Focus on: The Cyprus Real Estate Market
A.G Erotocritou LLCView firm profile
The real estate industry in Cyprus has had a considerable and unprecedented beneficial impact on the island’s international profile as a highly attractive investment destination. In this regard, such favourable exposure has consistently served as a dominant driving force in efforts to promote the abundant opportunities offered by the island’s real estate initiatives. In essence, this has culminated in firmly positioning the domestic property domain as a sustainable and lucrative investment vehicle – a positive and most welcome development which, over the years, has been widely credited and perceived as constituting an integral and inextricable component of the country’s steady economic growth.
A key catalyst for the creation of the island’s favourable investment climate has been factors such as the attractive tax regime, a high standard/low cost of living, an excellent infrastructure, an outstanding telecommunications network, ideal geographic location, a politically stable and safe environment, a pleasant Mediterranean climate, highly skilled and well-educated professionals, a legal system based on English common law and a host of other advantages which are conducive to choosing the island as an investment destination.
The key factors mentioned above have culminated in providing the necessary impetus to the island’s commercial and residential real estate market which has increasingly gained momentum in recent years. Aside from the upsurge in building activity and the rapid expansion occasioned by infrastructural and construction projects throughout Cyprus, the real estate market in the coastal city of Limassol has witnessed phenomenal growth, as is evident from an impressive multitude of modern high-rise buildings which have systematically altered the city’s metropolitan skyline. The rapid evolution of Limassol has not only maintained and reinforced its long-held reputation as a popular holiday destination but has served to transform this cosmopolitan city into an important and vibrant commercial hub.
As with most developed countries, there is no doubt that the life-threatening global repercussions of Covid-19 have adversely affected the island’s economy – a phenomenon which has inevitably had a significant negative impact on the real estate industry. This unfortunate development has, needless to say, cast a dark shadow over the real estate landscape in terms of occasioning the suspension of construction activity, severely restricting travel and disrupting all other aspects of life as we know it. Despite major setbacks and the consequential loss of confidence amongst prospective investors, there are nevertheless encouraging indications that commercial activity is returning to normality, with tangible signs of renewed interest amongst foreign buyers who appear to be ‘returning to the fold’ – a positive development and a reminder that investors continue to be inspired by the island’s low interest rates, attractive incentive schemes (linked to the acquisition of commercial and residential property), and a host of other beneficial factors which have served to make Cyprus a much-favoured and preferred investment destination.
It is anticipated that number of high-rise building projects which are currently underway, will be duly completed within 2021 and 2022, amidst most welcome indications that there is a consistent and significant level of demand from foreign investors who, as expected, will continue to pursue prime property opportunities as a viable investment vehicle.
The completion of the impressive €350m Limassol Marina project will, without doubt, be regarded as one of the hallmarks of the real estate sector’s accomplishments on the island. This development, coupled with other major ‘flagship’ undertakings, such as the €220m Ayia Napa Marina, the €600m Casino project in Limassol (the largest of its kind in Europe), as well as the recent renewed interest shown by reputable international hotel chains to establish a local presence, will as anticipated serve as forerunners and a most welcome catalyst for further investment activity on the island.
An imaginative scheme has given the green light for hotels to construct their own tower blocks. This innovative, and so-called ‘condo hotel’ concept, effectively paves the way for investors to acquire luxury apartments while having the added benefit and convenience of enjoying the hotels’ services and facilities. Such a ‘ground-breaking’ development (which appears to be more prominent on the coastal strip of Limassol), is a most advantageous incentive for property buyers who will also be afforded direct and trouble-free access to the vast array of activities, amenities and extensive recreational resources of the seafront area. There is little doubt that this unique initiative will not only add much-needed impetus to the real estate market but will enrich and provide immeasurable value to the island’s vibrant hospitality sector.
The abolition of the Cyprus Investment Programme as of 1st November 2020, has culminated in a drop in demand for both residential and commercial properties – an inevitable consequence of the loss of confidence in the stability of the island as a reliable investment destination. As part of intense efforts to reverse this negative trend, it is anticipated that the government of Cyprus will undertake an in-depth assessment concerning all aspects of the now defunct programme. In this respect, there is an acute realisation for the need to formulate a revised and more demanding regulatory framework.
At this juncture, and as of 24th March 2021, the Cyprus Permanent Residence Scheme under the amended Aliens and Immigration Regulations, permits non-EU nationals and family members to take up permanent residence on the island upon investing €300,000 in residential or commercial real estate, the share capital of a Cyprus -registered company, or investment units of a Cyprus Collective Investment Organisation.
The applicable investment criteria for the above, are subject to the following:
- A minimum of €200,000 is to be paid and deposited in a local financial institution prior to submission of the investor’s application, along with appropriate verification that the funds in question are derived from abroad.
- The acquisition of property may be effected by a Cyprus, EU or EEA-registered legal entity provided the individual applicant and/or spouse are the sole shareholders or ultimate beneficial owners.
- In respect of residential real estate, up to two units may be acquired by the applicant subject to meeting the €30,000 minimum value requirement.
- Prior to investing in commercial real estate, the applicant is to furnish proof of residence in Cyprus (title deed, sales contract or lease agreement).
- Residential property may not be purchased by way of a ‘resale’ transaction.
- A permit issued may incorporate the applicant’s spouse as well as dependent children who are not over 18 years of age.
- Specific provisions cater for dependent children attending local or foreign higher education institutions and aged between 18 to 25 years, as well as for parents and parents-in-law who, under express conditions, are at liberty to apply on the basis of the principal applicant’s investment.
- Under certain stipulated circumstances, the applicant’s adult children may secure permanent residence irrespective of whether they are financially dependent.
- All applicants are to provide a clean criminal record from country of origin/residence.
The real estate sector has without doubt taken on a crucial and integral contributory role in relation to the economic development, long-term growth path, and financial prosperity of the island. In doing so, it has shown itself to be a dynamic force, prime mover and a key enabler of a multitude of activities, disciplines and operations, which span and extend across the domestic, commercial, industrial, legal and financial landscape of the country. This, in itself, reflects the significance and implications of a buoyant property market and highlights the crucial importance that the A.G. Erotocritou legal team attaches to maintaining and entrenching its position as a major player in the island’s real estate field.