By Antonis Loizou F.R.I.C.S. – Antonis Loizou & Associates Ltd – Real Estate Valuers & Estate Agents
For those brave people who want to invest in real estate, especially houses, now is the time to get a good deal, as opposed to that of previous years. Building land and plot prices are on a downward trend, as are building costs and professional fees. Depending on location and district, building land has been reduced in prices by 25-35% (from 2008 levels), whereas building costs are either stable (since 2009) or even showing signs of a reduction (by 10%) but now, they have stabilised. So, should you wish to buy a plot and build your own home now is the time.
Having said that and unless you are looking for something particular, reflecting your own location, style and wants, you must first examine the alternatives in terms of buying a ready home. Ready homes can be acquired from developers whose prices have dropped by around 30-40% over the last years or choose a resale whose price is around 40-50% less than before, as banks are selling assets because of foreclosures on non-performing loans or mortgages. The choice is out there with numerous properties for sale to accommodate all sorts of budgets and locations.
As an example, a 25-year house in the Platy area (Nicosia), one of the most prestigious locations and having a built area of 400 sq.m., is for sale for EUR 620,000, in an area where the plot alone is worth more than EUR 400,000. A beautiful house in an excellent condition, whereas the cost of rebuilding is more than EUR 400,000 (from new).
Building one’s home, one should budget about EUR 1,200 to 1,700/sq.m. depending on quality and external work,s plus of course the land cost, professional fees and overheads, as well as the topography of the ground, etc. As a rough estimate, in order to build your home based on average quality house, on a building plot of around 500 sq.m. and house 300 sq.m., it should cost you approximately EUR 2,000/sq.m., which works out as follows:
a) Land cost 500 sq.m. = EUR 200,000* (including transfer fees)
b) Building cost 300 sq.m. = EUR 360,000
c) External/garden/services = EUR 10,000
d) Fees, permits and overheads = EUR 30,000
e) V.A.T. (at 5%) = EUR 20,000
Total cost approx. EUR 620,000
* depending on location
That amounts to around plus or minus EUR 2,070/sq.m. for a 300 sq.m. new building.
Now, if you decide to buy a resale of, say, 3-4 years old, the price for the same house will not be more than EUR 500,000, plus transfer fees, say EUR 520,000 – a substantial difference of around EUR 100,000 or almost 15% less. Of course, the resale may not reflect 100% your needs, either in terms of design/quality/location/age, but if you are in particular after a holiday/retirement home, the difference is substantial and in addition you will get a ready and operational home, which, presumably the previous owner has repaired, whereas a new house which you decide to build with its possible uncertainties and contractor’s claims and disputes, delays and bad workmanship are factors that should also be considered when budgeting.
My suggestion is first to conduct an extensive market research on private (or bank foreclosed) resales, then move to developers’ completed projects and as a last resort to decide on your own house/building. Buying a ready house has the advantage that it is there, you can see what you are buying and you can easily check its structural condition and state of repair, whereas a new home you might discover latent defects of bad workmanship which might appear after delivery.
However, discounts for completed houses and developers’ projects, are not uniform. The discount depends on how desperate the seller is. The more he is, the bigger the discount you will likely get. Your decision must not depend on the price level alone, however, but there are other parameters to consider. If the property has a title deed, that is good, but, if not it is not the end of the world. What you need to do is to find at what stage issuing the title is at and ascertain the reason for the hold up – if it is not serious then you might decide to go ahead.
House hunting can be a joy, as well as a stressful experience. You need time and even if you do not have it (if you are abroad), pay another person in the know to visit the properties and compare the alternatives. Seek the services of a reputable and licensed estate agent (numerous British, so-called estate agents are unlicensed, so do not get carried away by the British name, only assuming that based on your own country’s experience being British is O.K.). Check if these agents have a license, check if they have a professional indemnity insurance, etc, since the licensed ones are governed by the relevant laws and the unlicensed ones are just freelance cowboys out to get whatever they can without any responsibility (almost like a “license to kill” based on James Bond film!).
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