Results of 2019 on the Cyprus property market

Last year Cyprus continued its growth in the number of real estate transactions in relation to last year's indicators. Thus, according to the statistics of the Cyprus Land Department, the number of real estate transactions in 2018 in Cyprus as a whole amounted to 9,242, while in the past year this number increased to 10,366 transactions - an increase of this indicator was 12%.

May hype

If we analyze the data by the regions of Cyprus, then the largest growth in sales in 2019 in percentage terms was shown by the capital of Cyprus, Nicosia, with an indicator of 24%, followed by Larnaca and Paphos - 17%, Limassol - 3%, and Famagusta closes the rating of leaders with an increase in sales in the rate of 2%. At the same time, it is necessary to pay tribute to Limassol as the city in which the most real estate was sold in 2019 - 3517 transactions, followed by Paphos - 2630, Nicosia - 1998, Larnaca - 1568 and Famagusta - 653 transactions. It was in these cities that 12% more objects were sold (10 366 lots) than in 2018. It is noteworthy that real estate in Nicosia and Famagusta is bought mainly by the local population, while in Limassol, Paphos and Larnaca, a significant figure is made by foreign citizens.

In total, in 2019, Cypriots acquired 5,468 real estate objects, which amounted to 53% of the total number of transactions on the market, and foreign citizens accordingly became the owners of 47% of the properties. Of these, 19% were accounted for by foreigners from EU countries, and 28% - by citizens of other states. Foreign buyers from the latter subgroup are Lebanese, Chinese, Russians, Ukrainians and Israeli citizens. As for the volume of cash inflows to Cyprus from real estate transactions, in 2019 it amounted to 3.5 billion euros against 3.6 billion euros in 2018. It is worth noting that until June of last year there was a real stir in Cyprus, caused by planned changes in the citizenship program. The most active month was May (1423 objects) - the month.

As for the type of objects in demand, there have been no significant changes: in 2019, foreign investors were mainly interested in apartments and a little less often in villas, which also repeats the 2018 scenario. Many expected that the change in the investment program would lead to a fall in prices, but this did not happen even partially: prices for new properties are steadily growing, and the cost of housing in the secondary real estate market remains at the same level. On average, the Cyprus market is growing due to the emergence of high-quality and modern complexes (often with an infrastructure of the level of first-class hotels), capable of satisfying even the most sophisticated consumer demand.

Internal and external demand

The obvious influence of foreign buyers on the indicators of the Cyprus real estate market is most often found not only among the offers of expensive housing - many investors acquire not one object, but several for a total of 2 million euros, which allows you to apply for a Cyprus passport.

If we talk about external demand, in addition to the citizenship program in Cyprus, there is also a program for obtaining permanent residence according to an accelerated scheme - Permanent Residence Permit. When buying a new real estate object (or two) for a total amount of 300,000 euros (paid at the time of submission must be 200,000 euros, the rest can be paid as the construction is completed), the investor and his family members receive a Permanent Residence Permit within 3 months ...

This program has no analogues in Europe (golden visas for Greece, Spain, Portugal are a residence permit that is "converted" into permanent residence only if they have lived in the country for at least five years with a minimum absence corridor, and then another 2-5 years must pass ( depending on the country) before obtaining local citizenship.And for example, the program for obtaining permanent residence in Malta does not imply the transformation of permanent residence into citizenship at all.

Cyprus permanent residence can be converted into citizenship by living here for seven years. This can be done both in seven years (living without leaving) and in ten years (in total, you must have lived in Cyprus for at least seven years over the past ten years). At the same time, in order to retain this permanent residence status for life, the investor and his family members must visit Cyprus at least 1 time in 2 years. Therefore, this program is also in great demand among foreigners.

It is also worth noting that the preferential taxation system attracts many Europeans to Cyprus, who do not need either citizenship or permanent residence, but are interested in tax residence. Some of them rent real estate for long-term lease, and the other part - buy. This is also a factor influencing the demand for Cypriot real estate in the foreign market.

The ratio between domestic and foreign demand in the Cyprus property market in 2019 was almost one to one (slightly larger than the domestic market volume). And if the domestic market is formed in many respects by the capital segment, then the external market primarily affects the coast. And if the indicators of the first half of the year are exactly the excitement with the citizenship program, then the data for the second half of the year speaks about something completely different. Only in Limassol and Paphos, most of the deals were concluded on the external market, in the rest of the regions - Nicosia, Larnaca, Famagusta - the domestic segment dominates.

Buyer's portrait

The buyers of Cyprus real estate in 2019, representing the EU countries, were very different: they were from the countries of the former socialist camp - Latvia, Lithuania, Estonia, Poland, Bulgaria (they most often come to Cyprus for work), and citizens of Germany and other countries, choosing the island as a tax residence (it is enough to have a registered Cypriot company, real estate rented or purchased, live 90 days or more (in their own or rented real estate), without opening a legal entity for more than 183 days a year), as well as summer residents (many Scandinavians), and pensioners (among the latter there are many Britons who are still counted as EU citizens).

Representatives of the EU countries often buy real estate for investment (in liquid locations for capital gains, for subsequent short-term or long-term lease), for their own vacation and residence, as well as for doing business, which is facilitated by the local favorable tax climate. If we talk about specific places, then for the second year already Paphos is extremely popular with them. It can be assumed that the secret of the city is in picturesque and clean beaches, an abundance of golf courses and a developed infrastructure.

Of course, against the background of immigrants from third countries, the number of those interested in citizenship and permanent residence is a much narrower stratum. In Limassol, the ratio of buyers is about 1: 5.5 (for five to six transactions with third-country nationals, there is one with a European), in Paphos - 1: 2 (for every European there are two third-country nationals).

Citizenship quotas in Cyprus

In 2018, the state in Cyprus set a limit on approval for issuing to participants in the investment program in no more than 700 sets of passports per family per year. And if in 2018 a little more than 400 approvals were issued, then in 2019 this figure fell slightly short of the limit. According to the Ministry of the Interior of Cyprus, 695 sets of passports were approved for participants in the Cyprus Investment Program in 2019.

Thank you for your help in preparing the material:

Sergey Smolensky, CEO of Empire Property Cyprus

Yulia Titova, director of RENTSALE

Elena Marinichev, vice - president of Moscow Sotheby's International Realty