written by Tunç Aybars, Triotime Real Estate

 Time Period for Return on Investment in the Real Estate Sector

Return on Investment (ROI) in the real estate sector can be simply defined as the gain from an investment relative to its cost over time through rental income or commercial use.

The time period of return is one of the vital factors considered by those who plan to invest in real estate. For people who decide to invest in property, the time period of return is much more important than the actual location of the property. This return period can also be defined as the time it takes to gain back costs made on an investment with income the investment provides over the years such as rental income.

Increasing interest or demand in a property increases the chance of investment. While making investments, the most important criteria to consider is its location, social facilities, and accessibility. Also, the possibility of further development is essential. Besides these amenities, the period of return and the ratio between net income and investment should be noted. People who decide to invest in property should be especially cautious about these two aspects. Another point to consider is the quality of construction and the quality of materials used in the construction of the property. The economic life expectancy of the property shortens or lengthens the time period of return.

 

How Do You Calculate The Time Period for Return on Investment?

In order to calculate the time period required for return on the investment, you must divide the present-day value of the property by the monthly rental income obtained from the property. If you divide the result by twelve, you can calculate the yearly return on the property. Comparing the result with an average return period will help you decide whether it is a good investment opportunity or not.

 

For example:
A property bought for 450,000 TL, provides a rental income of 2,500 TL
450,000 / 2500 =180 months
180 / 12 = 15 years for return on the investment

The basic value in this calculation is of course the price of the property. The price of a property is calculated according to its location, size, future development opportunities of the area, visibility, and rental potential. This also shows us the value of ecoefficiency. An increase in the value of the property as well as the rental income supplied from the property will help the investor choose the appropriate investment. For example, a property with no rental opportunities will stay empty for a longer period of time decreasing the chances of return on the property. On the other hand, a property with high rental potential will shorten the period of return.

 

The TRNC Investment Guide

The Turkish Republic of Northern Cyprus continues to attract the attention of many property investors. Over the years, investors from third World countries as well as from Turkey have shown a great interest in properties on the island.   

North Cyprus has become tourism, entertainment, and education island. The increasing number of universities and students, foreign citizens coming on holiday and buying property, continuing to be a safe environment despite an increase in the population, its excellent climate and geographical location, the property prices, and foreign currency rental income, short term return on investment and increasing property prices are the most attractive factors for commercial property investors.

Although certain expectations have been postponed due to the pandemic, a steady increase in land and plot prices represents an ongoing demand for investments.   

The Turkish Republic of Northern Cyprus offers different dynamics and advantages in areas around the island. When compared with other countries, the short-term return on investments on the island draws the attention of many investors.

Nicosia is not only the capital city of North Cyprus, it is also the center of bureaucracy, economy, and universities. With the highest population and number of students, return on property investments is 11-13 years, and 8-10 years on commercial properties. For this reason alone, Nicosia has become the most demanded area for investment.  Due to the border and high differences in rental prices, those situated and working in the South of Nicosia are increasingly demanding rental opportunities on the North of the island.

Kyrenia is the center of entertainment and has the highest property prices per m². Hotel and casino employees and also university students create a high demand for rental properties. Property prices are above average, therefore, rental income is also higher. Return on property investments in Kyrenia is 13-15 years and 11-13 years for commercial buildings.    
  
Famagusta is a student city located on the coast and is ideal for property investment. It has the second-highest population of students and the port's potential effect on the city increases the demand for property. Return on property investment is 12-14 years and 10-12 years in commercially used buildings. It is believed that the value of properties will increase because of the opening of Maras which has made the city a potential investment area.

Iskele is the shining star of the real estate sector. It is a newly developing area with completed and ongoing construction projects located on the shore which have been designed according to the needs of foreign investors complete with social facilities. North Cyprus’s most magnificent beaches are located in this area. There is also an increase in the number of hotels which has caused the area to grow and develop. This is a great advantage. Return on property investment here is 12-14 years however, the increase in demand from foreign investors and short-term rental opportunities make it possible to reduce the time period of return with rental income.

The area of Lefke has started to draw the attention of foreign investors because North Cyprus’s vastly growing Lefke University is located here.  Return on property investment is 12-13 years. The area is hungry for investments therefore it is believed that the new marina project will spike the interest of many investors.

North Cyprus has caught the eye of many investors. Short periods of return on investment and low property prices will continue as the island grows and develops. Therefore, new opportunities will always be awaiting you in North Cyprus.

Find The newest projects and the right property for your chick here