Avoid buy to resell since what you should be after
is an annual steady income and not speculate on such
an event for the purchase but having said that the
asset you acquire (apartment/shop) is there to sell
in the future even if sold at the price of
acquisition it will still make sense (retaining the
price of such investment is the minimum as nowadays
the property market gets better and most likely it
will be increased bearing in mind the improving
economic situation and the increasing demand).
those who are around the age of 40-50 should start
considering their retirement income as a first
priority and things to do once they reach the
retirement age of 63 (optional 65) years old.
Most companies and well organised private business have
in place a provident fund with contribution by the
employer and employees at various percentages of their
monthly income, which could amount to a sizeable sum
which could help them during the retirement years. This
amount could vary but let’s say on average around
€50.000 and could be multiple of this for the civil
servants and others and much less for the labour force
(those who need it more and should have been the other
Unfortunately, by Cyprus standards locals borrow against
this provident funds amount, whereas others have as
their priority of helping their children in their
studies etc, leaving them at the end very little – A
mistake to think that life ends at 70 years old. Based
on the Cyprus standards the life expectancy is around 75
years old for men and 80 years old for women, say on
average 15-20 years after retirement and Cy pensions do
not necessarily cover the living expenses and the
increasing health care (until the National health
Pensions amounts again is a matter of contribution and vary
from €600 p.m. to €2.000 p.m. for the high income earners.
As one gets older so will their own expenses increase not
only for their health care, but also for other expenses such
as grand children’s requirements etc. For one reason or
other in Cyprus parents seem to be looked upon by their
children at whatever age they are for help asking them for
funding regardless – how unfortunate for most retired people
who cannot say no.
Old age pensions are provided by the Government only to
those who are under a certain income, whereas widowers are
entitle for a small Governmental help. Not enough to live –
especially those who owe money and those wishing to live in
a similar style that they were used to.
Planning for retirement is therefore a must in terms of
retirement income and bearing in mind the prevailing
financial situation we suggest that at an early age (even at
the age of 30 years old) one should plan for the period
after retirement. For this we suggest the following:
Invest in real estate for income which nowadays show a
return of 3%-4% on the invested amount. What we refer as a
good investment is that one should aim for the rental income
with a particular reference to shops and residential
properties (apartments) the latter within the towns for
which it has now a high demand/rents are on the increase.
Apartments in Nicosia-Limassol and Larnaca are much in
demand, as are holiday villas to let (see our previous
article on the subject).
Location to target is Limassol for shops, Nicosia on high
streets (not only) and in the tourist areas, such as along
the tourist roads. Pay special attention to Possidon Avenue
area and Coral Bay area in Pafos, the surrounding area of
the Ayia Napa Marina and for the Paralimni region in the
Pernera area and other seaside areas of the resort (non
availability to target the Hotels road at Protaras).
Buy to let shops as we have recorded with 3%-4% p.a.
return but less expenses etc reducing the income to
2%-3%, a level, low as it may be, it is better than bank
deposits, whereas Governmental bonds are nowadays at
level below 1½% (and going down).
Rents in Cyprus have also all sorts of problems which refer
to the statutory tenants (properties built prior to end
2000) non payment of rents and common expenses by tenants
(provide a rent inclusive for the common expenses and
maintenance) repairs etc.
An upcoming form of investment (buy to let) are apartments
studio-1bed let for short stays by mainly foreign visitors
(mainly business people) in the towns of Nicosia and
Limassol. This is an alternative to hotel stay by visitors
costing them less than ½ of the hotel stay, but in such
occasions the units must be of good quality and very good
quality fully equipped furniture and equipment. It also
includes management on the investor’s side, but then the
rents are almost double from the long term ones. If one can
get connected with banks, auditors etc who have a long line
of foreign visitors, it could pay.
As we have
said, start considering your retirement income at an early
and not at the end.
Having discussed this with our more affluent readers they
have pointed out to us “why not invest abroad e.g. U.K. in
real estate where one can get a return of almost 8%-9% p.a.
or in international shares?”. Quite right, but then, we are
not talking about an investment of €150.000-€200.000 but
more like €½-1 mil. and in addition the recently introduced
inheritance tax (U.K.) could amount to 45% tax on the asset
(nothing for Cyprus).
Avoid buy to resell since what you should be after is an
annual steady income and not speculate on such an event for
the purchase but having said that the asset you acquire
(apartment/shop) is there to sell in the future even if sold
at the price of acquisition it will still make sense
(retaining the price of such investment is the minimum as
nowadays the property market gets better and most likely it
will be increased bearing in mind the improving economic
situation and the increasing demand).
So, let’s say at the age of 50 years old you invest in two
apartments in Limassol be it of some age but the building is
well kept, for 1bed €120.000 and with an expected rent of
€6.000 p.a. less expenses say net amount €4.500 p.a. which
shows a return of ±4.0% more than your deposits with the
banks etc etc.
Start considering our suggestions dear readers and specify
the area where you wish to target. At some age you could
secure a loan but make sure that loans have to be repaid not
later at the age of 60 years old.