Is it worth buying a condo in Cyprus to rent it out?

Is it worth buying a condo in Cyprus to rent it out?

Should I buy a condo to rent out? It can be a profitable decision, capable of providing passive income. But is it worth buying commercial property to rent out? And what is the better choice - residential or office space? Whether you are buying your first home or are an experienced property investor, there are certain additional considerations to consider when choosing an investment property. Read more about them in this post.


Can I rent out my condo in Cyprus?

Working through Airbnb and other short-term accommodation aggregators allowing rent in Cyprus can be the best investor solution. However, there are mandatory conditions that those who have decided to buy a condo in Cyprus to rent on the island should be aware of.

In January 2020, a law came into effect that requires owners of hotels and tourist apartments to obtain a license. This includes self-catering properties on Airbnb and similar resources such as HiChee and Booking. The license costs EUR 222 (~USD 235) and must be renewed every three years.

What happens if the property is not listed? Initially, owners were not penalized for this violation. However, the grace period ended in February 2023. Now, violators who have not registered their property can be fined EUR 5,000. The most severe penalty under this provision is imprisonment.

The process of obtaining a rental business license for your investment property is relatively simple:

  1. Fill out the application form in English on the government website. You will need to provide your tax identification number, proof of valid insurance, a copy of the building permit and whether the residential property is owned by an individual or a legal entity (company).
  2. If your registration is successful, you will receive an identification number and a license from the Ministry of Tourism, which you must mention when advertising the rental property.

Is it worth buying a condo in Cyprus to rent it out?

Rental costs in Cyprus

Should I buy a condo in Cyprus to rent it out? Let's have a look at the prices. When choosing an investment property for a rental business, you can follow the same plan as if you were buying villas in Cyprus for yourself. In addition, you should assess the preferences of the tenants (vacationers, businesspeople, freelancers and digital nomads). As an example, they may want to be close to major urban amenities: beaches, supermarkets, entertainment and attractions, rather than making daily trips over long distances.

Before buying an apartment to rent on the island, compare the prices of renting a condo in Cyprus in different areas.

CityMaximum rental price per day (in €)Minimum rental price per day (in €)The average annual cost of a one-day rental (in €)
Larnaca (895 active listings) 64 (August) 49 (February) 55
Nicosia (360 listings) 65 (January) 59 (September) 61
Ayia Napa (751 listings) 129 (April) 98 (December) 116
Limassol (417 listings) 78 (July) 70 (April) 74
Paphos (1155 listings) 72 (August) 59 (February) 64

It can be noted that in Nicosia and Limassol, there are fewer condos for rent in Cyprus, which makes it easier to enter such a market. However, it's worth noting that the cost of apartments here is among the highest - in the centre of Nicosia, the average price per square meter is EUR 2,370, and in popular areas of Limassol – EUR 3,190.

The table shows that the highest daily rent for apartments in Cyprus is in Ayia Napa. This area is very popular with tourists. Is it a good decision to buy an apartment in Cyprus in this city with a view to the highest profit? Perhaps this will be the best decision: the average price per square metre in the centre is EUR 1,500.

Return on investment in Cyprus and taxes

Can I rent out my condo to generate passive income? An average return on investment (ROI) of 6% for long-term stays is a solid figure. Compared to other locations, the return on local real estate exceeds the indicators of many European countries. The ROI for short-term occupancy can be as high as 10% per annum. Deciding whether to rent a property in Cyprus on a daily or long-term basis depends on how much time you can devote to the rental business. Higher profits mean more work: advertising, communicating with tenants, cleaning - all these responsibilities fall on the owner. If you lease apartments on a long-term basis, you will spend less time on all processes, but the income will be lower.

Talking about taxes, once you have obtained a leasing license, you must report your income to the state tax authorities on an annual basis. Residents of the island are obliged to pay taxes:

  • Income tax on income exceeding EUR 9,500 per year (an amount less than this is not taxable)
  • Special Defense Contribution (SDC) - 17%
  • GeSY (General Health System) tax - 2.65%
  • VAT at a rate of 9% on income exceeding EUR 15,600 annually

It is important to note that the VAT you pay on the purchase of a home determines whether you can lease. You can pay a reduced VAT of 5% on the first 200 square metres of a newly purchased property, but only if you intend to live in it. If you intend to lease the house, you must pay the full VAT of 19% at the time of purchase (or you may pay the difference of 14% later if you change your mind).

Can I rent out my condo after purchase to save on taxes? Yes, often the payment of taxes falls on the tenants. This is possible if the property is leased on a long-term basis. However, this is not common in the case of daily rentals, so you should consider these expenses when determining the cost of a day's stay and forecasting your income.

Difference between investing in residential and commercial real estate

Many investors are now considering commercial real estate as an investment rather than residential real estate. This can be a profitable and promising prospect - buying something that will not depreciate over time and will always have a consistently high demand.

Every year, about a thousand new companies appear on the island. At the beginning of 2023, more than 220,000 legal entities were registered in the country. This fact confirms the country's popularity as a business platform, and the demand for offices will grow accordingly.

The commercial space demand is growing, but the number of suitable plots for construction is limited. Therefore, the cost of non-residential real estate cannot decrease, which is a plus for an investor interested in buying office space for a rental business.

Investing money in commercial property - offices, shops, beauty salons or warehouses - is more profitable than investing in residential property. Rental rates for such spaces are generally higher, especially in the post-coronavirus market, and the payback period for investments is shorter. Experts note that trade is well positioned in terms of return on investment. In cities, it may be as high as 12% - even more than the income from daily apartment rentals, and at the same time you don't need to spend much time managing the rental business.

Another important difference with commercial investments is the possibility of avoiding repair costs. You can easily lease an office without renovating it, as companies often do the finishing work themselves.

Office rental costs in popular areas

Cost of office space for sale (in EUR per one square metre):

  • Limassol – 4,500 - 6,500
  • Nicosia – 3,500 - 4,500
  • Larnaca – 2,000 - 3,500
  • Paphos – 1,500 - 2,000

Office rental costs (in EUR per one square metre):

  • Limassol – 30 - 40
  • Nicosia – 20 - 25
  • Larnaca – 15 - 20
  • Paphos – 15 - 25

So, if you buy a 100 square metre office in Paphos for EUR 175,000, you can make a profit of EUR 2,000 per square metre. In total, your return on investment will be 11.5%. In addition, all maintenance and tax costs can be passed on to the tenants.

Is it worth buying a condo in Cyprus to rent it out?


We hope that this overview has helped you to understand the opportunities that the Cypriot real estate sector offers for investment in rental businesses. We recommend that you study the market carefully if you are interested in investing in office space or buying an apartment in Cyprus for rental purposes. Reviews of people, directories of aggregators with property in Cyprus, as well as advice from agents specializing in this area will help you get a more detailed idea of the prospects of your investment.

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