In March 2017, Cyprus became the sixth most popular destination on TheMoveChannel.com. This is the third time that the country has been in the portal’s Top 10 in six months. While the final months of 2016 saw interest fuelled by the end of a Capital Gains Tax and transfer fees incentive, there was no such deadline to drive buyer demand at the start of 2017.
Agents are also reporting a rise in foreign transactions. Select Resorts, who have been selling property on the island for over 10 years, say that 2017 is currently shaping up to be “one of the best starts to any year” for sales.
Here are six reasons why investment in Cypriot real estate is rising:
A healthy building sector is a sign of a healthy housing market. Construction of Cypriot homes jumped 55 per cent in 2016, according to official statistics. The Federation of Associations of Building Contractors Cyprus says momentum is continuing in 2017, with activity reportedly up 23 per cent in the first two months of the year, compared to the same period in 2016.
With last year seeing no transfer fees on new build homes (and halved transfer fees for those who do not pay VAT), new properties have been particularly attractive for international buyers. Developers, meanwhile, are also actively targeting international buyers in countries such as China, with builders in Paphos reaching out to Chinese buyers as early as 2013, following the housing and economic crash.
Today, luxury apartments in Limassol are helping to fuel construction and investment activity, with One Limassol selling out almost entirely off-plan. Work has also recently begun on the long-awaited Ayia Napa Marina development.
“We have just returned from Cyprus after visiting the newest and one of the most exciting development on the Mediterranean, Ayia Napa Marina,” says Michael Reilly, Sales & Marketing Director of Select Resorts. “A €150m Government-backed development of a world class marina with luxurious properties and commercial space.”
The project is expected to take several years to complete and is forecast to create 1,000 jobs for the area on the island’s southeastern coast.
One of the key groups of investors fuelling interest in Cyprus’ property market are wealthy buyers from China, and a significant factor in the island’s appeal is its Golden Visa programme, which offers Cypriot citizenship to non-EU buyers who spend at least €2 million.
“This has brought a large amount of investment into Cyprus and has certainly aided the property market to rise in the past 12 months,” adds Mr. Reilly.
Indeed, a significant portion of activity on TheMoveChannel.com in recent months has been driven by citizenship investment opportunities.
Location, location, location
Cyprus’ location is also a major boost for investors from the Middle East and Asia: 65 km south of Turkey, 385 km north of Egypt, 440 km southeast of Greece, its position on the Eastern end of the European Union makes it a gateway into the EU, giving Chinese investors, in particular, a funnel through which to channel its investments to anywhere in the world. That strategic location has been part of its development as a financial centre, which, despite the economic crisis of several years ago, remains a bonus for investors.
Economic and Legal Recovery
The island has managed something of a turnaround since the global financial crisis, exiting its IMF bailout program before scheduled in 2016, with its economy enjoying growth and its banking system on more stable footing. Work has also been made to tackle the long-standing issues surrounding the title deeds to provide full ownership rights to foreign buyers.
“Cyprus has well and truly overcome the challenges it experienced during the recession,” explain Select Resorts. “This has left a robust business and financial hub with the lowest corporation tax in the EU, Cyprus is attracting investment from far and wide. With its legal system based on the UK’s this provides peace of mind for individuals and companies investing there.”
Bottomed Out Prices
According to the official house price index published by Eurostat, Cypriot property values rose 3.1 per cent in the fourth quarter of 2016 compared to the previous quarter, and by 2.8 per cent year-on-year. This is below the average of 4.7 per cent for the EU as a whole, but it reinforces the positive figures from both the Cyprus Central Bank and the Royal Institution of Chartered Surveyors. According to the RICS, almost all cities and asset classes saw prices rise in Q3 2016, with Limassol leading apartment price growth with a 1.4 per cent rise and Paphos leading house price growth with a 1.77 per cent increase, both signs of the positive impact of foreign investment.
The bank’s price index, meanwhile, rose for the first time in Q3 2016 for the first time since 2009.
“We would say the property market in Cyprus has already recovered, some areas are still not at the highs of 2007 but others are much higher,” add Select Resorts.
The potential for capital growth before prices recover to their full levels is helping to encourage investors to return to the market, particularly with the dollar currently strong against the euro. Indeed, in Q1 2017 compared to Q4 2016, enquiries for Cypriot property rose by more than 50 per cent on TheMoveChannel.com.
On top of the investment benefits, Cyprus’ attraction to overseas buyers remains rooted in its timeless lifestyle appeal. The island has also been a sought-after destination for holiday homes, thanks to its beautiful year-round climate, friendly residents and low crime rate. A favourable tax system, strong telecommunications infrastructure, and a highly regarded standard of living are the icing on the cake.
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