Residential Real Estate Leases - Iceland

In Iceland, the revenue of the Residential Real Estate Leases market market is forecasted to reach US$984.90m in 2024.
Apartment Leases holds the largest share in this market segment, with a projected market volume of US$704.90m in 2024.
Looking ahead, the revenue is expected to exhibit an annual growth rate (CAGR 2024-2029) of 4.97%.
This growth will lead to a market volume of US$1.25bn by 2029.
The demand for residential real estate leases in Iceland has been steadily increasing due to the country's growing tourism industry.

Definition:

The residential real estate leases market refers to the market where landlords and tenants enter into agreements for the rental of residential properties, such as apartments, houses, and condominiums. The lease outlines the terms of the rental agreement, including the duration of the lease, the amount of rent to be paid, and the responsibilities of both the landlord and the tenant. The lease may also include provisions for security deposits, maintenance and repair obligations, and renewal options.

Structure:

The residential real estate leases market comprises the lease of houses and apartments.

Additional information:

The residential real estate leases market includes the following KPIs: the revenue generated by real estate leases, the number of real estate leases, the average revenue per real estate lease, the share of dwelling type of tenants, and the average room per tenant. The dwelling type shares comprise the shares of the renter population that lives in houses and apartments.

Residential house and apartment leases

Real estate transactions
Commercial real estate
Accommodation services, such as Airbnb

The Residential Real Estate Leases market in Iceland has been experiencing significant growth in recent years.

Customer preferences: Customers in Iceland are increasingly opting for residential real estate leases instead of purchasing properties. This shift in preference can be attributed to several factors. Firstly, leasing offers more flexibility, allowing individuals to easily relocate or upgrade to a bigger property when needed. Secondly, the high cost of purchasing a property in Iceland is a deterrent for many potential buyers. Leasing provides a more affordable option, especially for young professionals and families. Lastly, the convenience of having maintenance and repair responsibilities handled by the landlord is another appealing aspect of leasing.

Trends in the market: One notable trend in the Residential Real Estate Leases market in Iceland is the increasing demand for rental properties in urban areas. The country's urban centers, such as Reykjavik, have seen a surge in population growth in recent years, leading to a higher demand for housing. This trend is driven by various factors, including job opportunities, educational institutions, and cultural attractions. As a result, landlords are capitalizing on this demand by offering a wide range of rental properties in these urban areas. Another trend in the market is the rise of short-term rentals, particularly through online platforms. Tourists visiting Iceland are increasingly opting for short-term rentals instead of traditional hotels. This trend is fueled by the desire for a more authentic and immersive travel experience. Additionally, short-term rentals often provide more space and amenities compared to hotels, making them an attractive option for families or groups of travelers.

Local special circumstances: Iceland's unique geographical location and natural beauty make it a popular tourist destination. The country's tourism industry has experienced significant growth in recent years, leading to an increased demand for accommodation. This has had a direct impact on the Residential Real Estate Leases market, as landlords have recognized the opportunity to cater to the growing number of tourists by offering short-term rental properties.

Underlying macroeconomic factors: Iceland's strong economic growth and low unemployment rate have contributed to the development of the Residential Real Estate Leases market. The country has experienced a steady increase in GDP, which has boosted consumer confidence and spending power. Additionally, low interest rates have made it more affordable for individuals and businesses to invest in residential real estate leases. In conclusion, the Residential Real Estate Leases market in Iceland is witnessing significant growth due to customer preferences for flexibility and affordability, as well as the increasing demand for rental properties in urban areas. The rise of short-term rentals and the country's booming tourism industry have further fueled this growth. These trends are supported by Iceland's strong macroeconomic factors, including economic growth and low interest rates.

Data coverage:

Figures are based on total and average revenue of residential apartment leases.

Modeling approach:

Market size is determined by a bottom-up approach. We use national statistics, international organizations, and industry associations to analyze the markets. To estimate the market size for each country individually, we use relevant key market indicators and data from country specific industry associations such as GDP, price level index, household wealth, household size, number of renter and owner households, housing consumer spending per capita.

Forecasts:

We use a variety of forecasting techniques, depending on the behavior of the market, for instance, exponential trend smoothing. The main drivers are GDP per capita, population, number of renter and owner households, price level index, housing consumer spending per capita.

Additional Notes:

Data is modeled using current exchange rates. The market is updated twice per year in case market dynamics change. The impacts of the Russia-Ukraine war considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

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Residential Real Estate Leases - Iceland

Volume

Analyst Opinion

Revenue

Affordability

Real Estate Type

Living Space

Methodology

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