Cyprus Real Estate Investment
Cyprus real estate investment is very lucrative due to the island’s landscape, location, booming sectors of the economy, and tax benefits.
In this article, we will discuss residential property and commercial property investment, what the benefits are for both property investment types are as well as discussing what location is suited for your investment.
Cyprus Real Estate Investment: Residential Property
There is a high demand for residential property when it comes to Cyprus real estate investment, especially from foreign investors. Many of these investors want to gain a passive income as well as adding to their portfolio. Residential property can be easy to maintain on your own, and collecting rent from tenants as well as resolving maintenance challenges can all be sorted by yourself if you choose to. You, the investor, can save money by doing so, although, in Cyprus, there are many companies that you can hire property managers from. This can be especially helpful if you are a foreign investor and not located in Cyprus.
Cyprus real estate investment, especially residential property investment has many perks. Cyprus has a thriving tourist industry, therefore renting luxury villas or apartments to tourists is relatively easy. The island has one of the longest vacation seasons in Europe due to the weather. Therefore, you are able to rent your property out to tourists from around May to October. And, if you do decide to do this, then you also have the benefit of being able to stay in the property yourself whenever you wish to.
Although the market was impacted by the pandemic, you can see from data collected in 2019 that rental properties are in high demand. There was an increase of 3.4% in rental prices during this year.
Furthermore, as Cyprus encourages homeownership, investors will find an array of tax benefits as well as the possibility to apply for an EU membership. The island is also the 5th safest country in the world and has a relatively low cost of living. All of this makes it a very attractive market.
Locations
Cyprus is becoming an investment hub. There are 5 major cities or districts on the island that each offer various real estate investment opportunities. In this section we will discuss each area and what type of unique residential properties are available.
Larnaca
Larnaca is seeing a lot of development and new projects coming to fruition. Each of these projects has brought investment opportunities to the forefront of investors’ minds, and there is a reason why. The new residential projects are of very high-quality as well as located in up-and-coming areas, including the port and marina. Larnaca is also home to Cyprus’ primary airport therefore, foreign investors have easy access to their properties. With Larnaca being a coastal city, there are various property types to invest in. These include luxury apartments overlooking the seafront of Finikoudes, large villas on the outskirts of the city and inner-city houses.
Here are some of our real estate projects in Larnaca:
- Larnaca – City Centre
- Internal Area Up to 97m2
- 2-3 Bedrooms
- Sea View: Yes
- Larnaca – New Marina
- Internal Area Up to 131m2
- 2-3 Bedrooms
- Sea View: Yes
Nicosia
The capital of Cyprus, Nicosia, has a very different atmosphere to Larnaca. However, it is still filled with real estate investment opportunities. Nicosia is the financial and legal hub of the island, and although there are more commercial prospects in this city, residential investment is still thriving. As this district is home to the most popular university in Cyprus, many investors take interest in university accommodation.
Limassol
Limassol is arguably the most well-known city for foreign investors. This city has seen major development over the past 15 years. Due to this city being home to the largest port in Cyprus, this location brings a lot of opportunities for various types of investment along with Cyprus real estate investment. The only possible disadvantage to investing in Limassol is the property prices. Limassol is by far the most expensive city for residential property. However, it has many positives as well.
Ammochotos
Beach front property outside of the hustle and bustle might be what you are looking for, and if it is, then you should consider investing in residential property in Protaras and Ayia Napa. There is an abundance of white sandy beaches, areas filled with entertainment and large tourist areas. If you are looking to invest in property to gain a passive income through renting to tourists, then this is definitely a location to consider. Furthermore, there has been a recent investment to build a new luxury marina that includes villas and apartments. So, this is bound to change the landscape of the area for the better.
Paphos
Paphos is also a great location to invest in if you are looking for a highly renowned tourist area. It is known for being popular with British investors and families. This area of Cyprus has an extremely laid-back approach therefore, if you are looking for a quieter and more relaxing atmosphere then Paphos may be perfect for you.
Cyprus has a thriving tourist industry, therefore renting luxury villas or apartments to tourists is relatively easy
Real Estate Market Outlook
Examining the market outlook helps real estate investors get a lay of the land before dipping their fee and wadding knee-deep into the market. Cyprus takes its economic strength from its bustling tourist sector, and in recent years, the island has emerged on the European real estate landscape like never before. The country has witnessed unprecedented and consistent growth, owing to the many infrastructural and property development projects that have revived its economy and real estate market.
Experts reveal that the Cypriot real estate market has grown by a whopping 3.5% yearly until 2022. This growth has stemmed from numerous factors, including the influx of tourists and expats looking to relocate and the rising number of new construction projects. Cyprus is turning towards luxury developments that have garnered the interest of European and Israeli developers and expats looking to enjoy tax-free wealth worldwide.
In recent years, market projections have revealed consistent growth in the Cypriot housing markets. Home prices and sales are rising steadily, and the advent of new housing projects, especially the construction of high-rise developments, has further boosted the market growth. The housing market has greatly benefitted from an influx of tourists and foreigners arriving in Cyprus to relocate and own properties.
The government has taken numerous initiatives to revive and strengthen the real estate sector, and these measures have paid off tremendously. The development of new residential, commercial and corporate projects, and modern infrastructural developments, have paved the road for a stable and prosperous ecosystem.
Cyprus Real Estate Investment: Commercial Property
Cyprus real estate investment does not just mean residential property; it also covers commercial property and investment. A lot of people see commercial property investment as more risky than residential property investment. However, there are some lucrative opportunities in Cyprus. If you have an eye for spotting up and coming neighborhoods or understand locations with high demands for apartment blocks, then investing in commercial property is ideal for you.
Locations
You almost always need to find a location that is based near quality facilities, infrastructure, and other commercial properties. The tricky yet rewarding part to developing projects that are required to be near other, similar developments, is the need to make them of a high quality. If there are two buildings in the same location, the higher quality building will no doubt be rented first and be rented to prime tenants. When it come to locations in Cyprus, there are a number of class areas to pick from, but you must be fully aware of what each region offers.
Larnaca
Larnaca has seen a number of commercial property investment success over the past 5 years. As we have previously mentioned, there is the redevelopment of the port and marina as well as a new retail center set to be completed this year. Due to the new marina, investors are looking at the possibility of building luxury apartment blocks that are set to have a great return on investment. It is clear that Larnaca is becoming the rising star for Cyprus real estate investment.
Limassol
We mentioned earlier how Limassol has always been the investment hub of Cyprus for residential property, and this is also true for commercial property. However, with its apartment prices increasing by 8.3% in 2019, investors are starting to show interest in other cities for investment in property such as apartment blocks. Due to Limassol being the core of international business, many Cyprus residents have chosen to live and work in the city. But as we just mentioned, prices are increasing and demand is moving.
Nicosia
The landscape in Nicosia is similar to Limassol in regards to the work/home lifestyle. Many residents chose to live in the capital due to working there as well. Therefore, the commercial property market is booming. As previously mentioned, the University of Nicosia is also located in the capital with Cypriot students as well as international students moving here each year. Therefore, student accommodation is always in high demand.
Cyprus Real Estate Investment: Benefits
Now that we’ve established that the Cypriot real estate sector is growing and expanding steadily, you must wonder where I should invest in Cyprus? Nearly all the popular real estate markets, from Larnaca and Nicosia to Paphos and Limassol, are thriving on a healthy development trend. Property prices and valuations are increasingly steady throughout Cyprus, as observed through trends depicted over the last decade.
However, some markets are better performing than others. For instance, presently, Larnaca is the hub of all real estate developments, owing to the billions-worth of Larnaca Marina and Port and a string of lavish high-rise residential developments. Nicosia is also thriving and currently witnessing the highest demand. Experts believe that northern Cyprus and Central Nicosia are presently the hottest and most popular real estate markets for investments on the island.
Investors or expats looking to relocate and invest in a primary residence should look no further than Larnaca and Nicosia. These two destinations combine luxury properties that promise higher ROIs with modern ecosystems that support high life quality. Expats and foreigners typically flock to Larnaca and Nicosia to access modern amenities, recreational facilities, and work opportunities.
Interestingly, foreign investors have been flocking to invest in Southern Cyprus to benefit from its laid-back countryside lifestyle and low housing costs. It all boils down to your goals and ROI ambitions as an investor. Generally speaking, you will find the most lucrative opportunities in Larnaca, Limassol, Paphos, and Nicosia.
Why Should you Invest in Cyprus?
By investing in the Cypriot real estate market, not only you will enjoy the climate and the relax location, you will also enjoy the other benefits that the island offers. Some of these benefits are:
Tax Advantages
The low corporation tax rate is one of the most appealing features that create Cyprus investment opportunities. The corporation tax rate is 12.5 percent, among the lowest in the European Union, and entirely complies with EU and OECD rules. The advantages go beyond the low tax rate. Dividend revenue from the sale of shares, bonds, and other financial instruments, as well as foreign exchange (FX) dividends and earnings from Overseas Permanent Establishments (PEs), will all be free from tax.
Also read: Cyprus Tax System: A Detailed Guide For 2021
Low-Interest Rates
According to the most recent interest rate research (September 2020), the statistics for house loans have reduced to 2.10%. This is a significant decrease from its peak of 5.33% in 2012 and 6.05% in 2009.
Also read: Deloitte’s Cyprus Real Estate Market Report
Member of the EU
Cyprus is a European Union member that uses the Euro as its currency. The island has access to the single market and the customs union. As a member of the European Union, Cyprus enjoys the same rights as any other EU country.
High Quality of Life
Cyprus has a good and contented living level. It has evolved into a location where you may have an international experience due to the the flow of people from other nations. People come to this lovely location for numerous reasons, including the fact that it offers an easy and distinguished existence while also boosting their standard of living. Cyprus real estate investment makes you happy both monetarily and by enhancing your quality of life.
Growth in the Infrastructure
In many areas that play a role in the growth of businesses, Cyprus has seen tremendous growth. Huge investments have been made in logistics, transportation, and telecommunications, and the nation has a top-notch infrastructure that makes managing life and business much simplier than expected.
With excellent transit systems that make traveling around the entire country simple, two deep seaports in Larnaca and Limassol, and two exceptional international airports, Cyprus is well connected to the rest of the world. These benefits have helped Cyprus real estate investment become quite well-known. It is still a rising investment sector.
Skilled Workforce
Cyprus has a highly educated and talented workforce, a valuable resource for foreign businesses looking to invest there. These experts’ high levels of English fluency simplify interactions with international clients, partners, and coworkers and speed up the integration of foreign businesses into the local business environment.
This linguistic advantage guarantees that enterprises may easily access various abilities across industries and the pool of specialized talents fostered by Cyprus’s robust educational system. International businesses may now more easily locate, attract, and hire skilled workers, giving them the ability to get started right away and more skillfully negotiate the difficulties of the global market.
Our Suggested Kind of Real Estate Investment in Cyprus
Cyprus is very attractive for High-Net-Worth individuals, offering a great combination of lifestyle, a robust business environment, and a luxurious lifestyle. The real estate investment in Cyprus has been highly beneficial and continues to elevate across the city.
Larnaca stands out by having its international airport located by the sea. These property prices are usually at an affordable rate in comparison to Limassol or Nicosia.
In the surrounding areas of Larnaca, there’s a balance of options. There are detached villas with beautiful views, private swimming pool apartments in peaceful villages, modern houses in the urban region, and bungalows in the middle of city centers.
Real Estate Market Growth Opportunity in Larnaca
Among the cities in Cyprus, Larnaca holds a unique position. This coastal city fascinates you with many lovely traits, including stunning scenery, pleasant temperature, and historical landmarks. Fans of relaxing by the sea will be drawn to Larnaca’s alluring beaches, and the city’s outstanding infrastructure will make life there snug and comfortable. Many people have relocated to work and study in Larnaca, Cyprus, due to the city’s expansion during the previous few years. In addition, owners have turned their homes into Airbnb or vacation rentals because Larnaca is a well-liked tourist destination.
There are tremendous financial benefits to renting your home. Considering Cyprus real estate investment can produce revenue monthly when rented out in addition to the net growth in value. According to statistics from the Central Bank of Cyprus, the value of residential property in Cyprus climbed by 15% yearly. Purchasing real estate in Larnaca, Cyprus, won’t make you second-guess your choice.
The Real Estate Market's Growth Opportunities in 2023
According to Cyprus Property News, the real estate market in Cyprus is expected to continue its positive trend in 2023, with sales facilitated by foreign buyers from EU and non-EU countries. The report also indicates that the banking conditions and notable sectoral developments will play a crucial role in the growth of the real estate market. In September 2023, property sales saw a 15% increase compared to the same month in 2022, according to the latest data from the Department of Lands and Surveys. Experts reveal that the Cypriot real estate market has grown by a whopping 3.5% yearly until 2022, stemming from numerous factors such as the influx of tourists and expats looking to relocate and the rising number of new construction projects.
Investing in Cyprus real estate can be highly beneficial due to its strategic location, favorable tax regime, and growing economy. It’s important to conduct thorough research before making any investment decisions.
Cyprus Real Estate Investment: Market Statistics of 2022/2021
2021 has been a favorable year of growth in the Cyprus real estate market, and 2022 is emerging with promising trends. The Cypriot government’s subsidy program has increased homeownership and encouraged households to process their mortgage applications. Real estate transactions that were stagnant in the pandemic finally came to fruition in 2021.
The year started with reduced sales and mortgage applications, but mortgage values soared up to 82% in the later months. Limassol and its nearby communities witnessed a striking boom in property valuations, sales, and rental transactions. Keep reading to explore the trends that dominated the Cyprus real estate market in 2021-2022.
Home Ownership Transactions
A noticeable trend that dominated the real estate market was a profound preference for existing homes rather than constructing properties after acquiring land. Buyers actively began buying existing homes instead of building residential properties. Statistics shared by the Delfi Analytics report more than 14,000 existing properties were transferred to new buyers by November 2021.
As we compare the statistics with 2019, we notice a 3.4% increase as the figures for property transfers soared to a striking 26.5%. The residential market of Nicosia was at the forefront of this trend, witnessing a surge of 27% in property transfers in the early months of 2021, rising to 38% by November.
Limassol witnessed a boom in mortgage applications, and in 2021, the mortgages accounted for up to €3.2bn.
No Significant Fluctuations in Rent
Industry observers did not notice significant rental rate fluctuations across Cyprus’ residential market. In 2022, the average rent of a house or apartment ranges between 8-10 euros for a 1m2 property. Suppose you’re planning to rent a 100m2 property in Nicosia. In that case, you can expect a rental rate of around 800 to 1000 euros. Experts believe that the rental rates will remain the same as in 2019-2020.
Rental rates in Famagusta remain consistent with the costs observed in 2020-2021. Individuals can rent a 100m2 apartment or house in Famagusta for an average cost of 400 to 500 euros. Interestingly, Famagusta has not witnessed any notable fluctuations in its rental rates since 2013.
Larnaca’s rental market is relevantly stable, and you can rent a 100m2 house or apartment at an average cost of 800 to 1000 euros. The same stability and consistency are witnessed in Paphos. Still, Limassol is all set to see a surge in rental incomes, making it an ideal market for investors planning to establish passive income streams as landlords.
Conclusion
Cyprus real estate investment is definitely worth considering if you are looking for either commercial or residential properties. The island offers many benefits for investors, including its geostrategic location and positive tax system. Each district in the island offers something for investors and it is a buyer’s market.
If you have any questions regarding Cyprus Real Estate investment and development, don’t hesitate to contact us at info@sunshadowinvest.com, call us at +357 24 816246, or Book a 20-Minutes Online Meeting.
Related: Invest in Cyprus Wisely: 12 Secrets Why Now in 2022
