How to get citizenship of Cyprus without overpaying for real estate

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A EU passport is a reasonable investment in the future providing numerous advantages for the whole family. It is not actually complicated to obtain it in Cyprus. It is enough to purchase one or several luxury real estate objects in order to become the country full-fledged citizen several months later. But is this investment beneficial? How can one choose a worthy object to be sure of the investment return? Let us explain these and other details in this article.

Property in Cyprus is overpriced: Myth or reality?

The second citizenship of Cyprus is currently in demand among high net worth individuals, especially from Russia, as never before. In connection with this, the country real estate market is oversaturated, but it is demand that generates supply.

Cyprus’s real estate market is on the rise, which is largely due to the existence of the passport program, currently the most appealing one. There are also several other factors behind the real estate market flourishing: economic upturn, favorable tax environment, safety, pleasant climate and good location. According to the data by ​the Department of Lands and Surveys of Cyprus, from 2013 (crisis peak) to 2017, the number of local property sale-purchase transactions involving foreigners increased by 137%.

In 2017, more than 2,000 agreements of selling the property to foreigners were concluded, the number of transactions is 33% higher than the one recorded in 2016.

Cyprus is an island with limited land resources, it makes the land value increase, especially the coastline land. By buying real estate in Cyprus, you receive not only comfortable living conditions with a zero adaptation period, but also the opportunity to get a European citizenship, permanent residence, favorable tax residence, as well as the opportunity to enjoy great education system, high-level healthcare and generally cozy lifestyle. The cost of property is high, but the advantages that go together with the EU country citizenship are more than worth it.

The number of real estate sale-purchase agreements submitted by foreigners to the Department of Lands and Surveys of Cyprus from 2010 to 2017

The number of real estate sale-purchase agreements submitted by foreigners | Migronis

Is the investment return guaranteed?

It is clear that by investmenting the required amount in citizenship, foreign businessmen also care about the resources return prospects. To understand the investment return scheme, we should consider each case separately. It is important to take into consideration the situation in the market, the region of investment, the demand for real estate objects within the same category.

As an example, let’s look into several options of investing in Amathus Hills, a 3-villa complex in Limassol. The first option is to purchase one villa worth €2,000,000 plus VAT. After the 3-year retention period, the development company would buy the object off the investor for €2,000,000 without fail or would offer exchange for €1,500,000 plus a housing object worth €500,000, since it’s necessary to own a property worth at least half a million in order to retain Cyprus citizenship. The investor can also keep the villa in his/her possession for personal use or for resale. After the construction term is over, the property market price would reach €2,500,000.

The other option is to invest in the construction of entire complex. It is more expensive, but at the same time, it will generate a significant profit. It is worth noting that the managing company is responsible for organizing the object sale and can also act as the co-investor, with a 10-30% share. Thus, after selling all the 3 villas, the investor’s net profit (owning 80% of shares) will correspond to €514,500 in the worst case scenario, and to €1,004,500 in the most optimistic scenario. Find more details in the table below.

Calculating the profit from Amathus Hills project sale in Cyprus: 3 sale scenarios

pessimistic realistic optimistic
Sale of 3 villas (excluding VAT, agent’s fee and discounts) €6,000,000 €6,500,000 €7,000,000
Average cost of covered space per square meter €4,320 €4,680 €5,040
Average cost of 1 villa €2,000,000 €2,166,667 €2,333,333
Gross profit €1,500,000 €1,550,000 €2,050,000
Company income tax of 12.5% €131,250 €193,750 €256,250
Project net profit €918,750 €1,356,250 €1,793,750
Net profit for the investor (80% financing) excluding the managing company fees €514,500 €759,500 €1,004,500
Maximum total investment in the project €3,100,000
Maximum investment in the project by the investor (80% financing) €2,480,000
Project term (in months) 18
Return of maximum investment, % per year 19,76% 29,17% 38,58%
Return of maximum investment for the investor (80%), % per year 13,83% 20,42% 27,00%
* As of today, the situation in the market of Cyprus develops under the optimistic scenario

NOTE! Villas that cost about €2,000,000 are in high demand due to the passport program popularity and therefore no problems are expected regarding the objects sale.

Choosing a good object for investment

When choosing an object, you should take into account all the factors, the most important of which is its targeted use: whether it will be just an investment object or housing for your own living. It is worth paying special attention to the region, as the property location significantly determines its price and profitability.

Moreover, one should mind the cost of the object maintenance that can depend on its age, the location region and the supply companies involved in the agreement. Certified agents are the ones to assist the candidate with these details.

Generally, market tendencies are subject to constant change. In order to follow these novelties, you are recommended to consult experts.

One or several objects at €2,000,000: Which is more beneficial?

It is hard to state if it is better to purchase one, two or several objects. Luxury real estate can generate good profit when rented out or resold. However, when buying several houses or apartments, the investor can minimize risks by not contributing all the resources into on object.

NOTE: Reduced 5% VAT is valid only for the new object that would serve as housing for the investor. The investor is not permitted to rent out this object for 10 years.

If you purchase several objects, you will have to pay the standard 19% VAT for all the other objects, however, no renting limitations will be applied in relation to them. Therefore, it does make sense to buy a more expensive object first.

Pay attention! If the investor’s parents are included in the application, they should also own Cyprus property worth at least €500,000.

Choosing a good object for investment | Migronis

Many new projects are being constructed in Cyprus. It is more beneficial to invest in them rather than in resale property

Resale Cyprus property or investment in construction?

It is not easy to find worthy real estate objects in the resale property market of Cyprus, especially luxury real estate objects. In the past years the approach towards construction has been significantly changed. Only in the last 5-10 years the companies started constructing objects in compliance with high European standards. This factor makes investment in the property under construction more reasonable. The advantages of new buildings include relevant design, modern materials and equipment, refined decoration. Such objects will be much more profitable in the future.

Important: When investing in a new object, you do not have to pay the ownership title transfer tax.

Investment in the objects under construction at the first stage of works is the most beneficial for the investor who can thus save up to 20%. While upon purchasing the resale property, no saving scheme is actually available.

Commercial property or housing?

Commercial real estate market is currently on the rise. Firstly, more companies tend to relocate their offices to Cyprus. Previously they used to be registered there only technically. It results in the increased interest in the commercial spaces rent and sale. Secondly, the number of offers in the commercial property market is limited so far, there is a shortage of quality objects. Experts state that this tendency will remain in the coming years and that office spaces will be in demand both for rent and for purchase. The highest demand in such objects in observed in Limassol.

Housing is in demand at all times, since Cyprus is one of the most popular tourist destinations in Europe. Relocation of offices also heats up the activities in the market, as the arriving employees of companies need place to live. The demand remains stable both in sale and rent, short-term and long-term. The most popular places among those searching for the vacation property are Famagusta and Paphos.

Real estate in Cyprus: Every little thing should be taken into consideration

It is important to consider a set of details, like the aim of purchase, the object type, age and location. Moreover, the market is constantly changing, new objects are appearing, some regions are becoming more popular than the others and vice versa. Development companies abuse the passport program popularity and often artificially drive prices up to €2,000,000. Therefore, in order to make the most profitable investment, you should seek the assistance of experts. They will help you to determine whether the object has been overpriced and estimate the level of the object liquidity. Apart from that, certified agents will help you go through all the peculiarities of Cyprus passport program and tax system.


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