Investing in real estate in Cyprus is a real opportunity to save money from inflation. The island is divided into southern and northern parts, and foreigners can buy housing in both parts. The country attracts expats from all over the world with its comfortable climate, high quality of life, and convenient taxation system, which makes the island a popular destination not only for tourists. Apartments in Cyprus are sought-after buy-to-live options. In addition, thousands of foreign students and digital nomads look for rentals. This makes local housing in demand throughout the year. In this post, we discuss if it is possible to make money by investing in property in Cyprus, and which areas are best for investing in.
- Real estate market
- Market outlook in Cyprus
- Cyprus outlook
- Best areas in Cyprus for investment
- Possible investment strategies
- Long-term rentals
- Short-term rentals
- How to choose a promising property in Cyprus
A steady increase in demand for housing has been observed on the island for several years now. A temporary decline occurred only during the pandemic, which was largely due to the closure of borders and the general uncertainty of the situation. Already in 2021, only 21 fewer transactions were concluded in the southern part than in the pre-COVID period (10,347 versus 10,366). More impressive results were observed in 2022:
- 22,129 transactions were concluded, which is 30% more than in 2021;
- apartment prices increased by almost 12%;
- villas in Cyprus have risen in price by 8.9%;
- the rent rates increased by 19% on average.
It is too early to sum up the results for 2023, but the indicators for the first half of the year are again showing rising housing prices and an increase in the rent rates. For instance, apartments went up in price by 12.1%, villas experienced a 9% increase in prices. This confirms the fact that property investment remains a promising solution and you can make money on real estate in this country.
The local property market showed strong growth in H1 2023, recording a significant increase in both the volume and value of property sales compared to the same period in 2022. According to the Department of Lands and Surveys, in the first half of 2023, 12,162 real estate transactions were concluded with a total value of €3.2 billion. The volume of transactions increased by 13.6%.
Future market trends are directly linked to housing loan rates, which are currently growing. An increase in the cost of mortgages in the country will affect demand by possibly reducing it. However, for those who are planning a purchase with cash, this fact can be considered positive. The lower the demand gets, the more supply and less competition there is on the market.
Taking into account the general economic situation, we can assume that the most likely scenario is a slight stabilization of prices in the near future. However, this is unlikely on a large scale given current economic conditions. Major political events can lead to radical changes, which are as difficult to predict as it is to give exact figures for the development of the housing market.
The island offers potential investors many attractive locations, where real estate provides a comfortable lifestyle, which is supported by the country's stable economy, with an average annual GDP growth rate of 5.6% in 2022. The Central Bank expect that economic growth rates in 2023 will remain positive, although they are likely to slightly decrease due to the international situation. In addition, a slight reduction in inflation and unemployment rates is expected, which ensures stability within the country.
It is difficult to cover the best cities in the country for investment in one post, but we can highlight the most popular destinations for nationals of the UK and other European countries.
This is one of the popular cities in the southern part of the island. It provides a dynamic lifestyle and attracts holidaymakers. The advantages include amazing beaches, developed internal infrastructure, including international schools, nurseries and healthcare facilities. The housing market offers plenty of property offers for any budget.
The area is considered one of the best destinations on the southern coast and is especially in demand among British nationals and expats from other European countries. It is home to one of the largest British communities on the island. In addition, housing prices are more affordable than in Limassol.
This is a lively city in the southeast, located close to the international airport. Buying property in this resort city is a profitable investment solution since many expats prefer to rent property here rather than buy it.
The city is famous for its stunning beaches. Many of them are Blue Flag beaches. Holidaymakers also choose Famagusta for its proximity to the international airport in Larnaca. The transfer to the airport takes about 30 minutes. Housing can be bought in the city at affordable prices, and it has a high ROI.
Central Bank statistics show that housing costs are growing steadily in all regions of the country, with the highest growth rates observed in Paphos (10.4%), Limassol (7.1%), Famagusta (4.3%), and Larnaca (3.3%). The reasons for the growing prices is increased demand from foreign investors from Europe and Russia and the CIS countries.
The highest cost of housing is observed in regions with seaside housing options. The closer to the sea a housing unit is located, the higher property prices and rental income in Cyprus get. The housing prices range significantly, which allows property hunters find options for any budget. At the time of publication, we found the following offers:
- a 1-bedroom apartment in Iskele costs €134,000;
- a 2-bedroom unit in Famagusta can be bought at the price of €184,000;
- a 2-bedroom apartment in Limassol are sold for €372,000;
- the cost a 3-bedroom unit in Paphos is €330,000.
The house is on average offered at the price of €690,000. However, you can buy a villa with the same number of bedrooms in Larnaca for €290,000. On our website you can find real-time property prices in Cyprus.
Choosing an investment strategy depends on the investor's plans. You can make money in the short term by purchasing a property under development. At the start of construction, prices are much lower than after the completion of the residential project. In the long term, you can consider a rental business on the island. Here are 2 rental options you can use.
A long-term rental option brings the owner an annual profit of 4–6% of the cost of the property. Long-term rental are popular with students and expats from other countries. You can rent out your property in Southern part of the island for a long term to residents of the European Union directly.
According to the legislation of the southern part of the island, non-residents are not allowed to rent out apartments and houses on a short-term basis to tourists, although they can enter into long-term rental agreements with residents of the country. There are no such restrictions in Northern Cyprus.
Here are a few recommendations for those planning to buy a home for investment purposes:
- It is worth considering buying property under development or newly built housing. The former allows you to purchase a more comfortable housing option, while the latter are in high demand. In both cases, when reselling, the owner has the opportunity to quickly find a buyer and make a greater profit.
- Seaside property is more popular with both tenants and homebuyers.
It is important to take into account that the legislation in the southern and northern parts of the island differs. Therefore, we recommend you to consider the assistance of a qualified specialist who knows local legal norms.
Our website offers the latest property deals from developers and real estate agencies. In our regularly updated database, you can find apartments and houses for investment, relocation and rent. Choose your ideal real estate in Cyprus right now.