Property Market in Cyprus

[Alex]

We are thinking about buying a property in Cyprus for when we retire however, in the interim we need the property to be a sound investment as a holiday let. The property market in the UK & US has really taken a knock, does anybody know if the property values in Cyprus have been affected in the same way?

[grumpy]

Hello Alex and welcome,
In general the market here has remained buoyant with much of the supply being sold to newer markets (Russia, Middle East, Mid Europeetc) sowith the spread of economies involved and Crash is generally less likely. There is a good supply of resale and developements available. Resales offer some good prices and we can source these readily, and developments are being offered with either incentives or genuine discounts. So although there has been a slowing there hasnot been a reduction in prices. Income from holiday and long term rentals remains steady, and as an investment it offers some great opportunities.

For the holiday market, near the sea, on a small/ medium complex and 1/2 bedrooms is normally the best sellers throughout the year. Management companies can be used or you can try it yourself. pm me if you require any further information or assistance.

[Veronica Kneeshaw]

Hi Alex,
While I agree that the prices of property here in Cyprus are stable I cannot agree that rental income is steady.
There is a glut of rental property on the market with many many properties empty for most of the time.
I know of many people who have bought over here having been told by developers that rental income will cover their mortgages only to find themselves in financial difficulty with properties they cannot rent, unable to cover the cost of mortgages.
If you need to rely on rental income I would suggest that you think twice before buying yet.
I am probably shooting myself in the foot by saying this as I sell property here in Cyprus but my main concern is to stop people making expensive mistakes. Do not allow developers to talk you into buying with promises iof renting it out for you. It dosnt happen, and rental companies have so many properties on their books chasing too few people.
Whatever your decision I wish you luck with your future plans.
If you have any questions feel free to contact me and I will try to help you.

Kind regards
Veronica

[grumpy]

developers that rental income will cover their mortgages

Absolutely, dont rely on long term rental income to pay your mortgage if you have a mortgage of over 50%. Many developers will offer what seems to be deals that are too good to be true. Take the time and sit down to discuss the pros and cons of any such offer. Investigate cash discounts etc. We can negotiate these with you.

If a deal looks too good to be true, it is. So steer clear.

Some developers offer a uaranteed rental income to you for a period of time, do the maths to see if its worthwhile. Although there are properties sitting empty the rntal income on those being rented remains stable. It has to be worked at to be rented. It wont suddenly rent itself, make sure your rental agent pushes your property.

Holiday rentals can give a higher yield if you buy the right type in the right place and market it properly. But again it has to be marketed, it doesnt just turn into money in your hands. We rent some 1 bedrooms on a nice small complex, the rental yield net of costs has been 8%, but we strive to get them rented out, for ourselves and the other owners.
But with holiday rentals you have to ensure you have the correct insurance, and the maintenance/management team are in place, and also be willing to take the rental risk!

[Veronica Kneeshaw]

The problem is that supply now far outstrips demand.
Tourist numbers are down while the number of rental properties increases every year because people are conned by the developers.
The rental market is saturated and unfortunately when the developers say they will guarantee rental income it is all hot air, just to sell the properties. It is very rare for these promises to be kept they will just make excuses as to why they are unable to rent the property.
This is fact as I know many people in this situation.
So my advice is do not buy until you are in a position where you do not need to rely on rental income.

[Chris & Andrea]

Hi Veronica, there's a lot of sound advise being profered here and Andrea and I are working on the principal that we have to have sufficient funds to cover the mortgage. We're wanting to steer clear of holiday rental preferring to look for those seeking along term rental, possibly prior to making their own personal plunge into the cyprus property market.
We're also working on the principal that we have more control over the longer term tenant, as opposed to the lottery of holiday tenants who may not be too 'fussed' how they take care of our property.
Still hoping our five year plan works out, especially with the rubbish property prices in the UK at present.
(P.S. Did you get my private e-mail?)
Regards, Chris

[grumpy]

Hello Chris, Remember the long term market will probably not cover your mortgage if it for more than 50% of the purchase price, also your own use of the property is curtailed, and although you can vet a client before they arrive (or your agent can) theres no guarantee they will treat it well. In fact they may have longer to do damage!!

However the location of the property and type also dictates if it is best for long or short term rental.

[Chris & Andrea]

Hi Doug,
Yes, appreciate your comments, but as you know our property when completed is more within the area of agro-tourism as opposed to seaside holiday let, hence our dilemma.
No we don't anticipate rental to necessarily cover the mortgage, but we have accounted for that.
Good to hear from you regards also to Tricia.
Chris

[grumpy]

For agrotourism Chris may I suggest you look for gratn assistance from the cypriot govt and from the EU. I am aware grants were available previously so it may be worth investigating. I would also suggest that a high income agro type tourist would do less damage than a lager lout.