02.10.2022
“The cheapest rental in Nicosia is 300 euros for a 30m container room in Lakatamia” says Nick Theodoulou
In certain areas, the rent has increased by 50%, and not only in Limassol. Some students in Nicosia are now renting cheaper apartments in the north.
The cheapest available place to rent on Bazaraki, a popular site for those looking for accommodation, costs 300 euros. Yiannos Andreou, 32, told our newsroom that four years ago he rented a one-bedroom apartment on a busy street in Agios Dometios in the capital for 300 euros, but the rent has since risen to 420 euros.
The experts we spoke to told us that despite the increase, the tenant made a bargain.
“Rents have jumped, mainly because more people are moving to Cyprus,” said Pavlos Loizou, CEO of AskWire, a real estate technology company that provides real estate data analytics.
Estimated prices for a one-bedroom apartment in Nicosia are around 500-600 euros, while in Limassol they are around 800-900 euros, according to Marinos Kineiro, president of the Real Estate Agents Registration Board.
In Larnaca, the rent for a one-bedroom apartment is around 400-500 euros, while in Paphos it is 350-450 euros and rising. And while Limassol has long been the focus of rising house prices, there has been a surge in every area.
“Rents have in some cases doubled over the past three years,” said Andreas Kauris, head of the Association of Real Estate Agents (Skek). He stressed: “We are seeing an astronomical rent and I don’t think that will change any time soon.”
Kauris said the market was off balance as “rents in Limassol are so high that more people are drawn to Paphos, Larnaca and Famagusta where rents are cheaper compared to Limassol.”
Weak rent regulation, which landlords feel strongly favors those who rent, means that landlords are often hesitant to rent.
According to the president of the Paphos Chamber of Commerce, George Mays, the limited number of rental properties in the city is driving prices up by 30-50%.
Pointing to the surge in demand for housing, Loizou referred to the latest census, which showed that the population increased by about 85,000 between 2011 and 2021.
“And so far in 2022 – there is no official data yet – but we are probably around 20,000 and the number of new arrivals is growing,” he said, explaining that they are basically at a higher level of the market.
Those involved in the real estate market reported that there are many factors affecting the sector, most of which point to rising prices. They focused on the Russian invasion of Ukraine, which had a double effect : an increase in construction costs due to energy price spikes, as well as an increase in the number of people seeking asylum, which further increased the demand for housing.
Indeed, Kauris sees real estate as a sound investment as construction costs have also risen, meaning house prices are unlikely to drop during a potential coming crisis. He also cited arrivals in Cyprus due to the Russian invasion, as well as a high level of illegal immigration, which led to a surge in demand for cheaper housing, which also drove prices up.
Loizou explained that many of the legal foreign workers arriving in coastal cities provide much-needed skills, mostly in information technology. Many view this as simply a supply and demand problem: there are simply more people looking for housing than is available.
Kauris said housing is also viewed as a safe investment in a time of low interest rates and inflation, rather than saving money in banks.
“Many Cypriots – not big investors but small ones – took their money out of the banks and those who had enough money bought an apartment and then rented it out,” he said.
According to Loizou, another factor that will contribute to the growth of rents is rising interest rates. “As interest rates rise, those who rent and are considering buying are now likely to put it off — so by staying in the rental pool, they are holding onto one house or apartment for rent, increasing demand,” he said.
Luazou also does not expect prices to fall any time soon, explaining that foreign investors and workers are likely to compensate for a possible drop in demand from local residents. “I don’t see prices drop, and the reason for that is that even if demand from local residents decreases, it will be matched by demand from abroad, who will move and buy mostly housing,” he said. “We may see some rebalancing mainly where locals buy land to build their homes,” Loizu added.
Other factors are also shifting the balance and increasing demand, such as major projects going online: the Paphos-Polis highway and the announcement that the Cyprus Technological University (Tepak) is to establish a tourism and hospitality management school in Paphos, aiming for completion by 2023 year. This means that many more students will need housing in the city.
Loizou said that Larnaca has been gaining momentum for about three years, both because of the nearby Limassol port and marina, and because Lebanese investors are looking for a business base.
Asked if factors such as chronic urban congestion and higher gas prices could affect the market, Luazou said some changes have already taken place, but not because of difficulties. “You see that more apartments are being built in the central areas of the city, but this is not so much due to difficulties, but to a change in lifestyle: for example, the fact that young people do not marry or do not have large families,” he said.
Loizou explained that over the past eight to ten years there has been a shift towards smaller apartments and gradually towards apartments. Against the backdrop of a sharp rise in rental prices, there are calls to “do something.”
According to Kineiro, better regulation of the rental market can reduce costs for both landlords and renters. He argues that lax rent regulation, which landlords believe strongly favors those who rent out, means that landlords are often hesitant to rent out their properties. They claim that they are not sufficiently protected by the law in case of non-payment by the tenants, or that the tenants simply refuse to agree to a rent increase. Others are also raising rents as they try to charge potentially problematic tenants who may not be paying. He says creating a registry of “bad” tenants who don’t honor their leases would calm the market.
Others, however, said that such a move was not feasible and that privacy concerns could arise.
The situation has led to isolated protests from some student groups, mostly in Limassol, who warn they are facing a dire situation: a choice to continue their studies or give up and enter the job market.
The House Home Affairs Committee also learned this month that some are seeking a reprieve from high rent costs while living up north. This was confirmed by Dipa MP Alekos Trifonides, who spoke to five Greek Cypriot students who rent accommodation in the north, mostly near the Agios Dometios junction.
Students, mostly from rural areas and other cities, told him that in the north they could get a one-bedroom apartment for 170 euros and a two-bedroom apartment for around 200-220 euros.
The House Education Committee learned this week that a significant number of students studying in cities away from home are dropping out of institutions of higher learning due to high rents as well as high commuting fuel costs.
Our editorial team also reached out to Elena Kusiou, head of the Cyprus Land Development Organization (Koag), whose service is dedicated to providing affordable housing for low-income and vulnerable groups.
“Of course, many are now struggling to reorganize their finances in order to buy a house, so Koag is also looking for affordable rent as well as an affordable purchase,” she told us. They are concentrated in areas close to the city center, so tenements are in places like Agios Nikolaos in Larnaca, Kaimakli and Lakatamia in Nicosia, and Polemidia in Limassol, she said.
In July 2020, Limassol Municipality and Koag announced that Limassol will be home to the “largest housing project ever realized in Cyprus, worth €100 million”.
Kushiu told us that the project is facing delays, explaining that: “It’s underway, but since we’re talking about 600 units, you can understand that it’s difficult and we don’t want there to be any mistakes.” . She acknowledged that as this project stalled, the Coag Council decided to proceed with smaller scale housing works that could be completed more quickly.
When the major housing project in Limassol was announced, Interior Minister Nikos Nouris stated that: “This agreement will help normalize housing prices in Cyprus and also help low-income families who are struggling to make ends meet.”
But just a few months later, the citizenship by investment program, the proceeds of which were intended to fund the Koag project, was wound up. Earlier this month, a Treasury Department spokesman told the House Home Affairs Committee that casino revenues could now partly fund the project.
For the Home Office, part of the solution is the accelerated issuance of building permits, which it hailed as a success. It is hoped that the new process, in which applications are submitted through the government portal Ippodamos, will allow more properties to be connected faster by cutting red tape and bureaucracy.
However, new housing stock may take years to enter the market, and experts agree that demand will continue to outstrip supply.
