Ayia Napa residential property market has grown in the last five years and the area has observed a high increase in demand of privately owned holiday homes.
Ayia Napa property refers mainly to Protaras and its surroundings, as the main attraction for property investment in the area.
Traditionally Protaras and Ayia Napa have been well-known as tourist resorts. Ayia Napa is a town for youngsters with its vibrant and busy night life, while Protaras is seen as a more comfort family destination.
Competition is strong and the commercial streets are filled with agents and developers selling local property. Prices have been growing by 15%-20% every year over the last 5 years. Protaras and its surroundings currently present the best capital gains potential on investment property in Cyprus.
The reasons for the best capital gains potential on Investment Property in Ayia Napa are the following:
1. Demand has been high for holiday homes, although in the past two years the area has seen a significant increase in the number of retirees purchasing properties in Ayia Napa.
2. The increase in demand for retiree accommodation has encouraged a further property market growth. Due to demand increase, investors have increased their activity in this sector.
3. The prices on properties in Protaras are lower than in other similar towns. For example, demand for Paphos properties started a few years earlier than in Protaras. Due to the fact that Paphos was a bigger town at that time with better infrastructure, it was primary to get attention from foreign purchasers. At present, Paphos properties extend up to 20%-30% higher in price than in Protaras. There exists a favorable gap between these locations, creating huge buying power for a purchase of holiday home in Protaras.
4. If the demand remains to be as strong as current one, then prices are expected to increase in the same way as it happened in Paphos or Limassol over the next two to five years.
5. Demand for properties in Protaras justifies investors’ expectations. Off-plan purchase of numerous properties to sell them to holiday home buyers or smaller investors is a company favourite. Buying property 12-18 months before its completion remain in today’s pricing, allows good capital gain upon completion, on top of the gain received from a possible discount from the developer for multiple purchase of units.
By selling off-plan property in a country away from Cyprus investor benefits from the information asymmetry: From the point of view of the investor that sells property, foreign buyers are away from information and competition so that investors can sell their units at a price they can significantly profit from, while their competition is geographically away. Meanwhile foreign purchasers feel more secure purchasing property from known vendors in their countries.
Investors usually pay a deposit of approximately 20% and having a loan for the rest with a grace period of 1-2 years (paying only interest). They resell all the properties that were bought within the grace period and earn a return of 20%. If the timing is correct, the investor can make a return of almost a 100% of the original investment which makes this option a fantastic investment opportunity.
Demand for property in Protaras is still very high and this is evident due to the fact that sometimes supply does not always meet demand. Along with scarcity of land, this demand constantly increases material costs and labour at the same time as steadily pushing prices upwards.
95% of property buyers in Protaras are foreigners, while 85% of this number consists of British purchasers. At present holiday home owners are the major category, while retiree numbers are increasing every year. Long and short-term investors are also beginning to play a very important role in annual sales volumes in Protaras area.
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