The Casino is here, but are prop­erty prices right?

Financial Mirror (Cyprus) - - FRONT PAGE -

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).

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