Buying Real Estate in Cyprus: Real Estate Market, Trends, Prices
Are you considering to buy real estate in Cyprus? Cyprus is an island republic located south of the Anatolian Peninsula in the eastern Mediterranean Sea. Geopolitically, it is categorized as either Western Asia or Southeast Europe, despite its strong cultural ties to the latter. Located south of Turkey and west of Syria, it is the third biggest and most populous island in the Mediterranean. Nicosia is its capital and the most populous city.
Cyprus covers 9,251 square kilometers and has a population of 1,251,488. Its capital Nicosia has a population of 116,392. Cyprus’s currency is the Euro, which is currently valued at $1.02 per €1. Its GDP per capita is $48,443.
Political Overview
Cyprus attained independence in 1960. Cyprus’s territorial waters and exclusive economic zone are under its control. The London and Zürich Agreements give the UK jurisdiction over Akrotiri and Dhekelia.
The Republic of Cyprus is divided into two major parts: the south and west, which comprise approximately 59 percent of the island’s area and are under effective Republic authority, and the north, which is governed by the self-proclaimed Turkish Republic of Northern Cyprus and comprises approximately 36 percent of the island’s area. In addition, nearly 4% of the island is a UN buffer zone.
The rest of the world considers the Turkish-occupied northern portion of the island part of the Republic of Cyprus. However, according to international law, the occupation is unlawful, and because Cyprus is now a member of the EU, it is also an illegal occupation of EU territory.
A presidential republic rules Cyprus. The head of state and administration is elected via universal suffrage for a five-year tenure. The government exercises executive power, the House of Representatives exercises legislative control, and the judiciary is separate from the executive and the legislature.
Economic Overview
According to 2017 estimates by the International Monetary Fund, its GDP per capita of $36,442 is below the EU average. Due to its low tax rates, Cyprus has been sought after as a location for numerous offshore enterprises.
Tourism, financial services, and shipping are all important economic drivers. The government of Cyprus has centered its monetary policy on meeting the conditions for entry into the European Union. The Cypriot government adopted the euro as the official currency on January 1, 2008. The home rental market in Cyprus has grown in recent years due to the influx of tourists and foreign investors. Late in 2013, the Cyprus Town Planning Department offered several incentives to stimulate the property market and increase the number of residential developments in the country’s metropolitan districts. This follows prior initiatives to expeditiously provide immigration visas to foreign investors in Cyprus real estate.
Cyprus Real Estate Properties
Despite the disruptions caused by the pandemic and the termination of the Cyprus Investment Program (CIP), the Real Estate & Construction sector maintained its position as one of the fastest-growing sectors of the economy as of 1 November 2020, with the sector’s GVA output increasing by 4% from 1 November 2020 to 30 September 2021.
The volume and value of all transactions increased by double digits in 2021 compared to the previous year. The apartment market (particularly the $100,000 to $300,000 sector) and land sales were the primary growth drivers. Additionally, Nicosia looks to be driving growth in transaction volume, primarily due to demand from the local market, while Limassol remains the primary driver of the total transaction value.
When considering a purchase, it is essential to be aware that real estate in Cyprus has a distinct classification and a range of options that impact the property’s final price. In addition, most foreign buyers may find it odd that housing is divided into various categories other than homes and apartments. Therefore, it is advisable to grasp the peculiarities of the local property market and the types of real estate in Cyprus before making a purchase.
Apartments (Flats)
These are one of the most cost-effective types of properties in Cyprus. In Cyprus, they are often located in buildings with at least three to four stories and are frequently integrated into esidential complexes.
Cypriots never specify the number of rooms in an apartment, only the number of bedrooms. Consequently, a three-bedroom apartment has 3 bedrooms, a sitting room, a kitchen, and one or more restrooms. For $400 to $500, you can rent a studio or a one-bedroom apartment.
Duplex
Duplexes in Cyprus are affordable compared to other European nations, and the average price is $1713 per square meter. Duplexes often have two levels and are built in the manner of a mirror, with similar room layouts. On the ground floor of such homes are social areas; the first floor contains a kitchen, a living room, a toilet, and utility rooms, as well as bedrooms for family members, an additional bathroom, wardrobes, and a balcony.
Due to the efforts of some Cyprus developers, this type of housing has emerged: duplexes occupy smaller amounts of land than standalone houses. Large families are the most likely to employ „2-in-1“ structures, with one residence purchased by parents and the other occupied by adult children.
Bungalows
A bungalow in Cyprus is a detached one-story residence with a terrace. The bungalow is convenient for the homeowner because all rooms are on the same floor, there are no stairs, and there is no interior vertical zoning.
Bungalow rooms are typically small but as open and bright as possible for convenience. The number of furnishings and equipment is kept to a minimum, and the size of the windows can be panoramic to optimize natural light and visually extend the space.
Because of the increased basement and roof area, bungalows can be more expensive than standard two-story homes. In addition, larger basements typically have more stringent construction standards. A semi-detached bungalow goes for about $142,000.
Commercial Property
A hotel, residential complex, or apartment block in Cyprus is a secure investment because the tourism sector is constantly expanding, and the warm environment allows for year-round income. In western Cyprus, the average cost per square meter is $1327-$1838, and the annual income is 2-5%. Therefore, profit will be 4% with management’s help.
You can buy a ready-made restaurant, café, bistro, or coffee shop in Cyprus. The price per square meter depends on room readiness, location, and other considerations. However, the yield could surpass 10%.
Warehouse yields 4-4.5% annually. $817-$1021 per square meter. It’s suitable for launching a rental business or expanding your company in your chosen region.
Other commercial property classifications are available in Cyprus. For example, more adverts for industrial premises, industrial blocks, shops, shopping complexes, showrooms, and medical facilities have appeared recently. This is primarily due to the commissioning of new buildings.
How to Invest in Cyprus Real Estate
Buying property in Cyprus is a straightforward endeavor. It is recommended, however, to employ the services of a qualified, independent attorney with no ties to the seller or developer of the property being purchased.
The attorney will establish that there is no mortgage or other lien on the property and that the selling party is the only owner. In addition, he will confirm that all applicable planning and building licenses are in place and will evaluate the Sale Agreement on your behalf to ensure that there are no hidden issues for the buyer and that the contract is legally binding. It is also critical to ensure no issues with the title deeds.
To purchase property in Cyprus, non-European citizens must additionally seek formal clearance from the Council of Ministers, which is typically straightforward. To avoid a penalty, the agreement must be handed to the local tax office for stamp duty payment within one month of signing the Sale Agreement. In addition, the Sale Agreement must be submitted to the District Land Office within two months after its execution to formally register the acquisition and secure the buyer’s valid property title.
Real Estate Legal Requirements in Cyprus
In Cyprus, freehold property ownership requires an understanding of the legal framework. Long-term lease sales may be available for developments near marinas. Ownership may be held directly by individuals or organizations, with limits for foreign buyers. Every real estate transaction in Cyprus should follow Cyprus legislation.
Any change of ownership must be reported to the LRD and follow local laws and regulations. Foreign investors can’t register property in their names without the Council of Ministers‘ approval. Cyprus has a free-market economy and upholds EU values and law. Foreigners can own shares in Cypriot real estate companies. The Acquisition of Immovable Property (Aliens) Law prohibits foreigners from buying property in Cyprus (Cap. 109, as modified). Ministerial consent may be needed. EU members have no buying constraints, so they can register as many homes as they like. Real estate ownership involves planning.
The property’s municipal government should provide planning permission. This permit involves multiple authorities to analyze the proposed property. The environment is a factor. Environmental pollution is a criminal under the Control of Water Pollution Law. In extreme cases, incarceration may be imposed. Cleanup of environmental harm isn’t mandated by law, although it’s sometimes a mitigating factor. The Land Registry Department applies Tax Transfer fees based on the property’s market value to most transactions, such as when parents give property to their children as a gift.
Costs are determined using 3 to 8% percentage rates on value bands. Depending on the transaction price, stamp duty is added to every land registry-required sale agreement. Finance and real estate securities need LRD registration for validity and property rights. Mortgages, memos, charges, and other property sales contracts are standard real estate security. If the mortgagor is a Cyprus corporation, Section 90 of the Companies Law must be followed.
Risks and Potentials in Cyprus Real Estate
Purchasing property in Cyprus may frequently be risky. Therefore, prospective buyers should exercise caution, especially if the title deed is not readily available or even if the Cyprus property has not yet been issued a building permit. Typically, EU and non-EU residents relocate to Cyprus for tax purposes.
Statutory tenancies offer far more protection to tenants than Free Market Tenancies. Suppose their lease comes under the category of Statutory Tenancy. In that case, many international and Cypriot landlords find it challenging to regain possession of their properties or increase rents following current market rates.
One of the key legal requirements for a tenancy to be considered Statutory is that the property was developed prior to December 31, 1999, making it safer for future landlords to invest in properties established after that date. In the case of resale homes, your attorney can seek paperwork of the building date from the original developer and confirmation from the Electricity Authority Cyprus of when the property was initially connected to electricity.
Renting out your home in Cyprus can generate a solid income; however, you must plan before investing in real estate and investigate the above facts with an independent real estate agent.
Cyprus has everything if you’re looking to relocate, invest, or own a vacation house. With adequate due diligence and the advice of a lawyer, you can acquire lavish properties in Cyprus and return on investments for years to come.
Summary
Cyprus is a relatively profitable country to invest in real estate. This is because of the low tax rates that make purchasing and developing a property affordable. However, it is essential to note that Cyprus’ Real Estate sector has grown due to an increased influx of non-residential investors. The provision of immigration visas has expedited this for foreign investors in the country.
There are risks involved in purchasing real estate in Cyprus despite being straightforward. One only needs a competent lawyer to conduct due diligence before any transaction. Additionally, non-European nationals need approval from the Council of Ministers to purchase real estate in Cyprus.
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