In the modern world, torn apart by political and military conflicts, as well as economic instability, investors increasingly feel the need to protect their assets. In the face of uncertainty and fluctuations in financial markets, it is clear that finding stable and safe investments becomes a matter of paramount importance. In this context, purchasing property in Cyprus stands out as one of the most reliable ways to preserve capital.

Cyprus, due to its geographical location and stable economy, represents an attractive solution for investors seeking long-term sustainability of their financial portfolios.

Let’s look at the main trends in the Cyprus real estate market in 2023, assess the economic situation and take a closer look at the most profitable types of real estate in Cyprus, which can provide a stable and fairly high ROI.

In addition, our team of experts, thanks to our own analytics system, has prepared for you a new report on the Cyprus real estate market so that you can freely navigate and make the right decisions regarding your investments.

Main trends in the real estate market in Cyprus in 2023

2023 shows an interesting picture for the Cyprus property market. There is a steady increase in prices, the emphasis has shifted to ecological and family real estate in the premium segment, and the relocation of businesses and IT communities to the island is increasing. The country also attracts digital nomads — freelancers from the IT sector who come to the island and stay on it.

Among other things, we can highlight several main trends that have become the leitmotif of 2023.

Price stability

In 2022, Cyprus showed a steady increase in property prices, and this trend continues in 2023. The island attracts both residents and foreign investors, creating demand for housing. The increase in prices is now due not only to the increase in the cost of building materials, but also to limited supply and increased demand from foreign citizens, which makes property in Cyprus a profitable investment.

Environmentally friendly facilities

The growing interest in energy-efficient and environmentally friendly real estate reflects a global shift in mentality. Investors and buyers are increasingly paying attention to real estate with low emissions and built using eco-technologies. Solar panels, water treatment systems and other green solutions are becoming mandatory for new construction projects.

Moving to Cyprus for permanent residence

The COVID-19 pandemic has accelerated the trend towards remote working, and many people are now looking for a place to live and work surrounded by nature and cultural richness. Cyprus, with its wonderful climate, high quality of life and safe environment, has become a magnet for digital nomads (freelancer nomads) and those looking to change their working and living conditions. In addition, the program for obtaining permanent residence in Cyprus for investing in real estate is not losing popularity. According to the accelerated program, in just 2 months you can become the holder of permanent residence status. The terms of the program are an investment of 300,000 euros plus VAT.

Buying property in Cyprus for investment

2023 has brought instability to many markets and jurisdictions. Citizens of many countries were forced to change their place of residence and transfer their assets to a more reliable and stable field. Against this background, Cyprus has become exactly the place that has not been shaken by the influence of the previous pandemic and today’s military and political conflicts. Cyprus’ GDP continues to grow (plus 3.4% in the first half of 2023 alone), the real estate market contributes 15% to the country’s budget, property prices have increased by 15% over the last 5 years, and property sales have increased by 8% compared to the previous 2022 year.

In addition, the main trends in the Cyprus property market in 2023 include the following:

• Paphos will remain one of the centers of attention for investors, especially its areas close to the sea.
• The share of foreign buyers of residential real estate in Cyprus will grow; it already accounts for half of all purchase and sale transactions.
• In areas remote from business infrastructure, a decrease in growth or stabilization of rental prices is expected.
• Real estate prices in Cyprus are rising along with the recovery of the tourism sector after the pandemic.
• Since 2022, prices have continued to rise: from January to May 2023, the average cost of properties increased by 10% compared to the same period a year earlier.
• The volume of space under construction in Cyprus decreased by 15% in 2022 compared to the previous year.
• Half of the real estate transactions in Cyprus are made by foreigners — citizens of third countries.

The most popular cities for buying property in Cyprus are Limassol, Paphos and Nicosia. These cities attract three-quarters of all sales. Foreigners most often buy property in the three southern coastal areas — Limassol, Paphos and Larnaca; in Nicosia, purchases are made mainly by the local population. It is also worth noting that Paphos and Limassol are the most popular cities for purchasing property from foreign investors.

You can also name some reasons that led to an increase in prices for real estate in Cyprus:

• Significant increase in rental prices from 2019 to 2023.
• An increase in the tourist flow, which has already reached and even exceeded the pre-Covid level.
• The interest of foreign buyers, who make up almost half of all real estate transactions.
• The COVID-19 pandemic has increased interest in island real estate as people choose to live and vacation in their own homes rather than in hotels.

A 15% decrease in construction volumes in 2022 compared to the previous year.

Popular regions and their attractiveness for investors

Cyprus has several popular regions that attract investors.

Limassol

Limassol is a business center and the most expensive city in Cyprus. High-end commercial and residential real estate is being developed here. The attractiveness of Limassol lies in its picturesque beaches, developed infrastructure and the scale of business zones.

There has been steady growth in the residential real estate market here, with property prices continuing to rise in 2023. Some of the most attractive areas for property investment in Limassol include the Historic Centre, Neapolis and Agios Tychonas. Investors can choose from various types of investment properties, including residential buildings for renovation, luxury villas and penthouses near the marina, boutique hotels and new developments.

Pathos

Paphos is attractive to investors looking for luxury properties by the sea and close to golf courses. This city is about the Mediterranean lifestyle. There are also many high quality properties and rental opportunities.

Some of the most attractive areas for investment are Kato Paphos, which includes the tourist promenade and harbor, and Universal, which is a luxury development with swimming pools and beautiful architecture.

Larnaca

Larnaca is the air gateway of the island, with the main airport and transit port located here. Investing in real estate near an airport can be profitable.

Promising areas for investment are the areas of Kato Larnaca near the harbor and promenade, as well as Harbor and Mackenzie near tourist locations.

Nicosia

Nicosia is the capital of the island, real estate here is the most popular among the local population, the greatest demand is for apartments, including budget ones, since the city is home to many universities, which creates a high demand for housing among students.

In addition, the tourist areas of Ayia Napa and Protaras are now actively developing, and also offer space for creativity and opportunity. Of interest here are villas, which are in great demand during the high season among tourists.

Each of these regions has its own advantages, but there is a trend towards certain properties that can bring a stable ROI.

We talk in more detail about prices per square meter in each region in our report “Property types with high returns in Cyprus 2023”:

Types of real estate with high ROI

The greatest profitability in residential real estate comes not just from villas and apartments, but from those properties that are located in the right areas.

On average, projects in Cyprus are implemented at 8% per annum.

To summarize in general terms, the highest ROI can be obtained from short-term rental of real estate located in tourist areas near the sea. The profitability of such objects during the hot season, which lasts from May to October, can even reach 15-35% per annum. Usually in this case we are talking about luxury villas on the first line from the sea or, to a slightly lesser extent, about apartments within walking distance to the beach and with sea views.

Flats and apartments

Apartments with a high ROI are apartment complexes with a developed internal infrastructure, the mandatory features of which are walking distance to the sea and the beach, located in the embankment area and completely ready for living. For investment purposes, it is best to buy apartments in Cyprus in three cities: Limassol, Larnaca and Paphos.

Villas and houses

Villas and houses are in great demand for short-term rental among wealthy tourists who want to live by the sea with luxury and comfort in Paphos and Limassol. In Ayia Napa, villas are also popular, but among the “golden youth” who come in groups to relax at the resort, since Ayia Napa is informally recognized as the Cypriot “Ibiza” and is popular specifically among young vacationers. ROI in a good location during the busy season can reach an incredible 25-30%.

Commercial real estate

The most in demand types of real estate are business centers and office space, since a lot of foreign companies are relocating to the island and need to rent an office for their employees. ROI is usually between 8 and 10%.

Tourist properties

In this sector, hotels, apart-hotels and hostels generate the greatest profits. ROI 6-12% depending on the type of property, location and marketing campaign. However, it is worth saying that in Cyprus the maximum occupancy of hotels is about 90% from May to October inclusive.

We speak in more detail about the types of in-demand real estate and the conditions for obtaining a high ROI in our report “Types of real estate with high returns in Cyprus 2023”:

Factors influencing ROI

The property market in Cyprus represents a unique investment field with the potential for high returns. However, to maximize ROI, there are several important factors to consider.

Location

Location is a key driver of successful investments. Properties near the sea or large cities such as Paphos, Limassol and Larnaca are traditionally in high demand, which contributes to an increase in cost and rental yield.

Infrastructure and development

Infrastructure development projects, such as the construction of schools, health care facilities and transportation routes, can affect property values and attract tenants.

Services and amenities inside the complex

The presence of additional services and amenities such as a swimming pool, gym, parking, etc. can attract more renters and tourists, which can increase ROI. Excellent forecasts concern new “city-within-a-city” projects.

Property management

Creation of a management company.

High demand for housing

Demand is generated both by the internal market of residents and the external market from foreign citizens. In 2023, the share of foreign real estate buyers accounted for about 60% of the total number of purchase and sale transactions. Among foreigners, the largest group of buyers were from Eastern Europe — 80%.

Rising real estate prices

Housing prices in different areas of Cyprus vary, but are rising inexorably. Prices for Cypriot houses and apartments increased by 3.5% in 2022 and continued to rise in 2023 — by 6% in the first quarter. Annual growth for 2023 is expected to be 7.7%. It is noteworthy that last year in 2022, the increase in real estate prices was caused mainly by an increase in the cost of building materials, but this year the increase in costs is causing increased demand.

Tourism

The recovery in tourism is also contributing to the stability of the real estate market. For example, in 2023, the tourist flow fully recovered to the pre-Covid level of 2017, which led to full occupancy of the hotel sector and increased the demand for rental villas and apartments by the sea.

Taken together, all these factors make it possible to receive a good return on investment and profitably diversify your portfolio with a stable asset, which is extremely necessary during a period of economic instability in the world. By the way, we have already written an article about how to minimize risks during a crisis and what assets are best to invest in in 2023.

Real estate management and maintenance: how it affects profitability

be it residential buildings, commercial properties, apartments or villas. This process includes various aspects designed to ensure the safety, comfort and value of the property.

In most cases, for these purposes, the developer either creates his own or turns to the services of an existing management company in Cyprus.

The management company performs a number of important functions related to the management and maintenance of real estate:

Maintenance, which includes providing regular maintenance of buildings and infrastructure: inspection and maintenance of heating, ventilation, air conditioning systems, electrical systems, plumbing and other technical components.

Managing leases, finding tenants, drafting contracts, accepting rent payments and resolving issues related to rent.

Taking care of green areas, gardens, swimming pools and other public places. Regular cleaning and maintenance maintains good appearance and comfort for residents or guests.

Keeping financial records, paying bills, taxes and insurance premiums. Property management companies can also provide reports to property owners.

If there are personnel (for example, security, cleaners), managing their activities and responsibilities.

Ensuring the security of facilities using video surveillance systems, alarm systems and coordinating security services if necessary.

Maintaining open and transparent communication with property owners.

Resolving conflicts and ensuring customer satisfaction, resolving issues related to property maintenance and maintaining a high level of customer satisfaction.

These functions are aimed at ensuring the efficient and smooth functioning of the property, maintaining its value and attractiveness to tenants or potential buyers.

In addition, the management and maintenance of real estate in Cyprus plays a key role in its profitability. This applies to both commercial and residential real estate. And this is precisely the activity that the management company is engaged in. Here are a few aspects to consider:

Regular maintenance helps maintain the quality of buildings and prevents costly repairs in the future, while effective maintenance of heating, ventilation, air conditioning, electrical and plumbing systems keeps indoors comfortable.

Providing property security, including alarm systems and CCTV, can increase its attractiveness to tenants and buyers.

Well-maintained areas around a property can improve its appearance and appeal. Regular garden and pool maintenance is important to keep them in good condition.

In the case of rental property, good rental management, including attracting tenants, monitoring the condition of the premises and collecting rental payments, can increase the profitability of the investment.

Investing in energy-efficient technologies (such as solar panels) can reduce energy costs and make a property more attractive to tenants.

Proximity to well-developed infrastructure such as transport, shops, restaurants can increase the value and demand for real estate.

Choosing a professional management company with a good reputation can ensure effective management and improve profitability.

When done correctly, all of these measures can have a positive impact on the profitability and value of your property.

Tips for choosing real estate: planning long-term and short-term investments

The higher the profitability, the riskier the investment. However, in Cyprus it is possible to choose investment property in the golden mean, which will ensure stable price growth and will bring about 8% ROI.

Here are some tips that can help you make informed decisions:

Carefully study the property market in Cyprus. Consider different neighborhoods, property types, and current prices.

Choose properties in good locations, close to beaches, restaurants and other amenities.

Decide on the type of property that best suits your investment goals. This could be residential property for long-term rental or quick resale after completion of construction, commercial properties, short-term rental properties, etc.

Determine what your goal is to generate income: is it income from long-term rentals, short-term rentals for tourists, or from an increase in value in the future.

Explore the prospects for value growth in selected areas. Consider plans for infrastructure development and other factors that may affect property values. Now the most popular city is Limassol, Paphos and Larnaca are very actively developing, but in the near future, so far underrated developing areas such as Troodos, Pomos, Polis, Protaras and Ayia Napa will show good prospects.

Consider the costs of property maintenance, taxes and utility bills. This is an important aspect when calculating overall profitability.

Carefully assess the condition of the property. If rentals are planned, the property needs to be in good condition to attract quality tenants.

Consider using professional property management companies to maintain and rent your property.

Be aware of your risks. Consider possible changes in the economic situation, politics and other factors that may affect the real estate market.

It is important to note that the choice between long-term and short-term strategies depends on the investor’s investment goals, risk tolerance, financial situation and other individual factors. Many investors also use a combination of both strategies to achieve a variety of goals.

Long-term investments

The main goal of long-term strategies is to create and increase capital over a long period of time. Focused on a long period, which can vary from several years to decades.

Long-term investors can use strategies such as buy and hold, portfolio diversification and rebalancing to achieve long-term investment goals.

This type of investment is more tolerant of short-term market fluctuations, as it is focused on long-term profit and does not aim at short-term speculation.

Long-term investment strategies

Developing regions
Regions with high growth potential can provide opportunities for significant capital investment and property value growth over time. These in Cyprus are Ayia Napa, Protaras, Polis, Pomos, Paralimni.

Long term rental
Renting out real estate for a long term can provide stable income on a long-term basis. This is especially suitable for residential and commercial properties.

Infrastructure projects
Investing in real estate located near infrastructure projects such as airports, ports and roads can help increase property values. In Cyprus, airports are located in the cities of Larnaca and Paphos.

Social infrastructure projects
Investments in social infrastructure such as health clinics, schools and sports facilities can benefit the community and create long-term demand.

Short-term investments

The main goal of short-term strategies is to make quick profits in a short time. Focused on short-term periods, often from a few weeks to a few months. This often means purchasing real estate off-plan and resale it after completion of construction. Or the acquisition of real estate in poor condition, its renovation and subsequent sale after renovation.

Short-term investment strategies in real estate

Flipping
The practice of purchasing real estate for the purpose of quickly resale at a profit. Requires good knowledge of the market and resources for repairs.

Arbitration
Investments in real estate for subsequent short-term rental, for example, through platforms such as Airbnb. This can generate high short-term profits.

Renovation
Purchasing real estate for the purpose of renovation and improvement. After renovation, the property can be resold or rented out at a higher price. This is the most high-margin type of real estate.

Real estate trade
The practice of buying and selling real estate with the expectation that the price will increase over time. Allows you to make short-term profits from the difference in

Advantages of investing in real estate in Cyprus

The property market in Cyprus has demonstrated remarkable strength and resilience, making it an attractive destination for property investment. In addition to the demand for real estate and the growth of its profitability, there are some other advantages:

Tax benefits

One of the advantages is the absence of a tax on the increase in value when selling real estate by individuals. This promotes the free circulation of real estate and stimulates investment.

The VAT rate on new properties could be reduced to 5%, especially for the first 200 square meters of living space, supporting the development of the construction industry.

Quickly obtain permanent residence for yourself and your family

Investors who purchase property in Cyprus for an amount over €300,000 plus VAT can obtain permanent residence for themselves, their spouse and dependent minor or student children in just 2 months. Of course, this period may be longer, but still, the accelerated procedure allows you to become a permanent residence holder much faster, since according to the standard procedure this process takes at least 1 year.

High profitability.

The profitability of real estate in Cyprus is one of the highest and most stable in Europe — on average 5-8% per annum. Prices for Cypriot real estate grow annually by 1-4%. In addition, net rental income in most cases exceeds the mortgage rate.

Wide selection of properties

Cyprus offers a variety of property types — from apartments on the coast to villas in the mountains. As well as office buildings, innovation hubs, objects for renovation, creative projects and much more. Investors can select properties according to individual preferences and goals.

English law and property protection

In Cyprus, English law prevails, the center of which is the protection of private property, which gives transparency and predictability to real estate transactions. The Cypriot legal system not only provides strong protection for property, but also has a strong legal framework in close connection with EU law.

Figures and percentages may vary depending on specific conditions and market conditions. On average, to summarize, we can emphasize that the ROI is often 8-10%, short-term rentals during the hot season can bring a return on investment of up to 35%, when resale of a building after completion of construction you can get a profit of 30%, and renovated real estate can generate income of up to an incredible 70%. Of course, these figures are subject to change due to changes in politics and the economy, but a look at Cyprus’s hindsight suggests stability and continuation of these trends for a long time, at least.