Real Estate Investment & Return Analysis: Limassol Offices

This report provides a comprehensive analysis of real estate investment in the Limassol office sector, examining various aspects such as quarterly and total returns, capital values, and standard deviations across a five-year period. It identifies increasing trends in property values and discusses factors influencing these trends, including high market demand and the nature of commercial properties. The report also explores alternative office spaces in Limassol, comparing rental values and features. Furthermore, it assesses the impact of external environmental factors on property rates, considering good, normal, and worst-case scenarios to evaluate investment risks and potential returns, providing a detailed overview of the Limassol office real estate market and its investment potential.

Real Estate Investment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Question 1....................................................................................................................................3
Question 2....................................................................................................................................5
Question 3....................................................................................................................................6
Question 4....................................................................................................................................8
Question 5..................................................................................................................................11
Question 6..................................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Real estate investment is about to make an investment in the real estate property. This
report will discuss return and different dimension associated with the return such as quarterly
return, total return, annual return and standard deviation of all different property. Analysis will
be done in respect to the rent of the respective property at the location. Different scenario will be
discussed to understand the significance of all different properties in the location. Furthermore,
five year time cash flow will be discussed in this project. Risk involve in the property with the
use of different tactics such as IRR and such like of features. Expected return in all different
scenarios will also discuss in this project.
Question 1
a)
Quarterly income is different in respect to all different property. The quarterly income is
identified as 6035.02, 6265.84, 7217.36, 8440.68 and 8848.39 of the previous years. Capital
value is identified as 391286.65, 392373.56, 412766.66, 458679.48 and 492006.01 of all the
previous five years. Total revenue is spotted as 4.9, 4.73, 5.16, 5.5 and 5.21. All these are the
previous five year total return that is increasing in every single financial year. The real estate
always rise in the market as it involve the price element that keep on increasing. The demand of
the real estate property is always high which is also become one of the reason the value of these
properties are always increasing.
b)
The trend that is identified of the property in the previous five financial year is spotted as
increasing in the market. The value of real estate property is always increasing due to the high
demand in market and also the competition that further increases the price. People are always
keen to invest in any of the real estate property that matches the budget of the stakeholder. In
such a situation the rise in the price trend is spotted in the market. Limassol office space is the
commercial property that contain more value in comparison to residential property. This become
essential for the real estate market that the rice are always increasing due to increased demand in
the sector. The nature of the commercial properties like office spaces which always carry high
demand in market that further increases and rises the price of the proeprty and value of the same
in market (Iacovido and et.al., 2021). In the real estate market the trend is always rising as it
always increases the price and value of the property for the target customer. As the Limassol

office sector are highly in demand for the target customer that support stakeholder to constantly
rise the value of the property in the respective market. In the last five year the property become
more feasible for the business venture which further increase the price of the real estate property
in location. This could further empower the property containing high demand in the market.
c)
The average annual rerun of the property is identified as 376613.4, 402634.65,
427298.97, 468350.94, 504474 and 480677 are the previous return value identified against the
properties in Limassol office sector. The value of the property further affect over the return
capacity of each individual property in the location. The demand always contain the price rise
and the potential increase in the rerun or value that is spotted as an inflow for the shop. Office
spaces always contain high in demand and especially the premium location. The increase
demand of the property and office spaces make the prices more effective for the office space. Te
average annual return are increasing which clearly indication about the increasing demand of the
property in market that could eventually increase the price of the same. Return in respect to any
property is influence with the value of the property and also the location at which the property or
office space is situated. All this further influence the business venture to ask for more value if the
demand is high (Bano and Sehgal, 2019). The demand indicate about the level of option which
business entity is containing at this point in time. All this influence the business venture
considering more demand in market that could further affect over the price and rise in the
property value of the value of rent against the property is hold. The value of the property is
always an increased feature associated with the property. This is spotted as a fact that all such
properties that contain a high in demand which will further increase the value of the property in
market. Demand of property and the property prices are the one that is comprehensive in nature
which empower the venture to increases more value to the property. The value ad standard
deviation is identified of the property is 9782.2, 8325.78, 8748.57, 8799.4, 9304.77 and 8046.62.
All these are the standard deviation of all different years. These contain a difference between the
original value and the mean value of the property.
d)
The value of the property influence the return that owner of the property will get against
the investment in respective property. In case the value of property is increasing this would
certainly improve the possibility for the owner to gain return over the property. IN the last five

financial year the value of the property is increasing constantly which can also be taken as an
indicator that for the next five financial year the value will further increase. The hypothesis can
be taken from the same as the increasing trend of rising price can be taken for the next five years
but the value cannot be taken as same for the next five financial year (Ioannidis, 2021). The basic
nature of the real estate property is that it always consider the price rise henceforth, it can clearly
be stated as a fact that the price of the property will further increase in the next five year. There
is one estimated rate to which the prices are rising can be taken in order to determine the
expected value of the property and the expected return over the property as well. Macroeconomic
forecast of economic growth also favour this concept of rising the price with some appropriate
rate. There are plenty of factor and element that result the rise of price which further result into
rising price of real estate property and especially the office space and commercial properties.
Question 2
There are other properties also situated in the Limassol office sector. Beachfront office is
a property that is 300 m2 in size. This property offering air condition and double glazing. The
value of this property is identified as €4500 per month. The office space rent in Ypsonas that is
of 300 m2 contain the price of €3600. The owner of the proeprty is offering air condition,
covered parking, double glazing, electrical appliances, furnished and uncovered parking features.
Ground floor office rent and mezzanine for rent is available. This property is 322 m2 of size and
contain the rent of €7500. The owner of the space is offering features like air condition, covered
parking, double glazing, private complex and a sea view. There is a one property located in
centre of Limassol. This property is of 300m2 and contain the rent of €4000. This property
contain only the feature of air condition and covered parking (Nikolaidis, Chatzis and Poullikkas,
2019). The property containing features like air condition and covered parking area. Office in the
centre of Limassol is of 350m2 and contain a rent value of €5000 per month. The space is only
offering the uncovered parking area. There is one property in Kato Polemidia which is of 234 m2
and contain the rent value of €6000. This property is offering features like alarm system, covered
parking, double glazing, private complex and VRV Air Condition. One property located in
Zakaki area is of 260 m2 and offer the rent of €5200. This property is associated with air
condition, covered parking, double glazing and private complex. The office space offer at Agios
Athanasios that is of 330m2 and contain the rent value of €10000 (Katsoufis, 2017). This space
is associated with the multiple features like air condition, covered parking, double glazing,

electrical appliances, furnished, private complex and sea view. Limassol sea front office area is a
size of 514 m2 and carry the rent value of €11500. This office space is offering different features
like alarm system, covered parking, double glazing, private complex and VRV Air Condition
systems. Business centre for sale in Potamos Germasogeias contain the size of 31111 m2 and
carry the property price of €12000000. There are multiple and different features also attached
with the property is alarm system, covered parking, double glazing, private complex, sea view,
storage room and VRV Air Condition. Every property contain a different features and feasibility
which also influence the price and rent charge against the use of respective property option (El
Zant and et.al., 021). This is significantly directed to the business unit for understanding the
feasibility of each property option and allow the stakeholder to charge the respective prices
against the property option that is selected.
Question 3
The working within the external environment is not static and there may be many
different changes being taking place and affecting the rates of property. This is particularly
because of the reason that real estate rates are being decided by the demand and supply of the
product. Hence, it is not necessary that the rates of property will appreciate or depreciate. Hence,
in order to analyse the working of the property it is very essential for the person that when the
invest in the property then at that time they must evaluate the property thoroughly (Waldron,
2018). This is particularly because of the reason that when the rates of the property will not be
analysed in proper and effective manner then this will be impacting the working of the company
to a great extent. Thus, by undertaking the different scenario the person can evaluate the fact that
how the property rates will be changed in different situations being provided. With the working
of the environment there can be only three different scenarios that is good, normal and worst.
This is particularly because of the reason that with the working of the environment and its
activities only.
Hence, with respect to the changes the working can be either worst where in there will be
decrease in the price of the property. In the second case, it involves the base case that is the
normal situation wherein the price will be appreciating (Del Giudice and et.al., 2019). Further in
the optimistic case the situation is involved where the increase in return is high and it is assumed
that the working of the property and its rate will be increasing and is good and effective. Hence,
when the property is being evaluated against these entire three scenarios then it provides a wider

base for selecting the property. The reason underlying this fact is that when the property will be
working on the basis of the economic market condition. Hence, for this the property rates will be
multiplied with the expected return which the property might be facing due to the economic
condition. Thus, for this the rate of the property will be multiplied and as a result of this, the
working and rates of the property will be affected (Feng and et.al., 2021). Thus, these three
scenarios will be providing a better and detailed situation relating to the property and as a result
of this the decision of investing within the property can be taken. This is particularly because of
the reason that when the property will be analysed on the basis of three different situations then
this will provide more accurate working efficiency of the property and will outline the rate of
properties in proper manner.
SCENARIO PROBABILITY
EXPECTED
IRR
(RETURN
FOR EACH
SCENARIO)
Business
Center for
sale in
Potamos
Germasogeias
B- 97754
expected
increase
or
decrease
according
to
scenario
(property
1)
expected
increase
or
decrease
according
to
scenario
(property
2)
PESSIMIST
IC 0.3 -2% 12000000 11000000 -240000 -220000
BASE
CASE 0.4 4% 12000000 11000000 480000 440000
OPTIMISTI
C 0.3 7% 12000000 11000000 840000 770000
On the basis of the above calculation it is clear that the pessimistic scenario is the one
wherein negative changes occur. This simply means that in pessimistic scenario the rates are
being decreased and this is not good for the investment. Thus, with the analysis of the data it is
clear that in case of property 1 the amount or money which will be depreciated is 240000. On the
other hand, in case of property 2 the amount will be decreased by 220000 in the case of
pessimistic scenario. Hence, on the basis of the pessimistic scenario the it is advisable to the
person that they must invest in property two as there is less amount of depreciation.
Further on the basis of the above calculation it is clear that in optimistic scenario the
expected return is 7 % and on that basis the value of property 1 will be appreciated with 840000
where in case of property 2 the amount will be appreciated by only 770000. Hence, on the basis

of optimistic scenario the property one must be selected. The reason underlying this fact is that
property 1 will be providing more of the return and as a result of this, the property rates will be
appreciated (Janoschka and et.al., 2020). Along with this, in the base case as well the
performance of property 1 is good that is 480000 whereas for property 2 it is 440000. Thus, on
an average it is recommended to the person that they must invest in the property 1 as it is more
beneficial for the person for earning more return. Hence, as a result of this, the working and
earning of the company will increase as this will motivate them to work in better and effective
manner and earn a good amount of profits.
In the present case, the probabilities are also assigned to each and every scenario as it will assist
the company in analysing and evaluating the working and investment of the property.
Question 4
Property 1
Price
€
12,000,000.00
10 Storey Grade A office
building
Freehold
Floors 10
Area per floor 311
Total Area 3110
Discount Rate 10%
ARY 5.90%
Monthly Rent per sqm
€
19.72
Annual Rent
€
735,950.40
Rental Growth every 3 yrs 5%
Period Outgoing Income CF PV @ 10% DCF
0
€
(12,000,000.00)
€
(12,000,000.00)
€
(12,000,000.00)

1
€
735,950.40
€
735,950.40 0.909090909
€
669,045.82
2
€
772,747.92
€
772,747.92 0.826446281
€
638,634.64
3
€
772,747.92
€
772,747.92 0.751314801
€
580,576.95
4
€
811,385.32
€
811,385.32 0.683013455
€
554,187.09
5
€
811,385.32
€
811,385.32 0.620921323
€
503,806.44
6
€
811,385.32
€
811,385.32 0.56447393
€
458,005.86
7
€
811,385.32
€
811,385.32 0.513158118
€
416,368.96
8
€
851,954.58
€
851,954.58 0.46650738
€
397,443.10
9
€
851,954.58
€
851,954.58 0.424097618
€
361,311.91
10
€
894,552.31
€
894,552.31 0.385543289
€
344,888.64
11
€
939,279.93
€
939,279.93 0.350493899
€
329,211.88
12 986,243.92
€
986,243.92 0.318630818
€
314,247.71
13 986,243.92
€
986,243.92 0.28966438
€
285,679.73
14 986,243.92
€
986,243.92 0.263331254
€
259,708.85
15 986,243.92
€
986,243.92 0.239392049
€
236,098.95
16 exit 16,715,998.69 16,715,998.69 0.217629136
€
3,637,888.35
NPV
€
(2,012,895.11)
IRR 8%
Property 2
Price
€
11,000,000.00
10 Storey Grade A office
building
Freehold

Floors 10
Area per floor 389.3
Total Area 3893
Discount Rate 10%
ARY 5.90%
Monthly Rent per sqm
€
19.72
Annual Rent
€
921,239.52
Rental Growth every 3 yrs 5%
Period Outgoing Income CF
PV @
10% DCF
0
€
(11,000,000.00)
€
(11,000,000.00)
€
(11,000,000.00)
1
€
921,239.52
€
921,239.52 0.90909
€
837,490.47
2
€
967,301.50
€
967,301.50 0.82645
€
799,422.72
3
€
967,301.50
€
967,301.50 0.75131
€
726,747.93
4
€
1,015,666.57
€
1,015,666.57 0.68301
€
693,713.93
5
€
1,015,666.57
€
1,015,666.57 0.62092
€
630,649.03
6
€
1,015,666.57
€
1,015,666.57 0.56447
€
573,317.30
7
€
1,015,666.57
€
1,015,666.57 0.51316
€
521,197.55
8
€
1,066,449.90
€
1,066,449.90 0.46651
€
497,506.75
9
€
1,066,449.90
€
1,066,449.90 0.4241
€
452,278.86
10
€
1,119,772.39
€
1,119,772.39 0.38554
€
431,720.73
11
€
1,175,761.01
€
1,175,761.01 0.35049
€
412,097.06
12 1,234,549.06
€
1,234,549.06 0.31863
€
393,365.38

13 1,234,549.06
€
1,234,549.06 0.28966
€
357,604.89
14 1,234,549.06
€
1,234,549.06 0.26333
€
325,095.35
15 1,234,549.06
€
1,234,549.06 0.23939
€
295,541.23
16 exit 20,924,560.42 20,924,560.42 0.21763
€
4,553,794.00
NPV
€
1,501,543.20
IRR 11%
With the analysis of the cash flows it is very much clear that the investment within the
property to having the price of 1100 0000 is beneficial for the person. This is particularly
because of the reason that in the case of second property the NPV and IRR are both are good and
profitable for the company for struck on the other hand in case of cash flow was that is belonging
to machinery first the NPV is in negative and the higher rate is also 8%. That this implies that the
performance of property to is more beneficial for the person as it will yield more return in
comparison to the earlier one (Chen, Kamran and Fan, 2019). And as a result of this it is
advisable to the person that they must invest within the property to which is having positive NPV
and higher IRR. When the investment option of higher NPV and higher IRR is being selected
then it will outline a good amount of profit which will be earned by the company or the person
investing. In the present case the machinery to will be providing more outcome and as a result of
this investment within that machinery will be more fruitful for the person.
Question 5
Before the investment to be done it is very essential that risk of all the properties must be
estimated beforehand. This is particularly necessary because in case the risk will not be
estimated then it might be possible that the company faces huge loss (Kaldiyarov and et.al.,
2018). Hence before investing within any of the property it is very essential for the person or
company that them was effectively undertake the risk analysis of all the property and other
investment options. This is necessary because it will provide the base to the person on whom
they can decide that whether the investment option is worth investing or not. In case the rest are
very hard then it will be advisable to the person that they not invest within the property. On the

other hand in case the risk associated with the property will be less then it will be beneficial for
the person to invest within the property and on a good amount of return (Pupentsova and
Livintsova, 2018). Thus on the basis of the property and their characteristics it was evaluated that
the major risk associated was of the inflation. This is because in case the inflation will rise then
the cost of purchasing the property will also increase. Hence as a result of this the person of the
company has to pay more for acquiring the property. This in turn will result in loss for the person
as they will have to pay more in comparison to the rate where they had to pay less.
Along with the inflation risk another crucial risk which might impact the investment is
the economic risk. This is particularly because of the reason that the prices are being set on the
basis of demand and supply of the product and in case there is no balance between both of them
then the prices can increase exponentially. In case the rest are not being evaluated and the
investment is done without any analysis then it may result in loss to the person. This is the major
downside of the investment property as the risk is not being identified then it impacts the
working and efficiency of the property is well. Also the competition within the real estate
investment is also very high and due to this it is very essential to critically evaluate the project
and then after invest with the option (Rogers, Wong and Nelson, 2017). This is particularly
because when the investment option will not be selected properly then it will result in loss or less
earning to the person. Hence as a result of this investment option will not be good and will be
selected in effectively. Thus to overcome this issue it is advisable to the person that they first
evaluate all the possible risks relating to the investment and then only decide to invest.
Question 6
In case of property 1 the expected return on investment is case of pessimistic approach is
identified as -9.61%, base approach denote the return is -8.6% and optimistic approach support
the return on the rate of -7.08%. While in case of the other property option the optimistic
approach support the return at the rate of -5.32%, base identify as -6.86% and the pessimistic
approach indicate the return is -7.89%. The expected return are different in all the three different
approaches. This has supported that the expected return is highly influenced with the level of
return that business venture will generate over the investment is made in the property. The
property 23 contain better possibilities of considering return in all the three case scenario. This is
supportive with the fact that all the thre approaches denote the different return which indicate the
various situation (Nikolaidis, 2021). All this identify with the support of various scenario of

business environment and market situation that can favour the expected return over the property
in different ways. This is certainly indicate as a fact that the business venture need to hold a
different return over the investment is made in the property. Hence it can be stated that market is
always fluctuate which further affect over the total return associated with the market situation.
The return against the investment is made in associated with the property. The demand in
market and the popularity of the location in market is a very decisive element that affect and
influence the value of the property in market. The return of the property get affected with
elements like expected demand of property in the respective target market. There are two
different properties contain a hypothesis on the basis of three different scenarios (Ismail, Yunus
and Hashim, 2021). IN context to each science the best outcome is witnessed in the optimistic
approach that provide extra hope to the investor for getting better return over the property as
compare to other option. The property 2 is very optimistic in comparison to the property 1 that
can be preferably selected by the investor in order to invest in the same. This is a very
progressive result that is determined against the investment is made in the property. The negative
return is arriving in each individual scenario which clearly indicating the fact that investor will
get a negative result over the investment is made but the least possible negative result is
determined in case of the second property choice. There are better return are anticipated in case
of the second property selected and identified. This will further create a better results for the
investor to do the whole investment in the proposal.
CONCLUSION
The above report evaluated the fact that a real estate investment who is being defined as
investing within the purchase and selling of real estate that is property for the aim of prophet. In
order to earn good amount of profit is this very essential for the people to invest within the real
estate. The reason underlying this factors that the investment within real estate provides a wide
range of profit to the person in resting. The reason behind this fact is that the real estate industry
is the one which involves most profit and the amount of investment is also very large. The above
report evaluated that proper analysis of the property and returns being provided by the
investment option are very high. and as a result of this the working of the company is improved
and person answer good amount of profit. Along with this with the help of IRR and NPV it was
easier to analyse the working and efficiency of the real estate investment option.

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