Cyprus

Cyprus Property

In Cyprus real estate, smaller houses, apartments are top choices
Demographic and social changes are impacting the international housing market, and of course that of Cyprus. In the US, large companies and high-net-worth individuals who purchase houses and apartments either to resell them or rent them to third parties, currently make-up 20 per cent of all property buyers. This trend has been progressing in an upward direction for the last two years, as people with the necessary financial resources buy properties intending to rent them back to their previous owners or put them back in the market in search of a tenant. As financial crises become more frequent, there is an increasing number of people who see the sale of their properties as an opportunity (a misnomer) to generate cash to finance the repayment of their loans. At the same time, Generation Y (those born in the ‘80s and the ‘90s) has shown its preferences for renting properties rather than being homeowners and for city centers where there are more amenities. In the US, out of some 140 million housing units, approximately 80 million are family homes. And, out of these family homes, some 15 million are being rented, with 300,000 homes in the hands of institutional investors. The rest, in their majority, are owned by independent professionals. While a relatively low number, it is enough to gauge in which direction the wind is blowing. In Cyprus, the idea of owning a house still resonates with a lot of people. However, we believe that the local market will progressively follow a similar trajectory to that of the US, as have most European countries. A recent WiRE FS analysis of transactions that took place in Nicosia over the past 18 months, showed that some 40 per cent of the transaction value involved apartments, while two-thirds of these transactions took place in urban areas. This indicates the increasing trend by mainly younger Cypriots to acquire apartments instead of houses (cheaper, smaller, closer to amenities, etc) and many acquisitions being from investors looking to generate a rental income by tapping-into the growing demand to rent. Taking a step further and looking at data released by Eurostat, it becomes easier to see that owning a property is somewhat losing its appeal. In 2009, property owners constituted 74.1 per cent of the Cypriot market, in 2013 that number fell to 73 per cent and in 2019 (latest available data) it dropped even further to 67.9 per cent. In fact, 2019 marked the first year where the percentage of property owners in Cyprus fell under the EU 27 average (69.8 per cent). With the country’s demographics shifting fewer births, smaller families) and changes in social norms (increase in employment – more women in the workforce, greater need for letting out steam/ entertainment, etc), this inevitably affects peoples’ housing needs. Nowadays, most people don’t want to go for the big house with the front lawn and the swimming pool. They want a smaller, functional unit, close to amenities and with low running costs, as they expect to spend a significant amount of their time going out for coffee/ dinner and travelling. Besides, the number of people who can afford these properties has significantly decreased compared to thirty years ago. This is something we also observe on the websites of asset management companies: big houses don’t sell for years, whilst apartments tend to be considerably more liquid. In Cyprus, the population and households have significantly increased over the last thirty years (from 185,459 households in 1992, to 303,242 in 2011), which brought about a lot of changes in the supply of residential property. However, the main increase in supply has been to cater for overseas buyers rather than locals, as the native population has progressively aged and family size shrunk over the past two decades. While we are waiting in anticipation to see what the 2021 census will show, the number of households (i.e. permanent residents) with one and two people in 1992 stood at 69,418 and 156,679 respectively, making up just 37 per cent of all households. In the 2011 census, that number jumped to 52 per cent. On the other hand, the number of households with four people or more, fell from 45 per cent in 1992, to 30 per cent in 2011 (83,792 in 1992, 91,266 in 2011). The layout of housing units being developed has also changed. In the 2001 census, properties with up to 5 rooms (including kitchen and living room) made up 52 per cent of the whole, while in 2011 that number went up to 61 per cent. During that same period, the largest percentage increase was found in houses with three and four rooms (18 per cent and 23 per cent respectively); this is in line with how households changed over time, with family size decreasing and young Cypriots having 1-2 kids. The trends in the property market will keep following the accelerated demographic shifts. The state, as well as the private sector, i.e. developers, banks, investors, etc, need to make the necessary strategic steps to take account of these, so that they are not placed in a position where they are forced to rush into decisions after the fact.

As Cyprus changes so do properties
Large companies and high-net-worth individuals who purchase houses and apartments either to resell or rent them to third parties currently make up 20% of all property buyers in the US. This trend has been progressing upward for the last two years, as people with the necessary financial resources buy properties intending to rent them back to their previous owners or put them back in the market in search of a tenant. As financial crises become more frequent, an increasing number of people see the sale of their properties as an opportunity (a misnomer) to generate cash to finance the repayment of their loans. At the same time, Generation Y (those born in the ’80s and the ’90s) has shown its preference towards renting properties rather than being homeowners and being in city centres with more amenities. In the US, out of some 140 million housing units, approximately 80 million are family homes. And, out of these family homes, some 15 million are being rented, with 300,000 homes in the hands of institutional investors. The rest, in their majority, are owned by independent professionals. While a relatively low number, it is enough to gauge in which direction the wind is blowing. In Cyprus, the idea of owning a house still resonates with a lot of people. However, we believe that the local market will progressively follow a similar trajectory to the US, as have most European countries. A recent WiRE FS analysis of transactions in Nicosia over the past 18 months showed some 40% of the transaction value involved apartments, while two-thirds of these transactions took place in urban areas. This indicates the increasing trend by mainly younger Cypriots to acquire apartments instead of houses (cheaper, smaller, closer to amenities) and many acquisitions being from investors looking to generate a rental income by tapping into the growing demand to rent. Taking a step further and looking at data released by Eurostat, it becomes easier to see that owning a property is somewhat losing its appeal. In 2009, property owners constituted 74.1% of the Cypriot market; in 2013, that number fell to 73% and in 2019 (latest available data), it dropped even further to 67.9%. In fact, 2019 marked the first year where the percentage of property owners in Cyprus fell under the EU 27 average of 69.8%. With the country’s demographics shifting (fewer births, smaller families) and changes in social norms (increase in employment – more women in the workforce, greater need for letting out steam/ entertainment), this inevitably affects peoples’ housing needs. Nowadays, most people don’t want to go for a big house with a front lawn and a swimming pool. They want a smaller, functional unit, close to amenities and with low running costs, as they expect to spend a significant amount of their time going out for coffee/ dinner and travelling. Besides, the number of people who can afford these properties has significantly decreased compared to thirty years ago. We also observe this on the websites of asset management companies: big houses don’t sell for years, whilst apartments tend to be considerably more liquid. In Cyprus, the population and households have significantly increased over the last thirty years (from 185,459 households in 1992 to 303,242 in 2011), which brought about many changes in the supply of residential property. However, the main increase in supply has been to cater to overseas buyers rather than locals. The native population has progressively aged and family size shrunk over the past two decades. While we are waiting in anticipation to see what the 2021 census will show, the number of households (i.e., permanent residents) with one and two people in 1992 stood at 69,418 and 156,679, respectively, making up just 37% of all households. In the 2011 census, that number jumped to 52%. On the other hand, the number of households with four people or more fell from 45% in 1992 to 30% in 2011 (83,792 in 1992, 91,266 in 2011). The layout of housing units being developed has also changed. In the 2001 census, properties with up to 5 rooms (including kitchen and living room) made up 52% of the whole, while in 2011, that number went up to 61%. During that same period, the largest percentage increase was found in houses with three and four rooms (18% and 23% respectively); this is in line with how households changed over time, with family size decreasing and young Cypriots having 1-2 kids. The trends in the property market will keep following the accelerated demographic shifts. Therefore, the state, and the private sector, i.e., developers, banks, investors, need to make the necessary strategic steps to take account of these so that they are not placed in a position where they are forced to rush into decisions after the fact.

Property developers & banks face legal action
The Cyprus Consumer Protection Service (CCPS) has registered 56 applications at court against property developers and banks in connection with abusive clauses in consumer contracts. According to the Greek language Phileleftheros applications have been registered against 7 banks and 49 property developers. Although the property developers and banks have not been named, an English translation of the list of decisions taken by the CCPS can be found by clicking here. In February this year, the European Commission has sent a reasoned opinion to Cyprus for failing to properly implement and enforce EU law on unfair contract terms (Council Directive 93/13/EEC) and unfair commercial practices (Directive 2005/29/EC). The Commission opened this infringement case in 2013 based on a series of complaints from EU citizens who had bought real estate in Cyprus and had allegedly been misled by real estate developers, banks and lawyers. The Commission found that the Cypriot authorities were not effectively enforcing either of the two relevant EU Directives. In March this year, lawmakers welcomed the first court judgement against a bank for unfair contract terms of contract, but still harangued the banks for acting with “impunity” in terms of their service fees to clients. In June 2020, the Nicosia District Court issued a decree against the Societe Generale Bank, ordering the immediate cessation and non-repetition of use of terms which are included in a mortgage agreement form, following a request from the Consumer Protection Service. The decree against the Societe Generale Bank paved the way for more requests concerning abusive clauses and the CCPS can now submit requests for older cases to be considered. Although many people who have bought property in Cyprus have complained about abusive clauses in their contracts with property developers and banks, we expect that many have yet to do so and need guidance. Anyone wishing to complain should read the following pages from the CCPS website – Unfair commercial practices, Unfair contract terms and the CCPS’ contact details.

"Why Invest in Cyprus Real Estate? Top Reasons Cyprus Properties Are a Smart Investment in 2025"

Cyprus, the third largest island in the Mediterranean, has rapidly emerged as one of Europe’s most desirable destinations for property investment. With its stunning natural beauty, robust legal framework, and attractive incentives, Cyprus offers unique advantages for both local and international investors. Here’s why 2025 is the perfect time to consider investing in Cyprus real estate.

1. Strategic Location at the Crossroads of Continents

Cyprus enjoys a prime location at the intersection of Europe, Asia, and Africa. This strategic position makes it an ideal gateway for investors seeking access to multiple markets. The island’s proximity to major international hubs enhances its appeal for business and leisure, ensuring a steady demand for both residential and commercial properties

2. Breathtaking Natural Beauty and Tourism Growth

From pristine beaches to scenic mountain landscapes, Cyprus captivates visitors and residents alike. The Mediterranean climate, with over 300 days of sunshine per year, fuels a vibrant tourism industry. This ongoing influx of tourists creates a strong rental market, especially in popular coastal areas, offering investors reliable rental income and high occupancy rates

3. Stable and Transparent Legal System

Cyprus boasts a well-established legal system that aligns with European Union standards. Property rights are protected by a robust legal framework, ensuring transparent and secure ownership procedures. This stability instills confidence among buyers and investors, making Cyprus a safe choice for real estate investment

4. Attractive Citizenship and Residency Programs

Cyprus offers several programs that incentivize property investment. The Citizenship by Investment program allows investors to obtain EU citizenship through real estate, while the Permanent Residency program grants non-EU investors the right to live in Cyprus with visa-free travel within the Schengen Zone. These programs make Cyprus especially attractive for international buyers seeking global mobility

5. Favorable Taxation and Double Tax Treaties

Investing in Cyprus properties comes with significant tax advantages. The country features low corporate and personal tax rates and maintains double tax treaties with over 65 countries. This allows investors to benefit from reduced withholding tax rates and avoid double taxation on rental income and capital gains, maximizing returns

6. Strong Rental Market and Capital Appreciation

The robust tourism sector and growing expatriate community have fueled a strong rental market. Investors benefit from both short-term holiday rentals and long-term leases, with the potential for significant capital appreciation as demand continues to rise

7. Modern Infrastructure and Government Incentives

Cyprus has invested heavily in modernizing its infrastructure, including transportation, airports, healthcare, and education. The government also offers incentives such as grants, subsidies, and tax exemptions, particularly in sectors like tourism, renewable energy, and innovation, further enhancing the investment climate

How to Get Started

If you are considering investing in Cyprus real estate, now is the time to act. Whether you are looking for a holiday home, a rental property, or a long-term investment, Cyprus offers a wealth of opportunities backed by a stable economy and investor-friendly policies.

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