Despite the fact that the Citizenship by Investment program in Cyprus was temporarily suspended at the end of last year, the local real estate market continues to grow rapidly. And although there are many objective reasons for this, such a noticeable increase can be considered quite a big surprise.
In May 2022, almost 1,150 property purchase and sale transactions were concluded in Cyprus – both residential and commercial, including land, which is an increase of 68% compared to the same period last year and at the same time a maximum in the last 14 years . Sales increased in all regions popular with foreigners (Limassol, Larnaca, Paphos, Famagusta), and only in Nicosia it decreased by 7%. At the same time, in May, transactions with the participation of foreigners were recorded by 94% more than a year earlier.
The Cyprus property market is still growing, although in addition to the suspension of the popular Citizenship by Investment program, there have been several other developments that were expected to impact its fortunes. This is a high level of inflation, which in May reached a record high over the last four decades – 9.1%, the completion of a state campaign to issue subsidies for mortgage loans for properties whose price does not exceed 400 thousand euros, and a noticeable rise in prices for building materials and energy, which will ultimately affect the cost of housing.
The cost of apartments in Cyprus over the past year increased by 1.4%, and houses – by 0.5%, and the leader in this regard is Larnaca, where residential real estate has steadily risen in price throughout the year (in the last quarter of last year – by 2.5 %). This trend will continue in the foreseeable future, but there is no talk of the formation of a so-called “bubble” in the real estate market.
All of the above factors did not prevent a sharp increase in demand for real estate in Cyprus, which can be explained by the following reasons. Firstly, foreign buyers, among whom Russians have traditionally stood out (and now Ukrainians have joined them), see in buying housing on the island an opportunity not only to save their money, but also to live in a “safe haven”. Cyprus remains loyal to Russian citizens, issuing them free visas of all categories, and it was its authorities who blocked the clause in the sixth package of sanctions banning the purchase of real estate in the EU by those who are not citizens or residents of one of the EU countries.
Secondly, the Cypriot government has approved a bill according to which tax benefits are now introduced for foreign companies in the case of a minimum annual salary of employees of 55 thousand euros – almost two times less than before. The registration and location of company headquarters in Cyprus will also be strongly encouraged, which should contribute to the influx of businessmen and highly qualified specialists from abroad.
Thirdly, interest in residential real estate is also growing on the part of the Cypriots themselves, many of whom are buying houses and apartments without using mortgage lending. They are trying to catch up before the new “wave of price increases” and at the same time not to become dependent on rising mortgage interest rates, as a result of which they give preference to inexpensive apartments with one or two bedrooms.