In a previous article, we pointed out that the Famagusta region and especially the Protaras area is running out of holiday homes for sale. In particular, it is debatable whether there are 5-6 beach units for sale, if that.
There are also some in the Ayia Napa/Sotira region, but that’s all. Just off the beach, the number is increasing, but again not with satisfactory numbers.
And even though looking around there are numerous units for sale (albeit not on the beach) many of these have problems concerning permits, mortgages, bad construction, and so forth. Thus, what remains ‘suitable’ for sale is less than 50% of what is available on the market.
Some buyers do not necessarily care and are willing to take the risk to buy and undertake the procedures and cost to solve any problems themselves.
This near-monopoly on beach/proximate-to-the beach units has kept prices at relatively high levels, with beach units reaching sales prices of almost €5,000-€7,000/sq.m in the Protaras area, depending on location, and around €4,000-€5,000/sq.m in the Ayia Napa-Sotira area. Prices for off-beach units range from €2,000-€2,500/sq.m, again, depending on location and available facilities.
What is also notable is the keen demand for rentals to visitors. Beach units (of at least 3 bedrooms) have a rental period of around 7-9 months (at rental prices of approximately €2,000 per week), whereas off the beach the rental period is 4-5 months, drawing an income of around €1,200 per week.
So, in the end it could be an investment with a reaso-nable return, retained partly for personal use, factoring in the non-payment of income tax (quite illegal, but nobody bothers about it).
What is also significant to note is the be-nefit to the region with the Ayia Napa marina under way, as well as the football grounds which draw a lot of local and foreign visitors during the off-season period.
Just recently there was the annual futsal competition with approximately 2,500 people attending, and 6 hotels filled by teams, as well as overprotective parents and relatives in full force. All of which means villa lets and entertainment spots were quite busy.
Meanwhile, the new infrastructural plans announced, which include additional sports grounds, beachfront walkways (based on Limassol’s promenade) as well as various other social activities, are moving the region’s development in the right direction. Villas to let is a trend also seen in Paphos and, to a lesser extent, in Limassol and Larnaca.
In terms of details, the in-demand villas-to-let market includes 3-4 bedrooms units with a small garden and a swimming pool (of at least 4m x 8m). They must be fully equipped and furnished and include a BBQ and, of course, offer both weekly cleaning, but, more importantly, an on-call handyman to attend to any repairs.
Long-term lets aside (which are unusual), if one lets on a short-term basis, it’s better to use the services of an agent who deals with these sorts of rentals. Yes, it might cost you 20% of the rental, but there is nothing worse than being woken up at 2am because the unit’s a/c unit doesn’t work.
In this regard, Paphos lets go at a lower rate, in the region of €1,000-€1,500 per week, always depending on bedroom numbers, stay duration and quality. In a recent speech by the chairman of the hotels association, statistics he provided showed 15% of tourists coming to Cyprus do not stay in hotel establishments. It is reasonable to assume that at least a third (out of the 15%) i.e. approximately 120,000 people stay in villa-to-let accommodation.
This is shocking to the extent that, not only do the owners not pay tax, but the local authorities also lose from the rent levy and, of course, hoteliers lose out as well. On the other hand, the trend for such alternative accommodation has delighted car rental companies, as well as local restaurants and supermarkets.
Now that financiers are looking for investors to buy properties and wish to get villa projects which are either unfinished or abandoned off their hands, such developments could prove to be an opportunity for those looking to embark on this sort of investment.
The returns are around 4%-5% p.a. (net of expenses) which are not bad but, as we have said, a marketing and technical team have to be on standby. For those who have spare cash and interested in investing in real estate, while also hoping for a better market in the future in terms of capital gains, this could be food for thought.
Antonis Loizou & Associates LTD Property Consultants