29.08.2024
Michalis Loizu , director of Delfi Partners , said short-term rentals on platforms such as Airbnb are not the main reason for the rise in rental prices in Cyprus. He noted that other factors are at play and that the introduction of strict restrictions could negatively impact the economy, especially in regions dependent on tourism.
Loizou warned that curbing short-term rentals in tourist areas could lead to lower property values, more loan defaults and a loss of competitiveness for local tourist destinations. He stressed that with the increasing popularity of short-term rentals in both Cyprus and Greece, the debate about their impact on the property market has become increasingly urgent. Some advocate for stricter regulations to slow rental growth and preserve residential properties for locals. However, Loizou stressed that it is important to consider the wider economic impact of such measures.
He also noted that regulating short-term rentals would not solve the underlying causes of rising residential property prices, but could cause significant damage to the economy as a whole. For example, in tourism- dependent regions, property owners receive higher income from short-term rentals than from long-term rentals. If this income is restricted, property values could decline, which would impact the banking sector, where property values play an important role in financial stability. Loizou added that if incomes decline, owners could face difficulties servicing their loans, leading to an increase in the share of overdue loans.
In terms of tourism, Cyprus and Greece rely heavily on short-term rentals to provide affordable accommodation options for tourists, which helps support the local economy. If short-term rentals are strictly regulated, this could lead to higher prices for accommodation and reduce the competitiveness of these destinations on the international stage. Loizou noted that short-term rentals help maintain balance in the tourism market by preventing hotel monopolies and keeping prices competitive.
He stressed that while the desire to regulate short-term rentals is understandable, the proposed measures could harm the country’s economy. Loizou called on the Cypriot and Greek authorities to take a balanced approach that allows the market to play a significant role in regulating the use of short-term rentals, while implementing sensible rules where necessary.
In turn, the Cyprus Tourism Enterprises Association ( Stek ) spoke out against short-term rentals. According to a representative of the association, this type of rental has a negative impact on the housing market, increases prices for local residents and changes the character of cities. The association expressed concern about the impact of “para-hotel” services, which compete with hotels and increase rental costs for the local population. In June 2024, there were about 15,000 short-term rental properties registered in Cyprus, of which only 7,200 were officially registered. Stek proposed limiting the rental period to 90 days per year and introducing mandatory tourist taxes for property owners, similar to those paid by hotels.
