.
By Antonis Loizou F.R.I.C.S. – Antonis Loizou & Associates Ltd – Real Estate & Project Managers
The property market seems to be evolving with a growing trend for apartments available to rent, which in turn has caused an increase in rentals to the tune of 20%, on the back of a 30% rise in demand.
The positive trend is evident mainly in the central part of towns, as well as in beach-side properties, prompting many to consider invest in this sector as new landlords.
The demand for buyers had pre-existed before the 2013 crisis, coming mainly from young buyers and others, while the current economic situation is pushing younger couples towards rentals, and a new trend is for short-letting, such as 1-3 months by foreigners, as well as the seasonal demand for local students.
Some fully furnished apartments (2 bedrooms) have a rental value of about 450 euros a month, up from previous years’ 350 a month, plus common expenses. For short lets, the quality of furniture and equipment plays a role, more importantly on the quality aspect and modern features.
These short-term lets should see landlords’ earnings rise by 50% (but need to compensate for vacant periods), while the administration must also be considered that very often means responding immediately to the needs of the tenant, both as regards equipment and furnishings, or other matters. Come to think of it, the rent should also include the common expenses as a unified cost.
All these matters make one wonder when the time is right to buy or get a long-term lease for an apartment at a low cost, while there is also the burden of upgrading and preparing the property for letting or sub-letting.
Referring to the small apartment rentals in the centre of towns, these are mainly south of Kennedy Ave. in Nicosia or “within the walls”, in the Mackenzie area in Larnaca and south of Gladstonos in Limassol, leadint towards the beachfront. Naturally, these short-term rentals are not that easy to manage, which means that someone must be dedicated to this work and have some technical knowledge or hire services from contractors, such as repairing damage to the apartment or equipment. In two recent case, one tenant decided to boil milk in the kettle, causing tremendous damage to the kitchen, while another put the carpet in the dish-washer, destroying it, in attempt to rid the carpet of cat fur.
Short-term rentals that carry a cost of 50 euros a day for a 2-bedroom, are clearly different from renting a hotel room. Usually, these are arranged through accountants and lawyers or foreign companies, offering apartments based on the Regus concept for office space, providing a small scale investment opportunity, with the relevant income and something to keep themselves occupied.
In such cases, fast and reliable broadband Internet is mandatory in order for the tenants to remain connected to their accountant/lawyer associates, and demands efficient and prompt management by the landlord.
Considering that such an investment is relatively good, with a low risk, the following should be kept in mind:
• Commitment by the investor/landlord to take good care of the property and deal with any matters that may arise.
• The units (if more than one) do not necessarily have to be in the same building.
• The better quality of equipment, the higher rent it can carry.
• Consider a base rate of 20% for expenses and damage.
• Short-term rentals for less than 30 days are not allowed by CTO rules. This is generally not applicable, but it shouldn’t worry the investor/landlord. However, avoiding declaration of income is major offence.
• You are not the only one in the market, so install the best possible equipment, but with measure.
• Electricity consumption and excessive use of air conditioners may be a problem, with one tenant I know of having left the apartment’s A/C on all day as he went to the beach, so that it would be cool when he returned. I cannot suggest an ideal solution for this problem, but very often recording the power meter before and at the end of the rental period, with a clear mention in the contract, is the best option.
• A good internet connection is necessary, as is a modern TV, even in the bedrooms, if possible.
• Smart units and installations are always a good feature.
• The décor should be smart, serious and professional.
Star planning ahead, because this is a good time to consider this type of investment. As regards holiday apartments and villas, I have referred extensively to this in past columns.
