Cyprus is considered one of the most beautiful islands in the world, known for its lush greenery, excellent weather, and easy lifestyle.
There are many other reasons, beyond the greenery, weather, and beauty, that have encouraged foreign investors to invest in Cyprus. The island enjoys a strategic geographical location that has contributed to the growth of business activities, making it a popular destination for international trade. This is why Cyprus has gained long-standing popularity among foreign investors interested in international commerce.
Let’s explore the importance of investing in Cyprus and discuss in detail one of the key investment opportunities on the island, which is real estate investment in Cyprus.
This is what we will try to present in this topic. Are you interested and want to know more? Keep reading.
Real Estate Investment in Cyprus
Real estate investment in Cyprus is one of the most important options available to foreign investors seeking opportunities in the European market. Cyprus is also one of the best places for real estate investment, thanks to the relatively low property prices and its status as a top tourist destination.
To understand how thriving and developed real estate investment in Cyprus is, it’s worth noting that the total amount of property sales in Cyprus in 2023 reached around 4.5 billion euros, which is an increase of approximately 250 million euros from 2022 and 1.2 billion euros from 2021.
The second quarter of 2023 witnessed the highest percentage increase in the value of the real estate market, with Limassol being the leading city for property sales.
Let’s take a closer look at some key facts about real estate investment in Cyprus.
Real Estate Investment in Cyprus
Property Prices in Cyprus
As for the latest property prices in May 2024, the average price of an apartment in Cyprus is approximately 550,000 euros, with an average price of 4,311 euros per square meter. For villas and large houses, the average price is about 700,000 euros, with an average price of 3,243 euros per square meter.
The most expensive areas for real estate investment in Cyprus are Limassol, where the average price of a medium-sized house is about 700,000 euros. The least expensive area is Larnaca, with an average house price of around 400,000 euros.
It’s important to note that these prices are averages and include both higher and lower property prices in Cyprus.
Real Estate Investment in Cyprus and Expected Rental Yields
According to the latest indicators for rental prices in Cyprus, there was an increase in rental prices by the end of 2023, and this increase is expected to continue throughout 2024.
The safest bet for real estate investment in Cyprus is Limassol, with a rental yield of around 7%. The second option is Nicosia, with a rental yield of 5%. Following them are Larnaca and Paphos, both offering a moderate rental yield of 4% each.
In general, the rental yield for properties in Cyprus is about 5.5% for apartments, 3% for houses, and around 6% for retail stores.
Is Real Estate Investment in Cyprus a Good and Profitable Investment?
Cyprus is one of the European Union countries and is famous for its tourism due to the island's qualifications, which has significantly strengthened and boosted the Cypriot economy.
Therefore, real estate investment in Cyprus is considered a stable and attractive opportunity for foreign investors, with an average annual rental yield ranging between 4-7%.
With the continued increase in property values and rental yields in Cyprus, it has become easier to achieve passive income and substantial returns from real estate investment on the long term.
Thus, real estate investment in Cyprus is a good and profitable investment, especially since, in addition to the financial profits, you can obtain permanent residency in one of the European Union countries, which opens the path to acquiring an EU passport.
Buying Property in Cyprus
For real estate investment in Cyprus, EU citizens can easily buy and own land and property. However, citizens from the US, the UK, and third-world countries must obtain approval from the Cypriot Cabinet.
Obtaining approval is not difficult; it is a straightforward process involving the completion of a form and submission to the Cabinet, with the expectation of acceptance, as long as the investor has a clean criminal record.
However, there are some restrictions for investors from those countries, as they cannot purchase a property or land exceeding 4014 square meters. It is essential to ensure that the property purchase is done through a certified lawyer and real estate agent.
Buying Property in Cyprus Without Visiting
It is also possible to invest in real estate in Cyprus and purchase properties without visiting the island by appointing a representative, such as a lawyer or real estate agent, to act on your behalf.
This representative will be responsible for the sale and transfer of land or property ownership or during the discussions and negotiations for lease agreements.
Foreign Agency Documents
The foreign agent's document must be stamped and authenticated at the Cypriot Embassy or Consulate for it to be valid in Cyprus. This rule applies regardless of whether your country is an EU member state or not.
Permanent Residency Through Real Estate Investment in Cyprus
Foreign investors can now obtain permanent residency in Cyprus through real estate investment in one of the following ways:
- Purchase property in Cyprus valued at no less than 300,000 euros, in addition to VAT.
- Obtain an annual income of at least 50,000 euros from outside Cyprus, provided that no paid work is performed in Cyprus.
By obtaining permanent residency through either of the above methods, you are allowed to bring your spouse and dependent children with you to Cyprus for permanent residency.
Note that if you apply for permanent residency through the second option, bringing your spouse requires an additional 15,000 euros in annual income, and for each child, an additional 10,000 euros is required.
Also, one of the most important requirements is that you must have a clean criminal record to qualify for permanent residency in Cyprus.
How to Obtain Residency Through Real Estate Investment in Cyprus
After obtaining permanent residency through real estate investment in Cyprus, you will receive a three-year residency permit, with the possibility of renewing it in one of the best countries for migration in Europe.
Once you have resided in Cyprus for five years with permanent residency, you may apply for Cypriot citizenship.
Investors can apply for Cypriot citizenship after five years of residency in the country with permanent residency.
It is important to note that each year, applicants must prove that they have maintained their investment and obtain a health insurance certificate if not registered in the general health system (GeSy).
Applicants and their adult family members must also prove that they still have a clean criminal record every three years.
Duration of Permanent Residency Application Procedures Through Real Estate Investment in Cyprus
The application process for a permanent residency card through real estate investment in Cyprus is easy and straightforward, and it can take about one or two months for the application to be reviewed and a response provided.
The application is expected to be accepted easily if you meet the pre-defined requirements for obtaining permanent residency in Cyprus.
Why Invest in Cyprus?
Why invest in Cyprus? A very important question is what are the advantages in Cyprus that might encourage you to choose investment on this small island? Here are the key benefits of investing in Cyprus:
- Strategic Location: Cyprus has a strategic location between the three major continents of Asia, Africa, and Europe. Additionally, it is a member of the European Union, making it a gateway for foreign companies to access several markets in an excellent and investment-friendly European business environment.
- Thriving Local Economy: Cyprus has witnessed growth and an increase in the Gross Domestic Product (GDP), with a rate of 10% in 2021 and 5% in 2022. According to the Central Bank's statistics, this growth is expected to continue, with increases in the GDP's returns.
- Thriving Real Estate Market: Real estate investment in Cyprus is one of the best and most important investment options, with the Cypriot property market seeing increased demand for properties.
- Tax System: The Cypriot government offers significant tax exemptions for foreign investors, which helps reduce the tax amounts required and, consequently, increases the expected profits from investment. Cyprus also has double taxation treaties with many countries, which reduces the chances of investors paying taxes in more than one country.
- High-Quality Business Support Services: Business operations are easier thanks to a range of professional services and infrastructure that Cyprus offers to encourage foreign investors.
- Low Business Costs: The low costs of labor, support services, and office rentals in Cyprus have contributed to the increase in both local and foreign investments.
- Access to Skilled Labor: Cyprus has a large number of skilled workers, making it easy to obtain qualified labor.
- Easy Access to Global Markets: As Cyprus is part of the European Union, it provides easy access to European markets. Additionally, the Cypriot government has signed several international trade agreements with numerous foreign countries.
- Strong Legal and Regulatory Framework for Safe Investment: The legal system is based on British common law, making international business operations more straightforward.
Establishing Companies in Cyprus
If you're looking for an alternative investment aside from real estate in Cyprus, establishing a company is also a viable option. Setting up a company or business in Cyprus is relatively easy.
There are several options for foreigners wishing to establish a business in Cyprus, including:
- Registering a private limited company from scratch.
- Registering a branch of a foreign company in Cyprus.
Companies with foreign majority shareholders can use the Cypriot Business Facilitation Unit, which has simplified the registration and application process.
However, note that as of May 2024, a company must demonstrate an investment of 200,000 euros in Cyprus to qualify for the Cypriot Business Facilitation Unit, typically by depositing the amount in one of the Cypriot banks.
Companies registered in EU member countries can also transfer funds or register as a European company.
All company and business establishment operations in Cyprus are carried out through the Registrar of Companies in Cyprus.
When opening a foreign company branch or a company registered through the Cypriot Business Facilitation Unit, registration must be done with the Civil Registry and Migration Department.
All these procedures must be done through an authorized lawyer appointed on your behalf.
Tax Benefits for Investors in Cyprus
The favorable tax system in Cyprus serves as a significant incentive for investment. Below, we will explore the key tax advantages for real estate investment in Cyprus as well as other types of investments.
Low Corporate Tax Rate
Cyprus has a corporate tax rate of just 12.5%, one of the lowest in Europe. Additionally, it offers a competitive tax rate for shipping companies and has an open registry certified within the European Union.
Elimination of Property and Inheritance Taxes
Property taxes in Cyprus were paid by property owners to the Inland Revenue until the end of 2016. However, this tax was abolished in 2017, and individuals or families owning properties or assets in Cyprus are exempt from paying taxes on those assets.
If you own a property in Cyprus or inherit a property, you will not be subject to any taxes when transferring the property. This is one of the most significant benefits of real estate investment in Cyprus.
Elimination of Income Tax in Cyprus
In Cyprus, there is no income tax on various types of income, whether earned within Cyprus or abroad, including:
- Profits
- Interest
- Capital gains (other than from real estate investment in Cyprus)
Dividends are not subject to income tax, but they will be subject to a Special Defence Contribution (17%) if you are a tax resident in Cyprus. Interest income, not subject to income tax, will be subject to a Special Defence Contribution (30%) if you are a tax resident in Cyprus.
Interest earned from regular business activities is subject to income tax and may be subject to the Special Defence Contribution as outlined above.
Tax Benefits for Tax Residents in Cyprus
Tax residents in Cyprus are subject to tax on their worldwide income, whether earned within Cyprus or abroad. Non-tax residents are taxed only on income derived from Cyprus. To qualify as a tax resident in Cyprus, an individual must spend more than 183 days in Cyprus.
Income Tax Rate for Tax Residents in Cyprus
There is no income tax on the first €19,500 annually. Then, the rate varies based on income, starting at 20%.
Cyprus Citizen Tax
This tax applies to individuals who have been tax residents in Cyprus for 17 out of the past 20 years. The 20-year period excludes the year in which the individual begins paying the tax.
How We Can Help You Invest in Real Estate in Cyprus
Our office in Zajel offers a range of services to help you invest in real estate in Cyprus with ease. Our services include:
- We provide a variety of high-potential residential properties, development projects, and commercial real estate listings in Cyprus.
- We assist in every stage of selection, negotiation, purchase, and registration and offer professional property management services.
- We offer personalized consultations and advice on choosing properties suitable for purchase for rental with the highest return on investment.
- If you wish to purchase without visiting Cyprus, we act as your agents.
- Our specialized team of trusted professionals has years of experience helping foreign investors in this way.
- We assist you in gathering the required documents to complete the procedures for obtaining residency through real estate investment in Cyprus.
All these services and more can be provided to you regarding immigration, company establishment, and investment in various countries. You can learn more about our main services and their prices through our Zajel app. Click here to download it now.
You can also contact us via WhatsApp and speak with one of our legal representatives for legal consultation by clicking here.
FAQ
Can foreigners buy property in Cyprus?
Yes, with permission from the Cabinet, which is a simple procedure. This is done by submitting a form to the local official of the area where the property is located. The property should not be too large for the intended purpose. For example, the land must be large enough to build a residential house.
What is the real estate investment amount in Cyprus to obtain permanent residency?
As of 2024, obtaining Cypriot citizenship through investment is impossible due to the suspension of the program in 2020. The alternative way to obtain a Cypriot passport is by obtaining permanent residency and living there for five years. You can obtain a permanent residency permit in Cyprus by investing at least €300,000 (plus VAT) in a new residential property, commercial property, company shares, or certain types of investment units. Additionally, you must have a guaranteed annual income of €50,000 from outside Cyprus.
The permit can cover your spouse and minor children, though you will need an additional annual income of €15,000 for your spouse and €10,000 for each child. These criteria, along with other conditions, must be confirmed annually.
Why Invest in Cyprus?
- Strategic Location: Cyprus is strategically located between the three major continents—Asia, Africa, and Europe. It is also a member of the European Union, making it a gateway for foreign companies to access various markets in an excellent business environment.
- Economic Prosperity: Cyprus has witnessed economic growth, with a GDP growth rate of 10% in 2021, 5% in 2022, and the Central Bank forecasts continued growth.
- Booming Real Estate Market: Real estate investment in Cyprus is one of the best and most important investment options, with high demand in the property market.
- Tax System: The Cypriot government offers significant tax exemptions to foreign investors, which reduces the amount of taxes owed and thus increases expected profits. Cyprus also has double taxation agreements with many countries, reducing the likelihood of investors paying taxes in more than one country.
- High-Quality Business Support Services: Cyprus offers a range of professional services and infrastructure that encourages foreign investment.
- Low Business Costs: Low labor costs, affordable office rentals, and business support services have contributed to increased local and foreign investment.
- Access to Skilled Labor: Cyprus has a large, skilled workforce, making it easy to find talented human resources.
- Easy Access to Global Markets: Cyprus, as an EU member, offers investors easy access to European markets and has established many international trade agreements with countries worldwide.
- Strong Legal and Regulatory Framework for Safe Investment: Cyprus' legal system is based on British common law, making international business operations smoother.
What is the Best Real Estate Investment in Cyprus?
The most reliable investment for real estate in Cyprus is Limassol, with a rental yield of around 7%. The second option is Nicosia, with a rental yield of about 5%. Larnaca and Paphos follow with a medium rental yield of 4% each. On average, the rental yield in Cyprus is around 5.5% for apartments, 3% for houses, and 6% for retail stores.
Is Real Estate Investment in Cyprus a Good Idea?
Cyprus is an EU member and is famous for tourism, which significantly strengthens its economy. Therefore, real estate investment in Cyprus is a stable and attractive opportunity for foreign investors, with an annual rental yield ranging between 4-7%. With continued growth in property values and rental returns, it is easy to generate passive income and substantial returns from long-term real estate investment in Cyprus. Additionally, investors can obtain permanent residency in one of the EU countries, opening the door to obtaining an EU passport.
Is Rental Income from Properties in Cyprus Taxed?
Yes, there is a tax on rental income in Cyprus. The first €19,500 of income is tax-exempt. The rule is the same whether you are a tax resident in Cyprus or not; non-residents must still pay tax on income earned from Cyprus.
How Much Tax Do You Pay When Selling a House in Cyprus?
A 20% Capital Gains Tax is applied unless certain allowances apply. Capital gains tax is not applied to individuals whose profits do not exceed 10,000 CYP (€17,086). No capital gains tax is charged on the sale of a primary residence if the profit does not exceed €50,000 and the property is on land of up to 1.5 hectares.