Cypriot Rental Market - prices triple in three years

06 March 2006

Three to four years ago the rental market in Cyprus was traditionally made up of local Cypriots looking for a place to rent, writes Simon Tweddle.

Prices for a 2-bed apartment in a complex without a pool, ranged from 80-90 CYP and 3 beds ranged from 110-120 CYP.

Currently, 2 beds cost around 280-300 CYP and 3 beds 350-400 CYP, in a complex with a pool (as most complexes are now built with pools).

This is a three fold increase in as many years.

In this time property prices have increased 30-40%, meaning that locals are finding it harder to buy their own place and subsequently have to rent instead, further keeping an upward pressure on rental prices.

This is similar as to what has happened in the UK as first time buyers have to rent for longer before they can afford to buy.

Another and large factor in the rental price increase is the steady increase in the number of foreigners coming to Cyprus.

Some move to Cyprus to take advantage of the year round warm climate (the so-called Snowbirds).

These people are either buying or renting long-term (particularly in the winter months), providing a steady stream of income for the investor.

Furthermore, a number of those buying are having to rent for several months as they have already sold up in the UK and have to wait while the developer finishes their property (sometimes a little later than planned).

Others are taking holidays on the island. Cyprus is not an expensive place to holiday, has excellent food and weather, and as the number of flights and package deals increase to the island, short term rents in the summer months prospects further improve.

This influx is only predicted to grow in the future as the infrastructure is put in place to support this demand. This in turn creates higher demand for both short term and long term rents.

Ex pats are increasingly becoming more integrated within the communities in which they live. Businesses are being opened and jobs are being created.

Paphos on the western edge of the island, is a city that has something going on year round. It is more exclusive than other parts of the island and thus has higher prices when both buying or renting.

The Paralimni/Famagusta region is starting to catch up, and with only 1/7th of the number of expats as Paphos has a huge potential to grow. As property investors this is exactly what we are looking for.

In fact, the predicted growth in rentals is expected to be a healthy 7-14% per annum of the next few years.

Clearly Cyprus still has a lot of room for growth, especially when you compare it to the prices in Spain.

Source Property Secrets May 06