The Cyprus Town Planning Department has announced a series of incentives to drive growth in new-built property developments in town centres across the country.
PRLog - Oct. 10, 2013 - NICOSIA, Cyprus -- Cyprus’ Town Planning Department has provided a series of incentives to promote new-built developments within urban town centres.
Most of these incentives are directed towards plots of more than 1,000 m² that are either vacant or with old building structures that can be demolished for new developments. The purpose behind these incentives is to encourage construction of mixed-use developments, with public squares, public parking spaces, high rise buildings i.e. consisting residential apartments, retail outlets, and commercial offices.
“These incentives focus on regenerating the somewhat ageing, yet charming town centres. It will certainly drive new momentum – following on from the already apparent interest and growth in recent years for such locations – and improve the wider offering throughout Cyprus,” states Managing Director, Urban Splash Real Estate & Chartered Surveyors, Lambros Kaloyirou MRICS. “No doubt, these incentives will fuel new and diverse growth in real estate supply, and in the long term boost each city’s positioning, especially business, administrative and tourist hubs Nicosia and Limassol.”
Utilising these planning incentives, building density can reach over 500% of a plot area.
“Although this might all sound intriguing, it does bear the question if numbers really add up – in other words, is it really feasible, and truly the best strategy for new development here in Cyprus?” questions Kaloyirou.
The increase in building density means buildings can reach 30 floors and more. Thus, developers must factor in the cost of creating high-rise structures, public squares, and of course the public parking spaces that will need to be incorporated into such development – already a long-standing issue in such old cities. Another factor to consider will be the time it takes to sell or occupy units; especially during such difficult economic times this will not be so easy.
“Overall, development and running costs will dramatically increase. In fact, just the parking requirements alone may very well conclude that the project is not viable,” continues Kaloyirou.
Profit margins are very low for many of the plots that stand to benefit from these planning incentives, in effect making many large scale developments unviable, especially considering current demand is so low for both sales and leases.
Since the value of a plot is determined by what can be built, there is a direct link between projected sales, cost and profit of hypothetical development on a specific plot of land. Therefore, an increase in building density does not necessarily mean that the value of a plot increases.
At present there is an oversupply of houses, apartments and offices of all ages throughout Cyprus; yet also very few buyers. Meanwhile, the sales and rental market in major cities throughout Cyprus continues to show signs of slow growth and declining prices.
According to Urban Splash, the cost of renovating and reusing old buildings, although may be costly to many owners, is surely lower than building from scratch. Utilising existing properties also has the added benefit of being completed in shorter time. In most cases, such town centres in Cyprus also offer an array of buildings with special character, tradition and charm.
“Perhaps attention and incentives should be more directed to reusing existing buildings rather than creating new-built developments. Especially now during economic constraints, and for a better future,” adds Kaloyirou.
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New Real Estate Incentives for Town Centres in Cyprus
October 10, 2013 at 09:19 AM EDT
