Short-term rentals have significantly changed the appearance of cities and the overall approach to living in Cyprus. This was stated by local economists Polis Kourousidis and Konstantinos Karakondis.
In their opinion, the situation has already shifted in some areas. While Cyprus is still far from Athens, there is a growing trend of property owners increasingly renting out their apartments as tourist accommodation. This contributes to serious housing problems for local residents. Kourousidis emphasized the need for timely planning to avoid such developments in the future.
Where short-term rentals are most concentrated in Cyprus
The largest number of self-catering properties is concentrated in coastal cities. The leaders are Paphos, the free areas of Famagusta, and Larnaca. A significant number of such properties can also be found in Limassol. In Nicosia, their number is still lower, although recently there has been an increase in listings, especially in the city center. This is due to the fact that tourists are increasingly choosing urban destinations, not just beach holidays. Old buildings in city centers are being renovated and converted into modern apartments that are in demand among visitors to the island.
Legalization and new legislation
Karakondis noted that over the past year and a half, with the support of the Deputy Ministry of Tourism, between 75% and 80% of all self-catering properties have been legalized. He described this as a significant achievement. According to his estimates, with the introduction of new European legislation on May 20, this percentage will increase even further. The new rules will make the market more transparent and property owners more disciplined. This will also help authorities track illegal rentals and collect taxes.
Profitability and long-term rental challenges
The short-term rental sector has been developing actively in recent years. It has contributed to the renovation of old buildings, especially in city centers, giving them new life. In some cases, short-term rentals offer higher returns compared to long-term leases. However, there is also a downside. Existing legislation on long-term rentals largely protects tenants. Kourousidis explained that the difficulty of evicting tenants who do not pay rent is a significant factor. As a result, the supply of long-term rental housing is shrinking, and prices are rising. Many property owners prefer short-term rentals to avoid such risks.
Location is everything
Experts emphasized that short-term rentals are not suitable for every property and are not always profitable. Returns depend heavily on the property’s location. Key factors include proximity to the city center or the beach, as well as the overall experience the property can offer guests. In remote areas without tourist infrastructure, occupancy rates may be low, making long-term rental a more economically viable option.
Experts advise investors to carefully analyze location before purchasing property for Airbnb and to consider not only potential returns but also risks related to seasonality and possible legislative changes. In Cyprus, where the tourist season lasts from April to October, the winter months can be a serious challenge for those relying solely on short-term rentals. Many consider a combined strategy optimal: renting to tourists during the high season and finding long-term tenants or using the property personally during the low season.