By Antonis Loizou FRICS
FOR those who want to invest in real estate, and houses in particular, now is the time to get a good deal. Building plot prices are on a downward spiral as are building costs and professional fees. Depending on location and district, building plot prices have been reduced by around 25-35% (from 2008 levels), whereas building costs are either stable (since 2009) or even showing signs of a reduction (by approximately 10%) but now they are stabilising.
So should you wish to buy a plot and build your own home, now is the time. But it might be wise to first examine the alternatives in terms of buying an existing home. Ready homes can be acquired from developers whose prices have dropped by around 30-40% over the last years or choose a resale whose prices are around 40-50% less than before (the banks’ assets for sale in addition). The choice is there, with numerous properties for sale to accommodate all sorts of budgets and locations.
For example, a house in the Platy area of Nicosia – a sought after location – with an extent of 400m², 25 years old, is for sale for €620,000 in an area where the plot alone is worth more than €400,000. A beautiful house in excellent condition, whereas the cost of rebuilding is more than €400,000.
When building one’s own home, a budget of approximately €1,200-€1,700/m² should be budgeted for depending on quality and external works plus of course the land cost, professional fees and overheads as well as the topography of the ground etc. As a very rough estimate, to build your home based on average quality house, on a level building plot of around 500m² and a house of 300m², it should cost approximately €2,000/m²:
a) Land cost 500m² €200,000 (including transfer fees)
b) Building cost 300m² €360,000
c) Externals/garden/services €10,000
d) Fees, permits and overheads €30,000
e) VAT (at 5%) €20,000
Total cost ±€620,000
That amounts to around €2,070 per m² for a new build.
If you decide to buy a resale about 3-4 years old, the price for the same house would not be more than €520.000 – a substantial saving. Of course the resale may not reflect 100% of your wants but the difference is substantial enough to maybe offset that. Plus if you decide to build there are uncertainties such as contractor’s claims and disputes, delays and bad workmanship.
It would be our suggestion to first conduct extensive market research on private (or financiers) resales, then move to developers’ completed projects and as a last resort to decide to build your own house. With a ready house, the advantage is that it is there, you can see what you are buying and you can easily check its structural condition and state of repair, whereas a new home you might have latent defects of bad workmanship which might appear after delivery.
Discounts for completed houses and developers’ projects are not uniform however. The discount depends on how desperate the seller is. The more so, the more discount you are likely to get. Your decision must not depend on the price level only however, there are other parameters to consider. If the property has a title that is good, but, if not it is not the end of the world if not. What you need to do is find out at what stage the route to the title is at and ascertain the reason for the hold up – if it is not serious then you might decide to go ahead.