Introduction: The Economy in Cyprus
The economy in Cyprus has been thriving in recent years. Dominating sectors such as tourism and real estate are still providing excellent income for the island and new areas like startups and funds are proving their worth. It is no wonder foreign investors are choosing Cyprus and with the positive forecast for sustainable growth, the island is set to see even more investment in the coming years.
In this article we will discuss the sectors that attract investors and help the Cypriot economy.
Energy & Renewables Sector
The first part we will discuss in regards to the economy in Cyprus is the Energy and Renewables sector. The island has recently began making intensive moves to grow its energy dependency with particular focus on sustainable and renewable energy. This has come about since data released by the European Commission stated that 90% of the island’s fossil fuels were imported. On the other hand, Cyprus has the highest potential for the usage of solar power in Europe and according to the Chairman of the Energy Committee a new scheme will see this target reached.
The energy and renewable sectors are expanding for the island and offers some rewarding opportunities for investment. In 2019 a discovery of natural gas was made on the offshores of Cyprus, sparking huge excitement which has since continued.
The strategic location of Cyprus means the island offers a dynamic location with easy access to major transit and communication routes. Ideal if you are considering investment in the energy sector.
One of Cyprus’ most well-known sectors is tourism. The tourism and hospitality sector has been powering the Cypriot economy for a long time and continues to do so. During August 2019 the islands revenue from tourism reached €431,6 mn in comparison to €428,2 mn the previous August. Cyprus also saw a 1.3% increase in tourist expenditure in 2019 compared to the year previous.
This growing tourism has the islands natural beauty to thank as well as the abundance of hospitality offered by the locals. There are blue flag beaches along all the coastal districts in Cyprus as well as mountain ranges for skiing during the winter months and ancient ruins to discover. It also offers a great destination for weddings and this part of the tourism sector continues to thrive. Again, much like the energy sector, tourism provides great investment opportunities.
Alternative investment funds (AIFS)
Over the past few years the Cypriot regulatory authorities have enhanced the Alternative Investment Funds, creating an attractive and competitive industry. This sector offers many investment and employment opportunities, especially as it has a significant number of advantages.
These advantages include:
The Economy in Cyprus: Real Estate
The economy in Cyprus has seen the real estate market flourish in recent years. The housing market has been an incredible transformative and sales have continuously risen with a large increase in foreign demand. Foreign resident and expats have taken to investing in luxury apartments, houses and villas on the island. All districts including Nicosia, Larnaca, Limassol and Paphos see foreign investors interested in properties as well as more scenic destinations becoming more and more popular.
The biggest investment by far is luxury coastal residential projects and high-end apartments. These projects and apartments on the housing market are for both permanent residents and also holiday housing. Many investors will rent out their villas, apartments or houses during the tourist season and use the property for themselves whenever they desire.
Another area that is powering the economy in Cyprus is the shipping sector. The geostrategic location of Cyprus has been instrumental in helping the international shipping industry of Cyprus grow. This sector competes with some major global giants and the EU-approved “open registry” regime has allowed the island to expand and develop at a rapid rate. There are over 1,000 vessels making Cyprus the 3rd largest merchant fleet in Europe and the 11th largest fleet in the world.
More recently, Cyprus has seen the reapproval of the specialized Cyprus Taxation System by the European Union. This has now ensured the sustainability of the islands shipping sector for the next decade.
Research, Startups & SMEs
In recent years, Cyprus has become known for dedicating considerable resources towards research and technological advancement. The island has specialized visa applications entrepreneurs outside of the European Union and European Economic Area who wish to establish, operate or develop a Startup. These visas consist of two parts; Individual Startup Visa plan and Group Startup Visa Plan.
Just last year, in 2019, the government made the decision to enhance its investment in technological research in order to innovate the island. Cyprus hopes to create an ecosystem that encourages, expands and supports areas of research and innovation.
Films & Entertainment
During 2018 film producers and directors from around the world travelled to Cyprus for the official launch of ‘Olivewood’. The historical landscape and natural beauty of the island has put Cyprus on the map for film and entertainment.
With a new incentive scheme created by the Cypriot government the island hopes to encourage more international productions and boost the economy. This new scheme has benefits for both foreign and local producers that decide to film in Cyprus including a cash rebate or tax credit of up to 35% on qualifying production expenditures. Furthermore, production houses may find themselves with a tax allowance of up to 20% for investment in infrastructure and equipment. Qualifying categories include feature films, television series, documentaries and natural history programs.
The economy in Cyprus has numerous sectors each of which offers excellent opportunities for investment depending on what you want. The areas that have dominated the economy are real estate, tourism and shipping however, the island is seeing new sectors flourish. These include the film and entertainment industry as well as startups and funds.
It is understandable why Cyprus has emerged as such a popular destination for foreign investment. The island is supported by forecasts of sustainable growth and friendly tax rates making it ideal for investors.