The Cyprus Property Podcast with Kritons Onisiforos, sales manager of Altia, was attended by Polys Kourousidis, President of the Cyprus Appraisers Association
Mr .Kourousidis was asked to develop his views on the commercial and residential sector for the city of Nicosia, based on his considerable experience in the field of real estate and appraisals all over Cyprus. “Nicosia is always a stable market” said Mr. Kourousidis. “It doesn't show ups and downs, mainly in the residential sector, we don't see the big increases that we see in other cities, but neither do we see drops in both values ​​and rents.”
As for the commercial sector
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Foreign companies, who have the ability to pay high rents, came to Nicosia mainly after the Russia-Ukraine war, and are now competing with the state that considered itself the only possible investor. “We see that the good buildings are now taken by the companies and not by the state,” said Mr. Kourousidis.
What we expect to see from now on, according to the appraiser, is either an upgrade of existing buildings or new buildings, which will meet the EU directive.
The problem with office development, however, is that it requires a large capital outlay, land purchase and construction, which are 100% borne by the investor. Also, it is difficult to sell them later, which leads the owner to rent them. This solution cannot cover costs in the short term, i.e. there needs to be a stable rental for at least 5-6 years, assuming it will have a good return. Developers, not only in Cyprus, but also in all countries, prefer to build “build to sell” and not “built to rent”. With the high cost of building office space in Cyprus, which cannot be sold, but is rented to cover construction costs, rents are expected to rise. A big risk for investors is also the fact that they have to start a building from scratch, when they don't know if it will rent immediately or if costs will increase during development.
Helpful could be for the construction or renovation of buildings, which will meet the Energy performance A, the Green loans given by the banks. However, for lending to be effective, there must be reduction of interest rates.
Another issue plaguing the construction sector in Cyprus is the long delay in the examination of applications submitted to Town Planning. It can take up to 2.5-3 years for an application to be approved and to get a building permit. Many times, by the time a building permit is secured, facts change, interest rates and demand increase, as well as costs.
In Nicosia there is currently no shortage of real estate because the majority of investors prefer coastal cities. This is observed both in the residential and commercial and office sectors, in which, as we have seen in recent years, the big winner is Limassol.
Regarding the legislative movesin the real estate sector in Cyprus, Mr. Kourousidis pointed out that the respective government listens to professionals for short-term issues, without long-term solutions. What needs to be done is to realize that every time the government changes, the advisers also change. We need stable technocrats, who work full time and not part time in the work they have undertaken.
Regarding the commercial sectorin Nicosia, Mr. Kourousidis observes that he moves according to the needs of the state. In addition, it is not expected due to Russia-Ukraine war or war conflicts in Israel, that other foreign investors and companies will come from the countries in question, even though in 2023 a satisfactory mobility towards our island was observed.
Making a forecast for 2024, Mr. Kourousidis mentioned that it is the only year in which he does not have a specific estimate for the course of real estate. Due to very high interest rates, we have seen zero growth in the EU, which of course affects Cyprus as well. Unless there is a reduction in interest rates so that loan demand for developments starts again, there will not be a significant boom in the real estate and investment sector in 2024. Also, a decrease this year compared to 2023 in the purchase by Israelis is predicted due to war as there is difficulty in transferring money given the situation.
See interesting discussion here:
A.P.
