Retirement condos: A new idea for the market
For many years now there has been a successful concept in America and later in Europe, with the construction of retirement housing complexes on an organised basis, while recent developments in Spain show the trend of this new concept which may be of interest to Cypriot businessmen, property developers and investors.
When someone talks about retirement homes in Cyprus, there comes to mind the miserable picture of most retirement homes, which are an embarrassment to society (albeit there are exceptions). Even though there are no new units with such high standards, the concept of retirement home is an upscale product that could target both Cypriots and foreign buyers and investors. These projects have their own specifications and maintain a high quality of facilities for tenants. It is a concept between whollyowned and an organised group with a single management.
Generally, the residence cycle in Cyprus starts from when the young couple buys an apartment, then jumps to a house of 3-5 bedrooms, with pool, etc. and when they reach the age of 60 odd years and while the couple may remain active, the house turns out to be very big and lonely, while the cost and effort of maintenance and the different levels of our homes, make it difficult to stay and enjoy living.
Family ties are no longer what they used to be ; children no longer visit and many generally become detached, caring less for elderly parents, while the number of friends dwindles. Purpose-built retirement housing projects are where active retirees want to feel at home, but the projects also reflect the living conditions and needs of this age. In general, these projects have the following characteristics:
• Organised complex with 30-100 units, mainly of one or two bedrooms.
• The units are single level (ground floor) with a garden or if it is on two levels, there should be private elevator unit.
• The doors and elevators are wide enough to accomodate wheelchairs.
• The units are fully equipped with kitchen furniture, air conditioning, etc.
• The facilities include central services at the main building (lounge, cards, billiards, shuttles, etc.), spa facilities with indoor pool, convenient outdoor shallow pool (1.40m), preferably heated, etc.
• All units have modern security systems, a direct line to the receptionist, internet and numerous television channels.
• Organised visits or partnership with a medical centre for the needs of tenants, private minibus service, etc.
• Outdoor activities may include tennis courts, green bowling and other ;aid-back activities and sports which are more suitable for such ages.
These units are available in the form of long-term rental or lease, the period of which depends on the age of the tenant and the terms of the project operator. Assuming that the average lifetime is 82 years and the buyer is 60 years old, then it is reasonable to offer a rent of around 25 years. The buyer prepays the rent and before the expiration of the rental may sell it to a third person, in consultation with the owner or project operator. Thus the original purchaser is not trapped in the project for life.
If the purchaser is not a permanent resident, ie. a foreign visitor, he or she may be allowed to rent the unit to third parties during the vacant periods.
To explain, let’s consider a hotel complex where each tenant uses the unit as absolute owner, without restriction, but there is the organisation, administration and management provided by a professional operator. So, each buyer can also have his own car and all the amenities of absolute property ownership. The advantages of such projects are: • The presence of mature aged people who may even be working.
• The availability of cleaning, maintenance and management of common spaces. • Camaraderie and fellowship. • A private maid use for each tenant with the appropriate room.
• The independence from children and friends where a tenant may also want less contact with the outside world.
With this concept, there tenant is not obliged to buy a, say, 2 bedroom apartment for EUR 250,000 for a period beyond his of her lifetime, but may do so for 30 years or less where the cost would be around EUR 180,000 or even 155,000 for 20 years and for 15 years just 130,000 - with the option of renting or selling it.
In such organised projects the cost of management or maintenance charges may be high and could exceed 5,000 euros a year per unit. Then again this cost is not very high as it does not have the additional costs we find in other properties, such as the maintenance cost of home ownership, property taxes, etc.
Ideal locations for such projects might be 3-5 km away from the coastal towns offering views to the sea, but also near enough to take advantage of facilities near or with villages, such as shops, supermarkets and leisure centres. An ideal project transformation of this kind could be the Kermia hotel in Ayia Napa that meets most of these requirements, except, basically, distance from cities and possibly a dull winter. During this period we see low occupancy levels in hotels, and whereas buying or converting an existing tourist villages could works, it may not be a perfect solution for locals, even though this would be more attractive to foreigners. For a simple comparison, a double room at a quality medical centre or retirement with food charge could be about 1,600 euros per person every month and includes care services, while when sharing a room the cost could drop to 900 euros a month per person.
Projects such as these might interest investment funds, insurance companies and provident funds for use of their retired officials, as well as for other tenant, foreign or local.
This is an innovative concept and projects such as those popular in Florida or across America may soon make their appearance in Cyprus, with a new classification of Condo Hotels whereby retirement residences and apartments could coexist.