Real estate in Cyprus: Detailed guide to buying property to further obtain the passport of Cyprus

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Kristina Ruzhilo 19.11.2018

 

Cyprus has gained the reputation of one of the most popular locations for buying real property for investment purposes. Beyond that, purchasing an apartment or villa on the island is a means to qualify for the EU passport which grands a number of advantages that are pleasant and indispensable to businessmen (visa-free travel around the world, reduced taxes, etc.).

What are the general principles of choosing and buying real property in Cyprus and how to avoid mistakes? Which steps need to be taken to make a successful purchase? The answers to these questions are provided in our today’s article.

Main criteria for choosing and buying a property in Cyprus

According to statistical data, 90% of foreign buyers who haphazardly purchased real property in Cyprus remain unhappy with their purchase. Why is it so?

First, because housing may be overvalued. The island’s territory is limited, and there are not many new construction projects in recent years. Before the advent of the financial and economic crisis, the authorities were issuing about 10,000 building permits per year. From 2008 to 2015, the number of such permits decreased by 2 times. However, since the middle of 2016, due to the increased demand for real property, the number of permits issued has increased. So in 2017, there was a 7% increase in the number of permits issued if compared to 2016.

 

Number of issued building permits VS value (m2/€million)

Number of issued building permits VS value (m2 / € million) | Migronis

 

Secondly, unscrupulous developers try to sell an item in which they have a bargain in any possible way. However, in these cases, investors’ preferences and needs are not taken into account. As a rule, such companies start working with clients even before they arrive in Cyprus. Their tactics are quite simple: to develop a minimal proposal and impose not the most attractive option, while eliminating any contacts with other sellers.

To have the best value for the money, one needs to choose a property object with a responsible care. Below are the criteria that will help you to make a rational choice:

  • Purposes of purchase. From viewpoint of gaining profit, it is worth investing in resort real estate: you can lease it out to tourists and receive income. If you are planning to move to a permanent residence, choose the apartment that corresponds to your idea of ​​an ideal home.
  • Type of property. You can invest in commercial and residential real estate. According to Knight Frank’s report, in 2017, 32% of Russian investors showed their interested in buying commercial real estate, since many businessmen choose Cyprus as a location for their business.
  • Primary or secondary objects. Advantage of the primary real estate over the secondary is the lack of history. Buying on the secondary market is practical because the housing is already fully prepared for living.
  • The area of ​​housing and the number of rooms. This is one of the factors that buyers pay attention to in the first place. Make your choice based on the number of family members. If you are going to move alone, then why spend money on buying a villa with four or five bedrooms?
  • Area in which the housing is located. Decide which part of the city will be most comfortable for you to live. The price of real property is higher in elite areas, but they guarantee high level of security and well-developed infrastructure. Houses within the tourist zone are a lucrative source of rental income.
  • Profitability of the object. Square meter prices are growing every year. Therefore, it is likely that at the end of the retention period the funds may be partially or fully returned to circulation.
  • Saturation of urban infrastructure. The availability of shopping and entertainment centers within a walking distance is an important element in terms of rental.
  • Proximity to the sea. You should keep in mind that the coastal areas are quite noisy. There are a lot of restaurants, bars, cafes – all to serve the pleasure of leisure travelers. On top of that, if the residential complex is not fenced, then tourists will be walking past your house.
  • Repair and fit-out. A rehabbed house with all the necessary furniture is ready for moving in and living. Acquisition of the apartment in “shell and core” condition will allow you to fit out the living space in accordance with the preferences of all family members.
  • Number of storeys. The cost of the apartment will be affected by the storey height. Apartments with a panoramic view of the city and the sea are more expensive.
  • A reliable developer. Make sure that the developer does not appear in the list of problem developers.
  • Developed adjacent territory. This criterion affects the living conditions of property owners. The availability of parking, children’s playground and sports grounds, recreation areas will be an advantage.
  • Transport accessibility. The proximity of transport hubs will save time when commuting.
  • The proximity of schools and kindergartens. Such an advantage is especially valuable for couples with children who move to Cyprus for permanent residence.
  • Term of completion (in case of a new building). If you need to settle in or begin to make a profit as soon as possible, consider the term of completion of an object.
  • Favorable conditions of purchase (installment / mortgage). Some developers offer favorable conditions for the purchase of housing.

 

The price dispersion in Cyprus is rather big, so depending on the area for the same amount you can buy an apartment or a villa by the sea. For example, buying a house with 3 bedrooms in Larnaca will cost €360,000, and a villa with a pool in Limassol with an area of 880 m2 is offered for €4 million. The price of apartments in the secondary market starts from €100,000.

 

Location Type Price (€) Monthly rent  (€) Profitability

Monthly rent

per sq.m. (€)

Nicosia Apartment 109,900 394 4.3% 4.66
  House 381,986 701 2.2% 2.80
  Retail 520,678 2,444 5.6% 20.95
  Warehouse 1,155,976 5,407 5.6% 2.70
  Office 547,724 2,521 5.5% 12.61
Limassol Apartment 113,229 452 4.8% 5.35
  House 324,032 756 2.8% 3.02
  Retail 464,700 2,213 5.7% 18.97
  Warehouse 1,705,199 4,742 3.3% 2.37
  Office 417,681 1,710 4.9% 8.55
Larnaca Apartment 126,122 334 3.2% 3.95
  House 293,066 458 1.9% 1.83
  Retail 298,478 1,469 5.9% 12.59
  Warehouse 1,327,007 4,168 3.8% 2.08
  Office 315,187 1,268 4.8% 6.34
Paphos Apartment 97,341 293 3.6% 3.47
  House 386,679 579 1.8% 2.32
  Retail 281,220 1,176 5.0% 10.08
  Warehouse 1,079,757 3,507 3.9% 1.75
  Office 330,663 1,053 3.8% 5.27
Famagusta / Paralimni Apartment 83,626 306 4.4% 3.62
  House 320,916 507 1.9% 2.03
  Retail 215,987 721 4.0% 6.18
  Warehouse 1,219,160 4,383 4.3% 2.19
  Office 365,276 1,447 4.8% 7.24
Cyprus (on average) Apartment 106,044 356 4.0% 4.21
  House 341,336 600 2.1% 2.40
  Retail 356,213 1,605 5.4% 13.75
  Warehouse 1,219,160 4,383 4.3% 2.19
  Office 365,276 1,447 4.8% 7.24
Source: Cyprus Real Estate Prices Index of the Royal Institution of Chartered Surveyors (RICS) for 2017

Peculiarities of buying property in Cyprus: first steps

Before you come to the island, you should select several items remotely. You may find suitable options on one of the websites dedicated to overseas real estate. The buyer may specify the parameters of the project, namely the type of housing, price range, region, number of bedrooms.

Another way is to contact specialists who will help choose the most attractive items based on the specified requirements to real property.

Visiting Cyprus: visa, transfer, accommodation

Check if you need a visa to enter Cyprus. For Russians, for example, Cyprus offers a simplified document submission procedure. It is a provisional visa. An investor will have to apply for a pro-visa on the website of the Embassy of the Republic of Cyprus in Moscow. For this purpose, it is required to fill out a questionnaire and send it via e-mail (the address is mentioned on the application form). The pro-visa is issued within 24 hours. The document must be printed and presented at the airport upon registration. Pro-visa gives the right to stay in Cyprus for up to 3 months. The application procedure is free of charge.

Also, you may enter Cyprus with a Schengen visa, provided that you have already visited one of the Schengen states earlier.

As a rule, hotel booking and transfer are arranged by the company that is coordinating the process of buying real estate. Most agencies have connections with local hotels, therefore booking is made at internal corporate rates.

Upon arrival, the investor may view the real property items that have been chosen by him remotely. As soon as a final choice is made, it is possible to proceed with the transaction.

 

Real estate in Cyprus: Detailed guide to buying property to further obtain the passport of Cyprus | Migronis

Apartments in Limassol

Stages of the transaction when buying property in Cyprus

Step 1. The buyer makes a deposit in the amount of up to 10% of the total value of the property to reserve an object.

Step 2. The investor concludes a contract with a Cypriot lawyer who will provide legal support for the transaction and issues the necessary power of attorney. After that, the buyer may return home.

Step 3. The property is reserved for 1-1.5 months. During this time, the lawyer is checking the documentation, releases the object from pledges and encumbrances (if any), and also prepares a contract of purchase.

Step 4. After the contract is ready, the buyer comes to Cyprus to sign the contract of purchase, and also pays half of the housing cost. In addition, the Stamp Duty is paid and the agreement is deposited with the Land Committee.

Step 5. The lawyer is preparing an application for obtaining permission to buy property from the Council of Ministers of Cyprus and application for a VAT exemption.

Step 6. Within 14 days, the authorities give permission for a VAT exemption. After that, the buyer pays the remaining part of the value of real estate, becoming its rightful owner.

Step 7. After the receipt of the Certificate of Ownership and payment of the property transfer fee, the investor becomes the registered owner of the property.

Obtaining citizenship by investment in Cyprus

As soon as the legal nuances are settled, an application for citizenship may be filed.

Under the terms of the immigration program of Cyprus, the minimum value of the property should be €2 million. At the same time, the investor must own residential property worth €500,000 for life.

Important note! Any wealthy foreigner without criminal record and problems with the law has the chance to obtain the EU passport. Providing false information is a strong reason for refusal.

Visa-free travel to 158 countries, favorable tax environment, access to progressive health care system and new opportunities for business development – these are the main “trump cards” of the Cyprus passport.

Maintenance of residential property in Cyprus

If you have purchased a villa, but do not intend to live there permanently, it is necessary to pay someone to take care of the garden and the pool. Taking care of a small garden and a swimming pool will cost additional €120-170 per month.

Also, the buyer must pay utility bills. Tariffs vary depending on the area. Rates are the highest in popular resort cities such as Limassol, Larnaca and Paphos. On average, a family of four pays about €30 a month for water and about €100 a month for electricity.

An apartment is very easy to be “deactivated” if the owner has to leave for a long time. Electricity and water can be cut off. Before arrival, one just has to make a phone call to the company engaged in maintenance of the house, and the staff will prepare an apartment.

Buying property in Cyprus – a rational choice for those who care about the future

In recent years, Cyprus has become a very attractive place for work, life, business. It is a magnet for foreign investors because it offers obtaining the second citizenship in exchange for investment in the local real estate market in the shortest possible time. On top of that, buying property in Cyprus is not only a step to become a EU citizen, but also an opportunity to develop a Plan B in case of force majeure in the home country.

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