The real estate market in Larnaca today – Values
You have noticed in our city in the last 2 years, a rapid increase in the construction of new buildings, an increase in the sale and rental prices of real estate, for which our customers and partners are wondering what it might end up being. As an active member of the Larnaca real estate market I would like to record my opinion on the matter below.
Larnaca has always been, in my opinion, the best choice among the cities of Cyprus for family life for several reasons, a fact that has been particularly appreciated by many foreigners in recent years, who have chosen it to settle down.
Some main reasons are, the lower cost of living compared to Limassol and Nicosia, the existence of Larnaca International Airport, the lower rental and purchase prices of real estate as well as the rapid change for the improvement of our city, thanks to the Mayor and the city council members.
The various projects of recent years, mainly the removal of the oil refineries, have brought the city to another level.
The existence of these facilities on the Larnaca-Dekelia beach was the main reason that property prices were previously kept at relatively low levels compared to Limassol. E.g. apartment on the beach of Limassol 80m2, 200m from the sea, 10 years old could be bought 2 years ago €500,000. The exact same area at the same distance from the sea in Larnaca €170,000.
Many businessmen, Cypriots, and foreigners, have noticed this difference, and by extension the opportunity to invest and increase property values, which is why you notice a huge demand in the area of Livadia street, Larnaca, Dekelia, and the beachfront of Oroklini, Pyla.
It should be noted, of course, the recent increase in construction rates in the area of former refineries up to the highway at the borders of Livadia, has made the construction of residential units more attractive for investors, resulting in an increase in the value of land in the area.
The construction and operation of new hotels is also a key factor in attracting further investment to our city.
The above activity is a permanent source of income from tourism and at the same time new jobs. The new Radisson units, the various new city hotels that have been operating as well as 3 new large units on Larnaka Dekelia road that are awaiting licensing make up a very positive future for our city.
The construction of a Marina in Larnaca is also an important chapter for the city, which will be an added value, when the first buildings emerge which were presented to the public and the internet.
However, apart from the increased demand that affects prices upwards, the issue of the cost of buying and renting real estate has been affected by the following factors.
Many apartments in the center and near the sea have been turned into Airbnb tourist accommodation businesses, thus reducing the supply of annual rental units for families. There was a great demand from foreign professional computer programmers, from Germany, Russia and other northern countries where their employing companies offered high rents for a 2-bedroom furnished apartment in the center of Larnaca up to 1300 euros per month.
For them, the cost of living is much cheaper than their country and the environment they live in is much better.
The new units of apartments and houses that are purchased are not included in the rental offer, which is a huge weakness of the system.
Someone who buys a new unit for 200,000 euros to rent it out has to pay 14% more VAT ie €28000 more than the reduced rate of 5%.
To achieve what? Should he rent it for 2 years to get the above amount if he finds a good tenant who will pay the rent?
We have repeatedly suggested to MPs a way to unilaterally increase the supply of rental units and consequently lower prices. A period of 6 months could be given in which new unit owners can rent it by paying a fine of eg €3000 in VAT.
Something similar that EAC pays to the European Union for projects it should have done years ago and didn't do. The only difference is that the EAC fine is paid by the consumer. In the above way, hundreds of apartments for rent can be put on the market in one day and consequently, the prices can be reduced.
For the cost of buying residential units, the factors are, in my opinion, the following.
- Rising land prices due to increased demand.
- Increase in building materials due to the war in Ukraine.
- Increase in transportation of marketable materials.
With every increase in materials - goods as well as labor services, there was an additional increase in the provider's profit share resulting in the prices we see today.
Finally, in closing, I would like to add that even if the way of life and the environment have changed on our island, in general it is a very good destination with quick access to many surrounding regions.
Lebanon, Israel, Egypt, Russia, Ukraine, are a few countries that in recent years had problems and their residents chose Cyprus, Larnaca to settle and buy real estate.
Adamos Palourti
Managing Director
