The real estate market is driven by supply and demand which determine property prices. Therefore, a successful investment strategy in real estate involves predicting how these will change with time in a specific area and for the different kinds of properties available.
Besides the general economy, supply and demand is also affected by some local factors which could result in the under-performance or the over-performance of the real estate market locally.
The area of Ayia Thekla (please see the satellite image below) probably presents the best example nationwide of an area that has all the required characteristics for a good investment: an extremely low supply of land and a number of significant infrastructure projects currently in progress which will radically improve the area and undoubtedly increase demand. In particular:
- Extremely low supply of land.
The new building regulations (as of November 2020) forbid the construction of houses in plots of land which are larger than 5,000m2, therefore, the vast majority of undeveloped land cannot be used. Moreover, in the few plots of land which are smaller than 5,000m2 it is only allowed to issue permits to construct houses which are larger than those typically considered to be holiday homes.
This inevitably limits the supply of suitable land to negligible levels, especially since the area itself is very small. In fact, the whole of the area is a narrow strip of land along the coast which is roughly 3-4 km long by 500-600m wide and is enclosed by:
(a) the sea in the south;
(b) Ayia Napa in the east;
(c) the British bases in the west where construction is not possible and
(d) the Larnaca – Ayia Napa motorway in the north, behind which the land is agricultural.
- Increase in demand due to new infrastructure.
Today, the area is a strip of coastal land with a few holiday homes and limited infrastructure. Soon, however, it will be transformed into a landmark because it will be enclosed between two major infrastructure projects and the seafront zone between them will be landscaped. In particular:
(a) In the east there is the state of art Ayia Napa Marina which is under construction. The marina infrastructure is already completed. The commercial and residential zones are expected to be completed in 2021 and 2022 respectively.
(b) In the west there is the Potamos National Park which is also under construction (estimated completion: 2022). The project includes landscaped banks along the existing seawater river, parks with nature trails, a nature museum and other educational and recreational facilities.
(c) The Local Authorities have submitted architectural drawings to the Planning Authority for a permit to landscape the whole of the seafront zone between these two projects. The plans include a footpath along the coast, new beaches, landscaped gardens, piers and small artificial islands.
The above have, in turn, attracted additional investments in the area, such as:
(a) The five-star Sun City Hotel and Spa Resort which is currently under construction.
(b) A landmark project consisting of a five-star hotel (which will be branded and managed by one of the major international hotel operators), a luxury residential project and a small high-end private hospital. The project is currently in the design and licensing stage.
(c) 2-3 similar projects which are under study.
Therefore, the whole outlook of the area will completely change and this will generate a significant increase in demand for properties.
Ayia Thekla is also ideally located, a few minutes away from Ayia Napa (which is currently trying to re-position itself in the upper holiday market segment) and 30 minutes from the Larnaca International Airport. Last, but not least, it attracts both local and foreign purchasers which mitigates risk because the demand does not depend exclusively on a specific market segments.
Disclaimer: This document is for general information only and it expresses the views and opinions of its authors which are based on the information available to them today. We, therefore, strongly recommend that you should obtain independent professional advice before making any investment decisions