26.01.2023
Could taxing idle properties be a response to the market’s inability to meet demand?
According to a report by Cypriot fintech company Ask WiRE , an additional 8,000 apartments could be built in Limassol City , with many plots of land currently undeveloped, which also raised the question of whether these vacant plots should be taxed.
The report was released as demand for real estate in urban centers has steadily increased in recent years, raising questions about how this demand can eventually be met.
“Research Ask Wire found that in the central areas of Cypriot cities there are many plots of land that either remain unused, or their rate is only partially exploited, ”the company said in a statement.
“As a result of the retention of land or the construction factor, there has been a significant increase in both the sale prices of real estate and the rent for residential units, primarily for apartments,” it added.
Ask Wire , a company that combines real estate know-how with the use of technology and analytics, has processed data relating to one of Limassol ‘s most sought-after areas , commonly referred to as Papas . This area generally refers to the area south of Kolonakiou Avenue, close to the Kean Beverage Factory , all the way to the Limassol Coastal Road .
The company identified building sites in the area, excluding roads and parks, calculated a build-in ratio, and removed existing and under-construction buildings. In addition, for greater clarity, the company has also removed all commercial areas and uses so that the numbers refer to purely residential areas.
In the Papa district, 1,515 plots were identified with a total area of 1,571,729 square meters. In these quarters, there are 3,624 residential buildings with a total area of 450,249 square meters.
The company explained that on the basis of the existing urban development zones, a total of 1,253,413 square meters can be built, that is, an additional 803,164 square meters.
“Analysis shows that only 36% of the permitted rate is used in this particular area,” the company said. According to the analysis, with an average area of apartments of about 100 square meters, excluding terraces and storage rooms, an additional 8,000 residential units can be built. In other words, the existing number of apartments can be increased by 121 percent.
“While in Cyprus we tend to demonize any form of taxation as the market is in the state it is in at present, taxing unused property in high demand areas is the only way to convince its owners to either develop it or get rid of it.” This was stated by the CEO of Ask Wire Pavlos Lois .
“Since incentives to provide an additional rate already exist, disincentive measures should also be applied that will encourage owners to develop them in order to stabilize housing prices, as well as make it more affordable,” he added.
Otherwise, Luazou explained , this limited supply situation will continue and prices will continue to rise not only in the city center but also in the suburbs as demand will now move there, negatively impacting the environment, resulting in wasted time and increased inconvenience due to traffic. This creates the need to develop public services and provisions in new areas.
“It goes without saying that the goal is not to tax the main residence or smallholders, but an inexhaustible building factor,” Luazou concluded .
Finally, the company said that similar data had been obtained for the Acropolis area in Nicosia and a special exploratory analysis would be published in the near future.
