Increasing construction costs, the limited supply of suitable units in residential or central areas, VAT, and the lack of title deeds have turned the market’s interest in acquiring older homes.
In most cases, these units need upgrading and repair, while residential units of the pre-crisis era that would have been considered depreciated are also upgraded and repaired, highlighting their prospects and upgrade capabilities.
In all this calculation of the comparative cost of a new or used unit, VAT (5% or 19%) has its role, as does separate title deeds (for older units) that offer easier financing.
Therefore, for example, it is not unreasonable to adopt that for a second-hand apartment of 100 sqm, the average sale price should be about €1,000/sqm and for the equivalent new €2,200-€2,500/sqm.
It does not apply to Limassol and other coastal locations (to the cost difference, add the transfer and VAT for the new units).
This shift towards older units has increased the demand for services from micro-contractors, who can offer the entire range of restoration for buildings, such as carpentry, decoration, and electrical and mechanical installations.
The cost difference in the above example exceeds €120,000-€140,000, which, compared to the upgrade cost, is much higher.
In purchasing older units, the quality of the common expenses, the existence of any hidden defects, and the quality of the neighbouring units should be considered.
Therefore, directly comparing the older unit and upgrade cost with a new unit is not absolute.
However, based on our experience and within some parameters, buying and upgrading an older unit is economically more advantageous than a new one.
A similar increase in demand for older units is also observed in Greece.
According to a recent report by real estate agencies, 70% of buyers preferred to buy older units (before 1988).
Indicatively, the market trend is now for small units of around 70 sqm.
Due to this situation, micro-contractors from Greece have begun to appear, and we expect this trend to continue.
Contractors
Of course, more attention is needed here, but observing some of them, the Greek contractors and the craftspeople they provide are of better quality than the locals, while their performance is much better.
Ensure these contractors are registered with the Cyprus Contractors Council to avoid any legal problems in case of disputes (there is also a serious difference in mentality).
Returning to the older units, if we compare them, they are larger than the new ones and have spaces that today are not particularly liked, such as a separate kitchen and dining room.
Of course, there are issues related to the new housing requirements, such as private bathrooms and w.c., large terraces, storage, or parking spaces.
And therefore, anyone interested should weigh the pros and cons plus the financial cost.
There is a noticeable increase in demand for older units within the city centre, partly from the increase in rentals for students, third parties, or Airbnb.
Buying, upgrading, and modifying such units for rent is particularly advantageous.
In this comparison study that you will have to conduct, the administration of the building in terms of common expenses also plays a major role.
New units have fewer problems than older ones in this regard, and it is good to examine the cost of common expenses and any pending works, while new units that offer high-quality services will face a serious problem in the future due to non-payment of the high cost of common expenses.
The government is trying to reduce the cost of buying or renting a house.
On the other hand, it is unable to propose an amendment to the legislation on common expenses, the immediate eviction of bad payers, which cause, especially for older units, difficulties in their disposal, even though it is financially in the interest of its citizens.
By Antonis Loizos FRICS – Antonis Loizou & Associates EPE – Property Appraisers, Property Sellers & Development Project Managers
