Cyprus real estate: A 33% increase in numbers of objects purchased by foreigners

120
Reading time:
Don't have time to read?
Send to Email
Kristina Ruzhilo 19.11.2018

The housing construction sector in Cyprus is showing positive dynamics. In 2017, the pace of construction has increased by almost 36%.

Cyprus foreign minister Nicos Christodoulides says his country is interested in aligning with a number of countries such as Jordan, Saudi Arabia, Egypt, Lebanon, and some Gulf states.

President of the Cyprus Chamber of Commerce and Industry, Christodoulos Angastiniotis, could add to this that Chinese investors also show interest in relations with Cyprus.

It is true that the last 10 years have not been easy for Cyprus. Following the real estate market crisis of 2008, the economy of the island state was hit hard by the banking crisis. In 2012, many real estate buyers fell into a trap by paying the developer the entire amount for an apartment but still not obtaining the owner’s certificate. The government of Cyprus even had to enforce a special law in 2014 to settle the situation and protect the interests of deceived investors (by the way, the situation was resolved by 2018).

Cyprus real estate: A 33% increase in numbers of objects purchased by foreigners | Migronis

Paphos, Cyprus

In 2014, Cyprus citizenship by investment program was launched, and the real estate market has gradually begun to recover. Sales soared. The volume of investment in the national economy has increased. In 2018, the number of construction permits for new buildings increased by almost 36%. In the pre-crisis period, about 10,000 construction permits were issued per year. Later, the number of permits was reduced by almost twofold, and the development business entered a phase of stagnation. Fortunately, since 2016, the sector has been on the rise. In the first ten months of 2017, the authorities approved 4,817 suits, compared to 4,350 in January to October 2016.

FOR THE FIRST TIME IN 7 YEARS, THE COST OF APARTMENTS IN CYPRUS HAS GONE UP BY 1.5%, AND BY 3.8% IN LIMASSOL. IT IS EXPECTED THAT THE COST OF RESIDENTIAL REAL ESTATE WILL CONTINUE GROWING BY 20-30% PER YEAR.

This insider information isn’t unfounded, as 18,200 new real estate objects were built in Cyprus in 2008, and only 2,290 in 2015. Given the recent surge in real estate sales, such stories about price rushes sound more than convincing.

In 2017, the number of transactions with foreign nationals increased by 33%. Most of the buyers are residents of Russia, CIS countries, Asia, and the Middle East. The most sought-after real estate objects are located in Famagusta, Nicosia, Paphos, Limassol, and Larnaca.

Investments in Cyprus’ economy in exchange for Cyprus’ passport

The program of Cyprus’ economic citizenship was launched with the aim of replenishing the state budget via private foreign capital.

ACCORDING TO THE OFFICIAL DATA, BY THE END OF 2016, INVESTMENT CONTRIBUTIONS AMOUNTED TO € 3.5 BILLION.

In November 2016, the Cypriot authorities introduced a number of changes to the citizenship by investment program, softening the rules for those willing to obtain a second citizenship. The minimum investment threshold was reduced from €5 million to €2 million, and the principal applicant’s parents were allowed to participate in the program, apart from his or her spouse and kids.

SINCE THE LAUNCH OF THE PROGRAM UNTIL THE BEGINNING OF 2017, THE CYPRUS’ GOVERNMENT APPROVED ABOUT 2,000 APPLICATIONS FROM FOREIGN INVESTORS.

The main trump cards of the Maltese CBI program are

the possibility of free entry to 150 countries, reduced tax burden, attractive business environment, a guarantee of social and legal security. Another significant advantage is the short processing time: the main applicant and their family members receive their new passports within six months.

Foreigners can apply for Cypriot citizenship in exchange for an investment in the amount of at least €2 million. White-listed are issued passports provided that one of the investment requirements is fulfilled:

  • Purchasing an apartment or villa in Cyprus. The applicant can choose between buying a villa, an apartment, or combine several objects once the total value corresponds to the investment minimum.
  • Establish a business or invest in an existing project, creating at least five jobs for Cypriots.
  • Combination of the above options. The applicant must invest €500,000 in government bonds and spend the remaining €1.5 million on, say, a real estate object.

Practice shows that foreign investors prefer investing in houses and apartments on the island to registering new businesses, even if they are not going to relocate to their new homeland. Why? Under the terms of the CBI program, the investor is obligated to perpetually own a home in Cyprus that costs at least half a million euros. Securities and real estate (except for the €500,000 real estate object) can be sold after three years.

Cyprus real estate: A 33% increase in numbers of objects purchased by foreigners | Migronis

Malta’s citizenship is an alternative to Cyprus’ citizenship

The Maltese CBI program can be considered as an alternative to that of Cyprus. Malta has begun issuing passports in exchange for investment in 2014. Cyprus CBI program has a limited number of spots for applicants, just 1800. According to preliminary estimates, this limit can be exhausted in the mid-to-late 2018. However, the government plans to restart the program.

Maltese citizenship means:

  • the opportunity of visa-free entry to more than 160 countries, including Great Britain, Hong Kong, and the USA;
  • favorable taxation;
  • access to authoritative EU banks.

Participants of the program have to undergo a multilevel identity verification procedure.

It takes no more than 14 months to obtain a Maltese passport. Investors interested in a second citizenship are expected to donate €650,000 to the state-run National Development Fund, purchase government bonds in the amount of at least €150,000, and purchase real estate worth at least €350,000 (renting real estate for at least 5 years is allowed provided that its cost amounts to at least €16,000 per year).

Property acquired under the CBI program cannot be rented out, but in 5 years’ time, the investor can sell the housing without losing the status.

Cyprus real estate: A 33% increase in numbers of objects purchased by foreigners | Migronis

Change of tax residency

Since 2017, the procedure for Cyprus’ tax residency was simplified. The main condition is to reside in the country for at least 60 days per year, and having a centre of vital interests. Apart from one’s passport, the bank may require documents that confirm ownership of housing, as well as utilities receipts. In contrast, one would need to stay in Malta at least 183 days per year to become a tax resident.

Krisitna

Get a free consultation

Send request

© "Migronis", within full or partial copying of the material is required reference to the source.

Share to friends:

Not ready to proceed with the application process yet?

Subscribe to our must-read newsletter. The articles we send will help you make the right choice. Once a week we send expert information without empty talk and with no advertisements. Articles are prepared by leading tax experts and lawyers.

Migronis uses cookies to improve your experience. In case of disagreement, leave the site.
Accept