Limassol is booming with prices and rents driven upwards at a fast rate which experts expect to continue in the foreseeable future. A decade ago like the most of the western world prices both in Cyprus and Limassol entered a downward trend after the global financial crisis triggered by the collapse of the Lehman Brothers and reached their lowest point in 2015 the year Cyprus exited a prolonged recession and two years after the culmination of the fiscal and banking crisis.
The number of students and workers has risen in Limassol partly as a result of the relocation of companies and their staff. There are a lot more forex firms, shipping, investment, law, accounting and business services companies now in the town. Demand for housing has increased while supply failed to cope over the past crisis years.
As many cannot afford to purchase a new home, they resort to renting one which in turn drives rent prices upwards.
After ten years of recession or economic slowdown, when prices stopped rising, we reached a turning point in demographics and financial cycle and it is in the nature of the property market to recover.
According to the Cyprus branch of the Royal Institute of Chartered Surveyors (RICS), rents for flats and houses in Limassol rose in the second quarter of 2018 an annual 26 per cent and 22 per respectively, against an island-wide increase of 8.3 and 10 per cent, also respectively.
Also, prices for both apartments and houses rose in Limassol more than 15 per cent in April to June compared with the respective quarter of 2017.
“A large number of companies has arrived bringing also its workers who are in no case low earners and receive a monthly salary of €2,000 or €3,000,” said Markos Kyprianou, managing partner of Cyprino Real Estate. “They are looking for modern, high quality apartments and are willing to pay €800 to €1,000 or for a two-bedroom apartment ”.
Moreover, investors who purchased real estate to get a passport will be eligible to liquidate their investment, including real estate, after keeping in in their possession for a minimum three-year period, this will hardly lead to a correction of the market in Limassol, as their interest focused on Limassol’s coastline stretching from the old port to the eastern suburbs. “This will lead to a price correction at the coast where we are not talking about apartment rents of €800 a month but €1,500,” he said.
However while property prices are on the rise, and the economy is faring its Fourth year of consecutive growth, expected to exceed 3.5 per cent this year, incomes have not risen to cope with the increase in rents and property prices.
For the situation to change, new projects, affordable to the average earner, have to be completed in the centre of Limasol and in areas close to it but away from the coast, where new properties are offered at a premium.
While the increase in prices and rents is offering new opportunities that investors will seek to exploit, it remains uncertain when this will lead to a correction on the market in Limassol, which recently attracted the hydrocarbon companies evicted from Larnaca, had its port’s operations privatised and is preparing for the construction and operation of a casino, a development which is expected to generate 4,000 new jobs.
There is no doubt that there will be a correction but unlike the stock exchange, the real estate market is slower in its reactions and corrections. The new situation prompted entrepreneurs to plan new projects which will take up to three years to be completed”.
The latest data on building permits show that in Limassol, the new housing and non-housing projects that got the green light from authorities rose 58 per cent in terms of construction area in the first eight months of the year, compared with 39 per cent island-wide. Last year, the construction area of licenced projects rose 52 per cent in Limassol compared to 19 per cent on average in Cyprus. Building permits rose last year 72 percent in Limassol’s urban areas and 18 percent in rural areas.
Chairman of the Royal Institution of Chartered Surveyors (RICS) Thomas Dimopoulos put forward another reason for the increase in rents in general: the difficulty of obtaining loans to purchase a house.
“Although the situation has greatly improved lately (particularly after the 2013 crisis), criteria for loans are quite strict and restrict many (potential) property buyers.
“Those without capital, cannot buy property. Demand for rentals increases and rent prices go up.”
It is exciting times for Limassol who have been been the recipient of many beneficial projects such as the marina and the upcoming casino while the old town has been given a huge facelift. This, plus the ever increasing investment by high net worth individuals in luxury projects like the many high rise luxury apartments along the Limassol seafront and the influx of Europe's elite companies is gradually transforming Limassol into a cosmopolitan thriving city where the lifestyles of the rich and famous is driving prices higher and higher.