Filenews 18 November 2024
Those who receive rents from income properties earn more in their returns than those who have deposits in banks and receive interest.
At a time when depositors do not enjoy large returns (latest data October average deposit yield from households maturity of one year 1.98%), those who collect rents enjoy multiple returns.
According to data from Danish International Real Estate Consultants and Appraisers, rent returns on apartments range from 4% to 6%.
Limassol, the city with the biggest rent growth in recent months, offers rental yields for apartments between 4% and 6%. These returns are especially profitable for beachfront apartments and properties in popular neighbourhoods with high demand from foreigners and locals.
Nicosia, the capital of Cyprus, offers fixed rental yields, ranging from 4% to 5%, especially in areas close to business centres, government offices and universities.
These performances reflect the importance of the city as a commercial and cultural center, where demand for rental properties by professionals and students remains high.
Larnaca has also become a popular investment destination, offering returns of around 5% to 6%. The city has gained ground due to its combination of affordability and attractiveness for local and international buyers.
Properties near the airport or beaches tend to yield the highest returns, making Larnaca an attractive option for investors looking for well-priced properties with strong rental potential.
Paphos, known for its appeal to British pensioners and tourists, also offers favourable returns, particularly for holiday homes. For long-term leases, yields range from 4% to 5%, while short-term leases during the tourist season can yield significantly higher returns.
It should be noted that in order to calculate the return obtained by the property you rent, you examine the relationship between rent and purchase price. That is, it multiplies the rent by 12, which are the months of the year, and divides it by the purchase price.
The resulting percentage also gives the annual return. Of course, in recent years there are also incomes from real estate exploitation through Airbnb which in these cases rent returns are even greater than deposits.
As Danos notes, demand for apartments from locals and investors continues to be the driver of the real estate market in Cyprus, as yields remain competitive, with prices stabilizing.
Property prices for the first time since 2020 have stabilized with only small fluctuations.
For two consecutive quarters, property prices saw little change, with increases of just over 0% in contrast to the upward trend in prices seen since 2021, where apartments saw quarterly increases of 1% to 5%.
Despite this slowdown, the residential market remains strong, mainly due to continued demand from local residents and investors aiming for rental returns.
Where did the prices go?
According to the data given, the average price per square meter for houses increased from €1,800 in 2022 to €2,500 in 2024. This increase has pushed up the total cost for the apartments. For example, a 150 square metre house costing €270,000 in 2022 now requires a budget of €375,000.
Similarly, a 100 square metre apartment that sold for €110,000 two years ago now costs €160,000. Despite these increases, the high demand for rentals across Cyprus keeps apartments attractive to buyers, who are willing to spend more on properties that promise stable rental income.
The strong demand for apartments is also reflected in the rental market. Across Cyprus, rental prices for apartments are rising, with almost all property types showing increases.
Limassol, the business centre of the island, recorded the highest rent growth, with prices for a bedroom starting at €850 per month. Two-bedroom apartments in the city start at €1,300, while three-bedroom apartments have reached around €1,700 per month, making it difficult for Cypriots to afford it.
