Limassol becoming a sky-rise bubble?

CYPRUS, and Limassol in particular, seems to be divided between two basic principles – to allow a new construction boom, with 30-storey sky-high towers, contributing significantly to the local economies in the short term, or to introduce a sustainable growth plan that will see tremendous benefits in the medium- to long-term.

Thus, the southern coastal port town is fast adopting the image of a split-personality city, where sacrifices are made in desperation, not realising the after-effects to the area that could impact future generations.

With Presidential elections just around the corner, development projects have been approved at an insane pace, with the government and all political parties hailing the nine mega projects underway or in the pipeline. These, they say, will create jobs and re-inject money into the local economy, thanks to foreign investors.

But a report in Politis, titled “The bubble of towers”, suggested that the uncontrolled vertical development is causing headaches to town planners, warning that the town could pay the price of uncontrolled development, referring to the rapid development created from when Famagusta was lost in the 1974 invasion and refugees re-established themselves in Limassol.

Panos Danos, CEO of the Danos BNPRE Group, said that “the Limassol property market is undergoing a strong surge, with high demand for prestige residential and commercial property – which will inevitably lead to a shortage of high-value homes and offices. Several tower developments are currently in the development pipe line or in the conception stage.”

Danos explained that Cyprus has a small commercial real estate market, both in terms of occupier and investor demand. “Transaction volume is limited to acquiring units for own use, with few exemptions of local institutional or overseas investors, typically high-net-worth individuals, interested in income-producing assets.”

Based on Danos/BNP Paribas Real Estate research, it is anticipated that the demand for office space in Limassol is 20,000 sq.m. per year.

However, some sane voices have suggested slowing down the pace of development and looking at a sustainable model, that will have more value in the longer term. While others, including the environmentalists, are just as concerned about the damage caused to the soil, with pollution seeping into the sea, eventually making it unsuitable for swimming, warning that the absence of a wider national plan on development could backfire.

Incentives need regional plan

“Incentives provided for high-rise buildings are certainly a positive boost to the city’s real estate sector, however these need to be incorporated into the general regional plan,” said Costas Zeniou, Director of Delfi Partners and Company, a leading real estate and asset management company.

He told the Financial Mirror a more strategic master plan is needed, with special development zones, where such developments are encouraged and will certainly benefit the entire region.

“In addition, such incentives must also provide benefits to the rest of the economy and infrastructure. Naturalisation incentives have unquestionably been highly beneficial to the entire island’s economy, however, we must ensure these benefits have a sustainable, long-term effect.

“Unregulated over-development aiming to take advantage of short-term foreign demand due to naturalisation incentives can have detrimental impact to the real economy of the entire island, exacerbating the current volatile state of the financial sector. Therefore, as in any investment or incentive aiming to aid the economy, the criteria for approving projects should also take into account positive social and economic externalities and aim to maximise their long-term impact on the real economy.”

Another sane voice calling for a sustainable plan, is Nigel Howarth, editor of Cyprus Property News, providers of independent information and advice for Cyprus home buyers and property investors.

“The construction of the high-rise tower blocks in Limassol will provide a much needed boost for the island’s economy and construction sector, providing jobs and increased business for companies supplying the building industry.”

However, Howarth said that “on the downside, the building work will cause severe problems for those living nearby due to noise, roadworks and traffic congestion, in addition to improvements to public infrastructure such as electricity, water and drainage services to cater for the increased demand – and many will lose their sea view.”

“Are they going to enhance Limassol and make it a more attractive town? No consideration seems to have been given to the overall aesthetic appeal of the Limassol sea front and I envisage it will end up looking like a set of very bad teeth all of different heights with no attempt made to blend the high-rise towers with their neighbours.”

Golden Visa under scrutiny

“Who is going to buy all the new apartments, foreigner investors?” asked Howarth.

“The ‘Golden Visa Programme’ (aka passports for cash) is already under scrutiny by the European Union and it seems unlikely that it will allow Cyprus to continue the programme indefinitely. Furthermore as visa holders do not have to reside in Cyprus permanently, it’s likely that many of these properties will remain empty for considerable periods and fall into disrepair.”

All said, however, the government’s argument has been that this programme has raised about 3 bln euros for state coffers.

Balancing the risks and benefits, the former Environment Commissioner and presently Greens MP, Charalampos Theopemptou, presented four arguments for and against the rapid development.

Looking at the general situation in Limassol, Theopemptou said that, “first, high rise buildings will result in high concentration of individuals in a small area. In Cyprus with our lack of public transport this will cause huge problems for all the residents in the area. A good public transport system should come before high rise buildings.”

“Second, there must be a carefully selected area where these buildings will be allowed to be built based on a proper scientific study and not where certain business people own land. For example, this planning policy if used wisely, can revitalise a poor area in a city.

“Third, having high rise buildings on the waterfront will also mean that properties behind these buildings will lose their market value because the tall buildings will be obstructing their view of the sea,” repeating the concerns raised by Howarth.

And fourth, “high rise buildings will also mean a lot of material that will get hot in the summer and will also block the cool air coming from the sea. The effect known as ‘heat island effect’ should be very carefully considered, otherwise it will affect the microclimate of the area. Abroad, this effect is used as the basis of city planning and development.”

Some benefits as well

Looking into the longer-term benefits, as long as proper planning takes place, Theopemptou suggests that “the fact that the city develops vertically will mean that water, sewage, electricity and other infrastructure services can be much easier designed and maintained.

“Second, it is very easy to provide for public transport systems”

“Third, the city does not spread into the countryside providing more protection for nature.”

And finally, “if the planning permits and policies are carefully designed so that development allowance are exchanged with land (ie. we don’t give the extra building coefficient for free) then we can have better streets and more open spaces and parks.”

The general conclusion from the recent workshop hosted by the Limassol architects’ group, was that town lacks a wide scale master plan, and that Limassol could very soon face a crisis, similar to the situation in 1974.

Then, the newspaper reported, the town sacrificed all of its seafront and uprooted the eucalyptus forests to make way for ugly blocks and hotels to cater to the tourist industry, some of which are falling apart, nowadays.

One such blatant proof of the lack of planning is a 30-floor complex that will rise on the doorstep of the ancient necropolis of the Amathus archaeological site.

Even the professional body of the industry, the technical chamber ETEK, has warned that a master plan is needed before it is too late, suggesting that development should take place in clusters so that any danger or risk can be contained in the future.

Cyprus ‘well prepared’ for high-rise disasters

Meanwhile, the Cyprus Mail reported that the authorities have been reassuring that despite the influx of tall buildings scattered across the country with skyscrapers planned in Limassol, fire safety measures are firmly in place, following concerns rising from the London tower block blaze that killed at least 50 people.

The deadly fire at Grenfell tower raised serious questions after it spread rapidly engulfing the 24-storey housing block, as British media reports outline the cladding used in the building had been banned in the US since 2012.

Closer to home, head of the House interior committee Eleni Mavrou, said the incident highlighted the need to bring fire safety laws in Cyprus up to speed so as to avoid any similar incidents, particularly while Limassol is boasting eight major projects set to be completed in the next few years, with seven permits currently being evaluated.

Fire services spokesman Andreas Kettis, however, said the measures Mavrou wanted approved in parliament within the next two weeks have already been in place for years.

“The difference is that now all the measures will fall under one regulation. Now we use one regulation from one bill, another regulation from another, and so forth. With the new rules, it will be a lot more simplified.”

The measures include a firefighting lift, fire sprinklers, rising mains and fire exit stairwells.

“Many measures are there to prepare in the case of a fire, such as having water systems or ensuring power won’t be cut off,” Kettis told the Cyprus Mail.