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Strong demand for rental properties in Cyprus

Strong demand for rental properties in Cyprus

As property sales slow in Cyprus’ residential sector, buy-for-rent is breathing new life into the real estate market as it is now proving very attractive for investors.

Danos’ CYPRUS PROPERTY MARKET 2019 report shows the increased interest of investors in properties that can be rented out.

According to the latest data for the Land Registry, May was the last month that sales documents filed exceeded those of the previous year.

October’s 454 sales were down from 565 the same month of 2018 while for the first 10 months of 2019, the annual decline touched 9%.

However, in the second half of 2019, sales of the residential real estate continued to increase across the island.

As interest rates hit rock bottom and the global stock market becoming more volatile, residential real estate – with its stable returns and rising value – has become a hugely popular investment category and provides some protection from uncertain financial prospects.

According to the report published by Danos and Associates, investors are showing an increased interest in buying properties which either have well-paying tenants or can fetch good rental income.

Despite Cyprus not attracting large international Real Estate Investment Trusts or other funds, Danos expects Cyprus to see its fair share of investor interest.

In comments to the Financial Mirror, Panos Danos CEO of Danos / BNPRE Group offers said Cyprus offers stability, safety, and attractive returns.

“Three rare features in an investment proposal that is becoming increasingly popular,” said Panos Danos.

“The result is the rising trend in house rentals of all categories, across the real estate market. High returns from renting houses and apartments are particularly attractive due to low taxation.

The lack of secure banking products with satisfactory yields are driving more and more people to consider buying a property in Cyprus.”

“The real estate sector seems to be a one-way street for many international investors,” he argued.

He said 2020 will not only see individual foreign investors turning towards properties in Cyprus but also small family investment funds from abroad.

Danos also expects to see Cypriot businesses turning towards forming investment funds in order to buy into the rental sector.

Over the next 12 months, prime retail rents are expected to rise at a sharper pace than all other submarkets (+7%), although secondary retail rents now exhibit a flat outlook.

However, prime and secondary office rents are also projected to rise by 6% and 3%, respectively.

Danos noted there is a strong demand for high-quality offices in Cyprus with new companies seeking modern, flexible and sustainable workplaces.

In the second half of 2019, the office market in Cyprus grew significantly.

“Since 2018, a great deal of office development has been recorded with luxury buildings now in their final stage of construction and with work on others having significantly progressed.”

According to Danos, the most expensive district for the purchase of offices is Limassol with the price per square metre reaching €4,000.

In Nicosia, the average office sale price is €3,200 per sqm, in Larnaca, it is €2,000, €1,800 in Paphos and €1,500 in Famagusta.

In terms of office rental prices, the most expensive town is again Limassol with €18 per square metre. In Nicosia, it is €15 per sqm, in Larnaca and Paphos €12 per sqm while in Famagusta it’s €10 per sqm.

As for the sale of shops, demand in central areas of towns was on the rise in the second half of 2019.

In 2018 and then in 2019 there is a great deal of office development, with luxurious buildings some of which are in the final stages and some construction work is well advanced.

(c) FinancialMirror

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