Larnaca is a coastal town that has traditionally been economically driven by the tourist industry. There are two sides to Larnaca’s property market, the growth of the main town of Larnaca and the new development of coastal holiday areas on the outskirts of Larnaca.
The growth of the main town of Larnaca is dependent on the local population’s increasing need for housing. The outskirts are driven by the demand for holiday home buyers and retirees. Purchasing property for retirement purposes is probably the major driver for Larnaca’s property market.
With a population of 120,000, Larnaca is lively throughout the year, having all the amenities that relocating foreigners may require. In fact it is a favourite amongst expatriates and retirees. As a small town, Larnaca has the advantages of offering villas in quiet relaxing areas only 100 meters from the sea, while being located only 10 minutes drive from the centre of Larnaca and its international airport.
Rentals in the town of Larnaca are year round but these contracts but do not seem to offer sufficient returns for investors. However, rentals for holiday homes present a different picture as they are seasonal and comply with investor demands. If they are marketed properly, they can provide good returns.
90% of all holiday villas are sought after by British holidaymakers. Larnaca also seems to be preferred by Cypriot expatriates returning to Cyprus. Larnaca is attractive to many visitors because it combines a tourist destination with the facilities of a city.
The demand for Larnaca’s main town property market comes mostly from the local population, combined with some repatriate Cypriots.
Investors have realized that Larnaca’s outskirts can reach a different market of buyers than Protaras. Having its own airport, marina, English schools, shopping malls and large commercial roads and many more, Larnaca presents its own unique investment potential.
The supply of property is increasing in order to meet the increasing demand while the phenomenon of demand exceeding supply pushes prices higher. The increase in property in the outskirts of Larnaca in turn influences the prices in main Larnaca area.
For new projects, especially in the outskirts, buyers are asked to wait on average 15-20 months for delivery of their property while big developers are already expanding into new areas for development.
Current Conditions And Predictions
The industry seems to be on the up side of the property cycle with increasing demand and good expectations for the future implying the market has not yet reached its peak.
Prices in Larnaca are lower than other similar properties in Paphos and Limassol. This shows the buying power of foreign purchasers is still strong and properties with higher prices are still being sold, suggesting prices will continue to rise steadily.
Developers have been selling their properties before they begin the construction process. While profits are sufficient for investors and developers, an increasing demand is triggered, along with an increasing supply of developed properties.
Foreign investors are expected to reinvest their money in real estate in Larnaca since they already seem to be have benefited by the past years’ increases in property prices.