The Casino is here, but are property prices right?
The casino is here and the location is Zakaki village on the western outskirts of Limassol. This area, together with the adjoining Asomatos and other immediate villages, have been so far considered to be the lowest income group residential area of the town.
The project as it has been announced will comprise of a 5star (plus) hotel of 500- bedroom capacity (the largest in Cyprus), plus a conference area of around 6,000 sq.m.., plus other facilities. The lack of such a large conference hall so far will not only supplement the casino activities, but it will also find Limassol with a commercial hall capable of accommodating very large international conferences and events. In addition (hopefully), the Lanitis group has obtained a licence to build an international 18-hole golf course and villas for sale next to the casino. So, it is indeed, as a comprehensive a project, similar to that of Las Vegas to be run by an international casino operator with a wealth of experience and qualified staff to make it a success.
There is plenty of vacant development land and building plots to accommodate any increase in demand expected mainly to support the casino completion by 2020. Is it, then, the time to invest in such plots in order to cash in on the expected demand that will follow? At this point, land cost in the immediate area is around EUR 200-220/sq.m. (even less) which is suitable for apartment and individual housing development. Bearing in mind the new connection with China and the keen gamblers that the Arabs/Israelis have for casino playing, as well as the visa/passports scheme, the prospects for such a development is evident. Perhaps it is time also to contact the casino operator to provide staff accommodation (estimated 4,000 on location jobs) in a development and lease deal. Bearing in mind the Limassol towers/seaside projects now selling at EUR 7,000-8,000/sq.m. (not on the beach) we expect local sales prices in this area will be much higher than the prevailing ones for apartments (EUR 1,200/sq.m.) and houses in individual half plots (EUR 2,000/sq.m.). In addition to the immediate area, locations such as Erimi, Kolossi villages which are nearby with a large volume of supply, are also expected to benefit. This will of course help the Mall (My Mall) and the various restaurants in the neighbourhood. So, a single project (casino) can turn around a depressed area of the town into a medium class one, but it will take some time to realise it (say, by the year 2025) in order to enjoy the real benefits of the casino post operation, by which time we expect an increase in sales prices by at least 20%-30% over the next 3-4 years. The location has certain disadvantages, however, which must be noted.
The never ending problem with flies is an issue that must be addressed since it will only take a few reports to give the project a bad name, as well as its poor direct access.
Although roadworks are under way connecting the Limassol-Nicosia motorway with the wider area, we are not aware of any infrastructural plans leading directly to the project site. Also, part of the villages described, fall within the British S.B.A. for which sales of real estate is subject to various restrictions (basically limiting the disposal to locals) and this is an issue to be examined, with the S.B.A. authorities.
The immediate neighbourhood is known for its illegal gambling. Surely, the casino operator has the know-how and experience to handle such problems and much of it will depend on the capability of the local police (however if we look back on recent events where there was a close “cooperation” between criminals and the police, this is not encouraging).
The casino is expected to have an upgraded food court and we understand that some of the restaurants may boast a Michelin star quality. This is, of course, good news since in Cyprus we do not have such high standard so far. Yes, they are pricy but it is also worth the experience and units of such a nature have a waiting list to accept customers running to several weeks of waiting.
Regarding the prices for such establishments, it does not appear to be a problem particularly. If we compare Mykonos as an example, the average good quality restaurants charge around EUR 150 per person choosing the lowest price local wine (EUR 35/bottle), but can reach, depending on the wine list, up to EUR 11,000/bottle, and are still fully booked, whereas the charges of the old port in Limassol are around EUR 100 per person.
So why not a charge of EUR 300 p.p. for a Michelin star? It seems that based on our own experience so far there are (mainly foreign) people who are prepared to venture in such a luxury, being an attraction for visitors by themselves (a reader of this column who was kind enough to provide us such charges abroad, having criticised us for setting out the high rentals for the old port which we have set on behalf of the Port Authority that we are to blame for the high charges). Yet an ordinary shrimp cocktail cost EUR 7.0/each (a souglakia pitta EUR 10/each), the restaurants are doing very well – so there is room for further “improvement” in charges which is in sight.
A casino “never loses” and there are always players of all sorts who do not particularly care about the charges and by projection, we hope, do not pay particular attention to the future property prices in the immediate region.
Good luck to Cyprus and of course to Limassol (again).