Real Estate Renaissance

The Cyprus real estate market is more attractive to foreign buyers now than it has been for decades. A combination of legislative changes together with strategic planning in the construction industry mean this is the optimum time for overseas investors to move into Cypriot real estate.

Cyprus, with its year-round sunshine, high quality of life, and convenient location between three continents, has long been a magnet for international investors, expats, retirees and those looking to enjoy a second home in a mild and hospitable climate. The 2013 Knight Frank Global Lifestyle Review ranks Cyprus as the fifth best place in the world to relocate, establishing the island as the only European location alongside Switzerland to make it into the top five – ahead of London, Madrid and Monaco.

Cyprus ranks highly because of its favorable tax regime for new residents – particularly for high net-worth individuals. In May 2014, the island ranked 11th out of 40 countries in the Top of the Props chart, which records the most searched for overseas destinations to buy property. Recent legislation, coupled with a continuing fall in real estate prices, has triggered new interest in the middle and lower end of the market, while sales of luxury, top-end developments have surpassed expectations.

Increasing Sales and New Incentives

Transaction volume rose by around 9% in the first eleven months of 2015, compared to the same period in 2014, with October 2015 seeing a 23% rise in property sales, yet significantly lower than the peak recorded before the recession. Limassol has had the highest number of transactions, accounting for 31% of the total volume. According to RICS (Cyprus), residential property prices continue to fall, with the most resilient property types being residential houses, whereby prices have only fallen 4% since 2014 yet 30% since the fourth quarter of 2009.

Although the recovery of this sector has been modest, there are signs of a possible stabilisation of construction activity in the short term. New legislation has been enacted providing additional benefits to investors in the property market, such as 50% reduction in transfer fees for all sales, and 100% exemption from capital gains tax on profits from properties purchased by 31st December 2016. Prospective purchasers will also be attracted by recent changes to the rating bands for Immoveable Property Tax (IPT). New legislation means that properties valued at less than €200,000 are now exempt from the tax, which constitutes around 54% of all properties on the island, along with consequent reductions through IPT reforms pending Commons’ vote.

Foreign investors are showing increasing interest in the Cypriot real estate market. The latest reduction in property prices provides an ideal opportunity for the foreign investor to enter the market and acquire extraordinary properties at exceptional prices. Around 20% of sales are driven by foreign buyers proving Cyprus continues to be on the list for investors, holiday-home seekers, expats and retirees, with the traditionally popular areas of Paphos and Limassol leading the way.

It is expected that transactions in the property market will remain concentrated on prime assets while overseas buyers, encouraged by the government’s Naturalisation Scheme, will focus almost exclusively on high-end residential properties in the over €300,000 bracket, according to a report published by Resolute Asset Management. At the same time, institutional investors are focused on producing income from their investments, such as grade A properties and sizeable plots of land with tourism development potential.

Protecting Buyers

New property legislation passed in 2015, and has thus ramped up protection for buyers in Cyprus, allowing owners to apply for their own title deeds. A contentious issue for years, the new property law is a welcomed move, and aims to correct the failures of previous years, of not issuing title deeds to people who have paid for property, either because the property was mortgaged by the developer, or the state could not go ahead with the transfer because of outstanding taxes. The new law grants the Head of the Land Registry department the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions.

Moving Upmarket

Traditionally, Cypriot developers have provided holiday homes for British buyers, due to the countries’ historical ties, strong tourist market and attractive tax treatment – particularly for expats and retirees (5% tax on pensions).

Today, the sector is pursuing a more innovative strategy, targeting top-end clients with a range of exclusive villas in five-star gated complexes, golf course and seafront developments and luxury townhouses. Many buyers are non-EU nationals who have taken advantage of Cyprus’ residency and citizenship programs to relocate to a European base. These programs, which require the purchase of property, brought in over €2 billion in revenue over the past two years, with most enquiries coming from Russia, China and the Middle East.

Recent studies conducted by global immigration experts rank Cyprus’ Citizenship by Investment program amongst the top ten worldwide. The scheme was introduced by the Cypriot government two years ago to attract high net-worth individuals, investors and entrepreneurs with all the benefits available to a Cypriot and EU national.

Regaining Momentum

Although still recovering, the real estate and construction sector is slowly making its comeback, with prestigious new developments in the pipeline and corporates investing in new ambitious premises. Landmark buildings have begun to spring up, such as the new global headquarters of Wargaming in the capital city Nicosia; luxury developments such as the Oval; and the prominent Limassol Marina; exclusive villas at the multi-million euro Minthis Hills resort in Paphos; and the Russian invested 70 meter-high upcoming Kimon hotel in Larnaca.

Oil and gas exploration in Cypriot waters, along with new investments in tourism and hotel infrastructure have also given the ailing sector a boost. Projects with a special focus on golf courses and marinas have spurred new interest in large scale projects in Cyprus, and the country has seen a surge of investors looking into the acquisition of entire complexes and projects that are both in the planning stages or already under construction.

Cyprus’ ongoing process of establishing its first ever luxury casino resort is set to boost tourism and fuel demand for holiday rentals. These premier developments will become the driving force behind the construction industry in years to come. The varied range of exceptionally priced properties together with Cyprus’ 2016 growth prospects make this a golden opportunity to invest. The real estate sector is still in the early stages of recovery, but it has already set firm foundations in place underpinning its re-emergence as a star performer in the island’s economy.


(Q4 – 2015)

Prices at 31/12/2015

Average monthly rental yield per property




(RICS, 2015)

Outline of properties

  • Apartments – Two bedroom, 85sqm, Medium quality.
  • Houses – Three bedroom with garden, Semi-detached, 250sqm, Medium quality.
  • Retail – High-street retail, 100sqm ground floor area with 50sqm mezzanine.
  • Warehouse – Light industrial area, 2.000sqm, 200sqm office space.
  • Office – Grade A, City center location, 200sqm.