Filenews 22 June 2024 - by Ioanna Mantipia
Changes in the map of real estate sales are recorded on our island with Limassol continuing to hold the scepter of the most expensive city, in terms of property values and rental prices. Currently, there are dozens of projects in progress in the construction sector, mainly new buildings and newly built apartment buildings, but at the same time there is limited demand in sales in Limassol, something that should concern land developers.
The first five months of 2024 saw for the first time after many years a decrease in the number of property sales in Limassol and the main reason is due to the reduction in demand from foreign investors who seem to choose other cities, more economically advantageous. These are sales involving apartments, houses, offices and pieces of land.
Outlining the situation in sales, the president of the Association of Real Estate Appraisers, Polys Kourousides, tells "F" that since the beginning of the year there has been a continuous decrease in property sales, with Limassol coming first and followed by Paphos. On the other hand, Larnaca and Nicosia give a different picture with sales skyrocketing, even reaching 40%.
The main reasons for the decrease in sales in Limassol are due to exogenous demand due to the war in Israel but also to the fact that interest rates are soaring, which has greatly affected the real estate market.
According to data held by the Association of Real Estate Appraisers, during May, nationwide, the overall decrease in property sales reached 17%, with the largest recorded in Limassol followed by Paphos. Specifically, the decrease in sales documents in the first five months of 2024 reached 7% for Limassol in contrast to Larnaka, which records an increase of 15% andLefkosia to jump to 40%.
Indicatively, last May in Limassol there were 511 sales compared to this year when only 350 were made. While Pafos recorded a decrease of 10%.
Small decrease in rental prices due to increased supply
Rent prices in Limassol are soaring with many young people still trapped in their parental homes and with the acquisition of housing seeming to them an illusory dream. However, for the first time this year there has been a slight decrease in rental prices compared to previous years. According to Mr. Kourousidis, this small reduction or rather correction of this situation with the exorbitant amounts of rents is due to the fact that demand has decreased and supply has increased. Also, in recent months there are several apartments available on the market compared to last year, when there was not even a sample apartment for rent.
At a time when there are decreases in property sales, the building boom in Limassol continues non-stop and this counts on the positive side of the market, since there are constantly available properties either for sale or rent and at the same time corrects the huge issue of steep rents and property sale prices.
"Building activity in Limassol continues and this can be seen by studying the applications for building permits, which are quite increased. Land developers have a plan and continue to invest in developments. If for some reason demand does not increase sharply, then it will help to contain prices and make them a little more affordable," Kourousidis said
Limassol property prices double
There may be a slight decrease in rental prices, but property values remain high with would-be investors turning to other cities. Compared to property sales prices and the difference with other cities in Cyprus, Mr. Kourousides cited as an example the purchase of a three-bedroom apartment in Germasogeia (one of the good areas of Limassol), comparing it with a similar market in a good area of Larnaca where the difference in the value of the property reaches double.
A three-room apartment is for sale in Germasogeia at €600,000 while in Larnaca in a similar area, the sale price reaches €350,000.
Real estate bazaar changes hands due to war
Limassol is characterized by property appraisers and real estate agents as a diverse city of investors, compared to the rest of Cyprus. Lately, however, it seems that many Israelis are turning to the city of Zenon, due to financial choices in real estate investments.
"The investment market from Israelis in Limassol has decreased and they are now more restrained. On the other hand, in Larnaca there is a continuous trend in sales, due to the fact that it is a more economical city compared to Limassol.
The president of the Association of Real Estate Appraisers Scientists, assessing the whole situation, sounds the alarm to land developers, pointing out that the signs of a decrease in sales recorded should lead them to a deeper study, even before new projects and developments begin, explaining that "if this decrease continues, not many projects can be opened at once".
They transcribed properties in the towers into luxury hotel rooms
Limassol has changed dramatically in the last decade with towers sprouting one after another and luxury apartments being sold mainly to foreign millionaire investors.
Currently, according to Mr. Kourousidis, most properties in the towers have been sold and very few remain available. A limited number of owners of these luxury properties reside in them, with most renting them either as a long-term rental or on short-term platforms such as Airbnb and some of them operate as hotel rooms.
"Investors who bought properties in towers choose to rent them with the goal of a good return on income. Some of these apartments are also converted as luxury hotel rooms since the five-star hotels in Limassol are limited and quite expensive. Many of the visitors who come for work or tourism choose these apartments to accommodate them and their families as a better alternative."
Limassol is also one of the strongest companies office rental market compared to other cities. Several large foreign companies rent offices and bring their staff with them. It is for this reason that the demand for apartments is created and consequently the increase in rental prices. It is worth mentioning that Limassol relies heavily on foreign demand with most property buyers having moved and living mainly in the eastern region as opposed to the western, which for now remains as an option for Cypriots.
As far as Cypriots are concerned, it seems that they still find it difficult to proceed with investments and purchases of real estate and the increased interest rates of the banks have a cleaning role for this. "Cypriots borrow to buy houses and because interest rates are very high, they find it difficult to get loans because they cannot service them, so demand from this segment decreases. Although after some time there is a decrease in interest rates for the first time, this is a positive sign as if the downward trend continues, then Cypriots will also start buying and investing.
