Investing in real estate in Cyprus is a common practice. Growing demand and prices for housing, a favorable climate, and beneficial tax conditions all contribute to the purchase of property on the sunny island. It can be later resold or rented out. In any case, investing money in real estate will be justified.
In this article, we will discuss what points to pay attention to before buying investment real estate in Cyprus. And in the end, we will come to a conclusion as to which type of property is better for these purposes: apartments or a private house?
Point №1: Will the investor live in the house/apartment?
This point, perhaps, should be taken into consideration first and foremost. The property should be comfortable for its owner, so the criteria for choosing the location, type of house, and its class will depend on the buyer's preferences. In this case, it is important to remember one important thing: it is more comfortable to live in a private house, but it is always more difficult to rent out or sell it.
Tip: The "golden mean" in this case is a penthouse. It has a high level of privacy but also has all the advantages of an apartment.
If the owner does not plan to live in the property, then it is necessary to focus entirely on choosing the property that is easiest and most profitable to rent out or sell. As a rule, several criteria should be taken into account, which will be listed below - specifically for those who plan to rent out or resell the purchased property.
Point №2: Long-term or short-term rental
It is unlikely that the property in Cyprus will remain vacant - it is much more profitable to rent it out for a short or long term. Many other factors will depend on the decision made:
- Choice of city and area
- Seasonal fluctuations in rental prices
- Property arrangement: from repairs to minor things
- Procedure for handing over the property (on your own or through an agency), and so on.
Short-term rentals imply that the property will be rented out to visitors - tourists or people on business trips. They are not so concerned with large living space. Rather, they prefer comfort and proximity to all necessary infrastructure. In this sense, villas usually lose to apartments.
Another important point is the process of renting out and accepting the property. If guests check-in and check-out every 5-10 days, it will have to be done often. It is easier to rent out apartments, especially if you buy them in a complex where the services of an aparthotel are provided. This means that the complex's administration will take care of all the hassle of settling and evicting tenants, as well as cleaning the apartments. This option is also possible for villas, but it will be more expensive and more difficult - you will have to negotiate all the services individually.
Renting out property for a long period of time may not be as profitable, but it is easier. It can be done independently. Here, apartments and villas become roughly equal to each other. And location begins to play a bigger role.
Point #3: Choosing a Location
For short-term rental properties, it makes sense to purchase real estate in tourist destinations. If there are options for apartments in your chosen area, it's better to buy them because the demand for apartments is always higher, and they won't be empty even in the winter. However, there are certain locations in Cyprus where multi-storey buildings are not typically found, such as Sea Caves in Paphos or Ayia Thekla in Famagusta. In those areas, of course, you can rent out a villa on a permanent basis.
For long-term rentals, you should choose a location based on your target audience, that is, the "portrait" of your future tenants. Families with children are likely to appreciate spacious houses close to schools, kindergartens, and centers, clinics, and bank offices. For example, the Germasogeia area in Limassol or Platy in Nicosia.
Young people and working adults usually don't need spacious rooms, but they require proximity to business infrastructure. In this case, it's most advantageous to buy an apartment (1-bedroom or studio), but as close as possible to the city center.
Point #4: Profit Calculation
A small apartment will pay for itself faster than a spacious villa - this is an indisputable fact. Everyone knows that the lower the initial price of real estate, the faster it pays off. From this perspective, apartments are more profitable than private houses.
However, there are other nuances to consider. For example, the owner may not be as interested in the speed of return on investment. Stability and the size of monthly income from real estate may be more important to them. In this regard, a villa has more potential than an apartment.
It also makes sense to pay attention to apartments in elite new buildings. They have a good demand, and the monthly rental cost is quite significant. This allows them to be compared in profitability to a large suburban villa.
Point #5: Property Maintenance
An important nuance to consider is the complexity and cost of maintaining the acquired property. In this sense, owning an apartment is cheaper and simpler - the owner (or tenants) only needs to pay the bills on time, while all the worries about the building and surrounding area fall on the shoulders of the management company. In addition, luxury complexes provide everything possible to create maximum comfort for residents: the presence of gyms and spa centers, pools and saunas, children's playgrounds, bars, and restaurants.
Taking care of a private house is always more difficult. The more adjacent territory and objects on it (such as a pool), the more laborious and costly it will be to maintain them. The exception is villas in new construction complexes, where the management company also monitors the territory and common recreation areas.
Note: in apartments, communal services (CS) can be included in the monthly rent payment. For villas, it is better to separate CS and rental costs since expenses in private homes can vary greatly from month to month, and it is harder to predict them.
Summing up
Without wanting to be categorical, it can be said quite unequivocally that for investments in Cyprus, it is better to buy apartments. They are easier and cheaper to maintain, rent out without "downtime," and resell. In addition, it is precisely apartments that are most often located in close proximity to all the necessary infrastructure for life and recreation.
Apartments in luxury complexes can bring the same income as villas, and sometimes even more, if they have a top location and interesting "features" (for example, a green relaxation area at a height or a luxurious Olympic pool).
Villas are only profitable under certain conditions:
- the owner will live in it himself;
- there is no multi-storey construction in the selected location (usually, these are elite locations on the coast);
- stable monthly income is needed.
Of course, each situation is individual. The article provides only general points that any investor will encounter. Therefore, it is extremely important to consult with a knowledgeable realtor who is well-versed in the real estate market situation, familiar with all locations in Cyprus, and can answer all (even the most non-standard) questions.
Interested in property in Cyprus? Check out DOM! The agency's website features the largest database of real estate in the country - more than 30,000 residential and commercial properties throughout the island! Here you will find information on the latest developer projects. Choose and contact professional brokers who will help you make the right decision.
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