Property Investment In Ammochosto

Ammochosto’s residential property market has flourished in the last five years and the area has witnessed a huge increase in demand of privately owned holiday homes.

Ammochostos property refers primarily to Protaras and its surroundings, which is the main attraction for property investment in the area.

Traditionally Protaras and Ayia Napa have been world renowned as tourist resorts. Ayia Napa targets the young and has a vibrant and busy night life, while Protaras is seen as a more relaxing family destination.

Competition is intense and the commercial streets are filled with agents and developers selling local property. Prices have been increasing by 15%-20% each year over the last 5 years. Protaras and the surrounding areas currently present the best capital gains potential on investment property in Cyprus. The reasons behind this are the following:

  1. Demand has been high for holiday homes, while in the past two years the area has seen a huge increase in the number of retirees purchasing in Ammochosto.
  2. The increase in demand for retiree accommodation has prompted a further growth curve in the property market here. Due to increased demand, investors have intensified their activity in this sector.
  3. Properties in Protaras are lower in price than in other similar towns. For example, strong demand for Paphos properties started a few years earlier than in Protaras. As Paphos was a bigger town at the time with better infrastructure, it was first to get attention from foreign purchasers. Currently, properties in Paphos range in average 20%-30% higher in price than in Protaras. There exists a favourable gap between these locations, creating greater buying power for holiday home buyers in Protaras.
  4. If the demand continues to be as strong as it is currently, then prices are expected to rise in the same way as they have done in Paphos or Limassol over the next two to five years.
  5. The key to demand for properties in Protaras seems to be the highly positive expectations of investors. Off-plan purchase of multiple properties to sell to holiday home buyers or smaller investors is a firm favourite. Buying 12-18 months prior to completion while locking in today’s pricing, allows good capital gains upon completion, in addition to the gain received from a possible discount they receive from the developer for multiple purchase of units.

By selling off-plan units in a country away from Cyprus investors benefit from the information asymmetry: From the point of view of the investor selling on the units, UK buyers are away from information and competition and they can sell their units at a price they can reasonably profit from, while their competition is geographically away. Meanwhile UK purchasers feel more secure when buying from known UK vendors.

Investors usually put down a deposit of approximately 20%, while getting a loan for the rest with a grace period of 1-2 years (paying only interest). They resell all the units purchased within the grace period and earn a return of 20%. If the timing is right, the investor can make a return of almost a 100% of the original investment and such gearing can turn this option into a fantastic investment opportunity.

Demand for property in Protaras is still very strong and this is evident from the fact that sometimes supply does not always meet demand. Along with scarcity of land, this demand regularly increases labour and material costs while steadily pushing prices upwards.

95% of property purchasers in Protaras are foreigners, while 85% of this figure consists of British purchasers. For now holiday home owners are the biggest category, while retiree numbers are increasing every year. Long and short-term investors are also beginning to play a very significant role in annual sales volumes in the area.

Current Condition And Predictions

The property industry in Ammochostos is on the upside of the property cycle, and an increased demand and expectations for the future implies it has not yet reached the peak of the cycle.

Prices in Protaras are significantly lower than other similar properties in Paphos and Limassol. Considering Protaras has a developed infrastructure and is considered to be a newly established tourist resort, the gap in prices shows the market’s buying power is still very strong compared to other similar areas. The general perception is that the value of property purchased here is relatively high and the property market will continue to prosper steadily.

Developers have been selling their properties before starting the construction process. Profits are sufficient for investors and developers to cause an increased demand and in turn an increased supply of developed properties.

The wave of foreign investors is expected to get stronger, considering many investors have been liquidating significant profits and reinvesting their money in real estate here. This, combined with the fact that expectations on the English property market are not very good, encourages many investors to diversify their property portfolio in Ammochostos.

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