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Rental yields, sq. m prices and rentals
Rental yields, sq. m prices and rentals

According to a valuation of Global Property Guide the rental income return for Greece (Athens) is currently at 5,45%, within Europe in the middle.

The Global Property Guide's valuation data is based on upper-end apartments in prestigious areas, such as appeal to foreign renters. They draw their figures from their own, in-house analysis of web advertisements, based on offers for sale, and offers for rent, of good (but not new) apartments.

They begin by defining key upper-end rental districts in the capital city, taking care to keep a database of where the properties are located, so as to ensure some measure of consistency in subsequent years. They carefully select appropriate price ranges and take average prices, rejecting deviant outliers.

When an apartment is sold, the seller is arguably less likely to decorate it to perfect condition, than when renting. So the renting and selling categories may not be precisely comparable. But since they use the same method in all countries, the comparisons across countries should be valid.

They are interested in the sort of properties which will be attractive to foreign renters. This is not always the same type of property in all locations. In Moscow for instance, pre-revolutionary apartments are in demand by foreigners. We have a separate category for these properties, as opposed to newly built apartments.

More usually, they aggregate data for the different types of property. Foreign renters are usually interested in properties which are in excellent condition, with good facilities, and which have been refurbished or redecorated within the last five years. Their properties are therefore likely to be less expensive than the very newest properties, except where new-builds dominate the market. In European cities, they lean towards properties in the historic city centres, therefore the ˇtypical' property is more likely to be a 90-year old refurbished apartment of character, than a newly built apartment.
 
 

 

If rental yields are high, does it mean that it is a good investment option and I should invest immediately?

Well… no. They present gross yields and not net yields. From the gross yields, you still have to deduct taxes, maintenance fees and other costs. You should also compare the gross yields with current bank interest rates, inflation rate and the risks you are taking in investing.

The rental returns on owning property in different countries varies greatly. For instance in Europe, in early 2007, the range was from around 14.13% in Moldova's capital Chisinau, to 2.43% in Monaco. The trend had been for rental income returns to fall, because rents are not keeping pace with prices anywhere in Europe. As 2007 dawns, rental returns are lower in most locations than they have been for 20 or more years.

To some extent rental returns appear to correlate with risk. Most of Europe's ˇhigh yielding' countries are in the East. Apartments in four Eastern European capitals earn above 10% rental returns: Chisinau, Moldova (14.13%); Warsaw, Poland (13.28%); Sofia, Bulgaria (10.56%); and Bratislava, Slovakia (10.06%). The higher risks of the East may be a factor in these returns (high corruption, political risks).

How about places with seasonal rents?

In some markets such as the Caribbean and the Pacific, most rents are seasonal. When the developed world is experiencing harsh winters, its wealthier citizens escape to sandy white beaches in the tropics. This leads to unexceptionally high demand during peak seasons and virtually zero occupancy during lean seasons.

For these places, they are moving away entirely from using seasonal rentals, as they find the results unreliable. For this and other reasons, the countries for which they have price data don't always overlap with rental income data countries. 

Rental yields in Greece: Read here http://www.ktimatoemporiki.gr/news/16/

 

Sq. m. Price, Premier City Centre

Average per square metre price in Euro of a 120 sq. m. apartment located in the centre of the most important city of each country, either the:

  • Administrativ capital; and / or
  • Financial capital; and / or
  • The centre of the rental market  

 

Source: Global Property Guide

 



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