As the cost of new apartment units rises, so does the difference between older units and new ones. If we compare the prices of new residential units, which are now around €2,500/sqm + VAT, and older ones, selling at €1,200-€1,500/sqm, the difference is large.
The consideration should be whether it is advantageous to buy an older unit and upgrade it, especially for units within cities, where there is higher demand.
Then buying older units, one needs to look at the plumbing and electrical, and check for any problems, both in the unit and common areas, and the existence of a title deed, which makes it easier to obtain finance and resell. Depending on what the whole project will cost, you can decide whether it is more cost-effective than buying new.
Older units have more spacious areas, but may lack private parking and storage space, of great importance by today’s standards.
If you are considering older apartments focus on units up to 15-18 years old, since then private parking and storage space was included, with good quality lifts. Any problems should be obvious.
Look into the management committee of buildings, whether common expenses are paid, anticipated new costs and any arrears from common charges issues.
A recent example is a 15-year-old three-bedroom unit in a central residential location in Nicosia sold for €190,000. It was in good condition, but it needed some upgrading, mainly of the bathroom and kitchen, costing around €25,000. With conveyancing the total costs came to around €225,000. The apartment was then rented for €1,000/month, and there is a proposal for purchase of it for €290,000 – a resale profit of around 30 per cent over 6 months.
In another case, a one-bedroom unit in Neapolis Quarter, Limassol with a rent of €400/month, was upgraded at a cost of €10,000, and immediately rented for €600/month – a return of 24 per cent on the additional investment, and there is an offer to buy from a third party immediately.
Older houses on the periphery of town centres, especially in areas that remain purely residential without dense apartment housing, as the data currently stands, are priced as if vacant plots. With an upgrade cost of €100,000-€150,000 these units can be converted into attractive residential units in prime demand areas.
The same applies for older offices that have the potential to be modernised with modern amenities (again, special attention should be paid to entrances, parking spaces and external appearance).
As a general rule here are some of the factors to look at:
- The immediate area: The condition and type of development, if there are vacant plots that will eventually be developed, increasing the density of the neighborhood
- Nearby public green spaces, which are a particularly attractive to young families
- Public and private schools in the area and transport
Looking at the market in general, there has been a drop in interest in luxury units in high rises following the end of the citizenship by investment scheme. Even with a 50 per cent discount on such units, they remain expensive for Cypriots. Problems are expected with the management and maintenance costs of such towers. There is an expected new wave of supply with the construction of the three marinas and so on. Great caution is needed when it comes to real estate market.
Antonis Loizou & Associates EPE – Real Estate Valuers, Estate Agents & Property Consultants, www.aloizou.com.cy, [email protected]