Retirement Homes for Energetic People

A retirement home by Cyprus standards and conception, is quite different from those we meet abroad. Evidence of the Cyprus model is abundant and one can see aged houses and apartment blocks turned into an “old peoples home”, with very little care and low standards of care. So do not confuse this with what we are about to report. Cyprus has the climate which is mot suitable for “mutured” people (say 65-85) who can still move around, drive, exercise etc. At the same time and at this late age, people do not want to invest their savings in a holiday/retirement home abroad. So there is an alternative where a resort complex can be designed/ developed with these people in mind. In a recent U.S. project we noted that:

• The project was top standard with all facilities available, ranging from pool and health center, to sports including tennis and bowling green and even a small theatre club.
• All units are single floor (ground mainly) or in case of two floors a private lift was provided (with the lift door wide enough to take a wheel chair).
• All units are fully furnished and servicing is provided on request.
• Special care was paid so as not to mix ages. That particular project could take residents up to 80 years and various age groups are so segregated in neighborhoods on submission.
• Most residents had private cars, but a common bus service was provided.
• There was a small apartment to let within the complex for visitors, as well as a club house.
• The project was sold either as a freehold or long lease base on a life expectancy of 90 years. So a 60 years old could buy a house (or flat) for 30 years, should he so wished.
• Etc

Interest for such concepts has been expressed from time to time by foreign investors, for Cyprus, but so far nothing has been materialized. This type of organized resorts, which need not be necessarily on the beach, could be developed in the periphery of towns (so that people can mix with the locals and be in close proximity to shops, restaurants etc) but primary consideration, we add, should be the relatively flat ground, easy internal access and if possible good views.

A distance from a town of around 5-8 km should be ideal. People can buy the freehold, or leasehold, to retain the right to let out and sell if they so wish (either the freehold or the lease balance). Even those who either by choice or if they die, can sell their holding (the property itself or the remaining of the lease) to interested other parties. Such projects could be of interest to provident funds and unions who may be interested to accommodate their members who retire and let out. So private investors could also be interested as an income and own use during vacant periods. Such projects will require very good on spot management and staff, not only to run the common facilities, but also manage the lettings, cleaning, repairing and maintenance etc. A recent Norwegian oil group expressed such interest for the Kermia Bungalow Hotel, but the asking price was not met.

We understand also that a proposed project on similar lines will be constructed at Dhroushia village, which meets the requirements as we laid out. Based on freehold values (nothing to do with the Dhroushia project), if a 2 bedroom bungalow has a freehold value in such projects of say €250.000, perhaps it could be acquired on a 20 year lease for €155.000, or for 30 years from €195.000, showing a return of around 5% p.a., plus any capital appreciation. This sort of investment however must be considered as being a “wasting” asset, since as time passes and the lease become shorter, its value will be reduced. Also such projects require high common/running expenses to keep the common facilities running and up to standard.

So it will not surprise us if the communal expenses are around €5.000-€8.000 p.a. Such projects are more suitable for foreign people who have a different prospective of life, since we, as Cypriots, act as “if we are to live for ever and eat as it is our last meal”. Locals with their attitude to pass on their assets to their children/grand children etc may not opt for the lease option. Surely we have not discovered anything new, but as the economic circumstances stand at present with a shortage of cash and future uncertainties, it is an option worth exploring. Another approach for such investors, is to buy holiday villages (hotels) which meet part of the required facilities and convert the rooms to studios/1 bed units, but, then it will not be the same. Such holiday villages are now sold “next to nothing” bearing in mind the state of the tourist industry.

So, for those who might be interested to carry out such projects, it is an option. Food for thought then for development projects, based on a different concept/ nature of ownership and perhaps one which meets today’s financial circumstances.

Mr Antonis Loizou FRICS, the Managing Partner of Antonis Loizou & Associates - Chartered Surveyors, a Cyprus Real Estate service provider based in Cyprus with offices in Romania and Russia. The company website offers more than 3000 Cyprus properties for sale online.

Mr Loizou has practiced in the UK and Cyprus for over 30 years, has a long track record of providing advice on complex real estate projects, writes regularly in the financial press, and is involved in the highest levels of the Cyprus government influencing policy.