to buy or to build?

[Nigel Howarth]

I guess I have to retract my statement

No need for that - two heads are better than one.

Cheers,

[footy123]

We bought an old ruin in 2008 and carried out a huge renovation,in fact it was a new build around 350000 euros.All through the project we did'nt have an ounce of trouble with anyone.The main contractor was a Cypriot who did not want any payment up front,only stage payments as the work progressed.The engineer and architect also Cypriot,again no problems......There are good guys out there you know

Oh,,and thanks to Nigel for some advice along the way.

[Nigel Howarth]

Oh,,and thanks to Nigel for some advice along the way.

You're welcome - I'm pleased to hear that everything went OK.

Regards,

[pee_kay]

hello there chaps and thanks for all the interesting comments :)

my wife and I have recently returned from our reconnaissance trip.
our objective was to view some plots and built property to compare.

We stayed in a hotel in Paphos, and rented a car (this was absolutely essential). I also got myself a Cyprus GPS system for my iPhone, which I cannot recommend enough to anyone interested in travelling extensively on the island.

We viewed about 6 plots (some were in larger development parks, where there was a choice of more than one to pick from) and 3 houses.

The results and our end-impression is complicated.

The Plots

We viewed plots in Souni (Limassol), Tsada (Paphos) and Secret Valley.

In the first two locations the plots were being offered by 3 developers. Each location had about 15 plots and I should point out that no construction work was being carried out, at all.

We got the usual pitches, how it's a great time to buy, there are discounts of 30-40% on the prices etc.
Admittedly all the plots had amazing views, though if and when the developments ever finish, many views will be obstructed. All had proper roads and utilities leading up to their very borders.

However, most plots were on steep inclines, very steep - from 30 to 50 degrees (no kidding).
This really put us off. One of the local residents who lived in Tsada was nice enough to join us for a chat, and it turns out his retaining wall cost close to 100k euro, on a plot similar to the ones we were looking at.

The prices seemed reasonable, we were shown paperwork suggesting that the plots had been heavily discounted, eg from 300k to 200k, and even that price was negotiable.
Various people suggested that these developers would probably take 150k (as a broad example, but you get the idea).

The Secret Valley plot was offered to us by a personal acquaintance - who showed me a 'valuation' from 2008, estimating the plot to be worth 320k. Again, the plot was far from flat, and this one had poor views.

In the end we decided not to discuss prices, negotiate or make any offers. I'll go into the reasons further down...

The Houses

As mentioned, we viewed 3 houses - one in Secret Valley, one in Pissouri and one in Prastio (close to Pachna).
All 3 had title deeds, they were in good decorative order and seemed nice. With each one however, there were one or two things that bothered us. The prices were again reasonable, ranging from 370k to 470k.

[pee_kay]

Conclusion

We felt that viewing built houses was necessary - just to see what could be had for a given price.
We didn't really warm to any of the houses, although we were satisfied with the build quality.

On the other hand, the plots and the idea of a build is actually more problematic.
We definitely can't spare the time to supervise a build. This means we either use a developer or a trusted project manager.

When you take all the costs and budget for unforeseen expenditure, building a house, currently, is not particularly cheaper than finding an existing property that has been discounted heavily.

So our decision is that we need to remove the emotional aspect for this project. We definitely want an investment, not a retirement home. So, buying the right property in the right location is key - and it doesn't have to tick every box of the 'dream house'.

[pee_kay]

Some additional thoughts

We were surprised by the volatility of the property prices. Plots discounted by 30-40%, with another 20-30% potentially off by negotiation. One house we saw for 470k, had a beautiful finish was close to another which was listed for 900k (similar specification, though we didn't view it).

This lack of homogeneity make me nervous.

Then there's the uncertainty in the Economy. Worries over clear and undisputed ownership, the potential to be dealing with insolvent developers, corrupt solicitors etc etc.
The figures show a clear downward trend in property prices right now. The GBP:EUR rate is growing and events in Greece and the other troubled EZ states suggests that exiting the single currency is not the unthinkable event it was regarded only a few months ago. An exit for Cyprus would mean a heavily devalued Cy £ (which would probably be good for the island in the long run).

I would like to see at least 12 months of stable property prices, stability in the strength of the local currency, reform in the Banking sector and preferably more transparency in the Land Registry - before reviewing our position...

[Nigel Howarth]

Hi PK

You will pay a premium price for a building plot if you buy from a developer. Best to find an area you like and ask in the local coffee shop, community office, etc. if they know of any land for sale in the area. And you can drive around the area looking for 'Building Land for Sale' (Πωλούνται οικόπεδο) signs.

It is important to recognize that there are two types of land that you can buy: 'building land' (in Greek οικόπεδο - pronounced ikόpedo) and what I call 'other land'.

• Building land is usually easy to identify:
  
  Most importantly, the word οικόπεδο appears on the Title Deed.
  
  The utility services (water, electricity and telephone) will be provided to the edge of the plot.
  
  There will be a right of way giving vehicular access to the plot.

Although you may be tempted to buy other land on which to build your property, doing so can be extremely risky unless you've done your homework properly:

• You may be denied planning permission for your property.
  
  It may prove prohibitively expensive to get electricity and the telephone to your property and/or you may have to wait many years.
  
  You may be unable to get water piped to your property and have to rely on tanker deliveries or a borehole.
  
  You may have to give up part of the land for roads, pavements and amenity areas.
  
  There may be no right-of-way to access the land or the right-of-way may be insufficient (it needs to have a minimum width of 12 feet) to make full use of your property. In this situation you may claim a right-of-way from adjoining properties on payment of reasonable compensation to their owners.
  
  The geological conditions may make the land unsuitable for building or there could be a seasonal water course running through it; a geological survey is a must.
  
  If the land is more than 600 feet from a public road, permission to build a dwelling on it will almost certainly be refused.

Our plot was owned by three sisters and an aunt. The family had subdivided their field into six plots, put in the roads and pavements and the utilities. Their intention was to sell four of the plots and the remaining two were for two of their daughters when they married.

Regards,

[JohnI]

Pee Kay

I think you are right to wait and see.

The property bubble (which many denied even existed, even though it was CLEAR to anyone with an ounce of sense that prices were over-inflated by any measure) has burst, and prices are only going to go down from here on until we see some sensible correlation between prices and rental yields.

There is no sense to pricing here, about that you are right. Everybody lists his property for sale at what he believes it is worth, not by any nationally recognized index or measure.

Your feelings about a possible default are well founded. We Cypriots don't do austerity very well, and it is my feeling that we will shake down the Troika for all we can get before defaulting and returning to the pound.

Tough times are coming, and assets here will be devalued in the coming years.

Anyway, I wish you much luck with your endevours,

[pee_kay]

JohnI
Thanks for your comment. I think it would be wise to wait longer.
The speculative bubble of the Cypriot property market has burst but is not fully deflated yet.
We will follow the events as the unfold over the next few weeks and months.
In time I'm sure we will re-visit the idea of buying property in sunny Cyprus!
Thanks
PK