The real estate market of Cyprus has more or less stabilized: the price of apartments is gradually increasing, the demand is not decreasing, and the programs of obtaining a residence permit for investment continue to work. But if you read more: at what price now you can buy an apartment or a house in the largest cities of the island? Who buys real estate in Cyprus for investment? And is it true that the residence permit program for investment has tightened? The answers to these and other questions about the state of the real estate market in Cyprus in 2023 are in latest analytics.

Contents:

  1. The residential real estate market in Cyprus is growing steadily
  2. The most popular is Limassol, the most expensive houses are in the capital
  3. Obtaining a residence permit of Cyprus through the purchase of real estate

The residential real estate market in Cyprus is growing steadily

Cyprus offers not only an excellent climate and rich culture, but also opportunities for life, work and investment. Among other things, the country has long attracted foreigners through the programs of obtaining citizenship and residence permits through the purchase of real estate, which provide a unique opportunity to combine profitable investments with new prospects of living in a stable and attractive country.

According to DEPARTMENT OF LANDS AND SURVEYS, in the first half of 2023, Cyprus had 7,689 transactions worth EUR 1.7 billion. If you analyze the real estate market of Cyprus since 2016 it is worth noting a steady increase in the number of transactions. The exception was only 2020, a "covid" year (-23% compared to the previous period).

Number of purchase and sale transactions of residential real estate in Cyprus

If we consider separately the segment of premium real estate*, according to the Cyprus Sotheby’s International Realty report, 23% of all transactions in the first half of 2023 were made with elite properties. Cash turnover from the sale of premium houses and apartments in 2023 amounted to more than half of the total market volume — 936.2 million euros (54%).

*The premium real estate market in the report of Cyprus Sotheby’s International Realty refers to houses worth 500 thousand euros and apartments worth 200 thousand euros.

In the segment of premium real estate in the first half of 2023, 80% of all transactions with premium real estate are made with apartments and 20% with houses. It is worth noting the change in the structure of demand for properties: the number of transactions with houses increased by 22% compared to the first half of 2022, and in the segment of apartments transactions became 10% more. At the same time, the total value of transactions with apartments decreased by almost 2%.

The most popular city for the purchase of real estate in 2023 became Limassol - 35% of all real estate transactions. Next in popularity is Paphos (23%), Larnaca (19%), Nicosia (18%) and Famagusta (5%). The same trend was observed in 2022. It is worth mentioning the change in the structure of city deals, which took place in 2020. Then more and more often the property was bought in Limassol, but the second most popular place was Nicosia — the capital of Cyprus — compared to 2019 there was registered at 7 p.p. more transactions. At the same time, Paphos lost 5 points in 2020

Number of purchase and sale transactions of residential real estate in Cyprus by city

Considering the situation in the real estate market in each city separately, we can distinguish the following features.

Limassol is the largest port on the island and offers a wide range of premium properties, including luxury apartments and villas on the first line — more than half of the deals in the 2nd quarter of 2023 are made with premium facilities.

This is evidenced by the distribution of transactions in price ranges — according to the report of Cyprus Sotheby’s International Realty, 52% of all transactions with houses and 44% of all transactions with apartments in the first half of 2023 was in the range of 200 to 500 thousand euros. Considering the distribution for 2016-2022, it is impossible not to note: apartments worth up to 200 thousand euros accounted for almost half of all transactions with apartments, while the situation in the segment of houses has not changed.

Median prices for premium facilities for the total of Q2 of 2023 in Limassol decreased compared to the same period in 2022: elite apartments lost more – up to -20% and as a result, the median price – 325 thousand euros, houses became cheaper by 12% Median price at 700 thousand euro.

Paphos is known for its historical attractions and beaches, the city is the center of tourist attraction. In contrast to Limassol, with the properties of the premium real estate market for the second quarter of 2023 there were a little more than 20% of transactions, and in this segment more often give preference to houses, not apartments.

The distribution of transactions in price ranges has not changed in general since 2016. Deals up to 200 thousand euros prevail with apartments (on average 80% of all transactions with apartments), and with houses from 2016 to 2022 each 40% accounted for transactions up to 200 thousand euros and 200 to 500 thousand, and from 2023 on the range from 200 to 500 thousand began to account for 45% of transactions, and on the range up to 200 thousand – 35%.

The median price of premium homes for the total of Q2 2023 is down by 8% compared to Q2. 2022 and amounted to 750 thousand euros, and the median price for apartments slightly increased by 1% and amounted to 303 thousand euros.

Nicosia is the capital and business center of Cyprus. The popularity of premium real estate here is about the same as in Paphos, — 19% of transactions were made with this segment in 2Q. 2023. However, median prices for both houses and premium apartments show a positive trend compared to 2Q. 2022: +26 and +4% respectively. As a result, the median price of the premium house — 810 thousand euros, and apartments — 260 thousand euros.

It cannot be said that elite facilities are in great demand in the capital. From 2016 to 2022, 85% of all transactions with apartments were registered in the amount of up to 200 thousand euros. In 2023, 9% less transactions were registered in this range, and in the range of 200 to 500 thousand euros were made for 8% more transactions. The trend in the segment of houses has not changed significantly since 2016. About 45% of transactions are made in the amount of no more than 200 thousand. Euros and about 45% in the amount of no more than 500 thousand euros.

Located on the east coast of Cyprus, Larnaca is a major tourist and business centre, attracting tourists beaches, the promenade of Finicudes and the famous palm tree alley. There is a relatively small number of transactions with elite real estate — 12% of the total number of transactions in Larnaca in 2Q 2023.

The most popular segment of real estate since 2016 is apartments worth up to 200 thousand euros.

The median price of both houses and apartments decreased compared to 2 Q 2022 — 4% and 15% respectively and amounted to 597 thousand euros for houses and 255 thousand euros for apartments.

Famagusta is a tourist town with, in principle, the lowest number of transactions in Cyprus, and with expensive real estate –- in the second quarter registered only 14 (or 8%). 90% of transactions since 2016 are registered with apartments up to 200 thousand euros. In the first half of 2023, the number of transactions with houses worth from 200 to 500 thousand increased by 13%. 63% of all transactions with houses were made in this range.

The largest drop in the median price of premium properties occurred in Famagusta in the segment of apartments: -24% and the lowest median price of all cities analyzed – 246.4 thousand euros. Premium buildings showed a slight increase: +1% and 730 thousand euros.

According to official statistics of DEPARTMENT OF LANDS AND SURVEYS, in the first seven months of 2023, 2,382 sales were carried out with the participation of foreign nationals, 44% of whom were European Union (EU) citizens and 56% of whom were citizens of countries outside the EU.

If we compare the figure for the same period in 2022, the difference will be less than 1% — there were 2,375 sales transactions involving foreigners. At the same time, EU citizens participated in 65% of transactions, and citizens of other countries in the remaining 35%. The same distribution persisted in 2022.

Thus, in 2022, 30% of all sales were made with the participation of foreign buyers, and in the first half of 2023 — 26%.

Europeans are less and less buying real estate in Cyprus. But where is the demand?

Obtaining a residence permit of Cyprus through the purchase of real estate

The purchase of real estate in Cyprus by foreign citizens is often motivated by obtaining a residence permit or citizenship of that country. Cyprus has introduced residence and citizenship programs through the purchase of real estate in 2013.

In 2020, the program "Cyprus Citizenship by Investment Program", which involved investing at least 2 million euros in the purchase or construction of buildings, land management or other infrastructure projects, was stopped.

At the moment, the residence permit of Cyprus can be obtained only under the program "Cyprus Permanent Residence Permit Program". Until recently, the rules of the program were as follows: in order to obtain a residence permit of Cyprus it was necessary to purchase a new housing unit in Cyprus worth at least 300 thousand euros (excluding VAT). The first 200,000 euros had to be paid before the application date. Moreover, it had to be the purchase of the first home in the country. It is also necessary to maintain a guaranteed annual income received outside Cyprus in the amount of at least 30 thousand euros and a buyer must not have a criminal record.

Since May 2023, the terms of the program were changed: the minimum amount of investment remained the same, but transfer a minimum of 300 thousand euros to the account of the developer must be at once, regardless of the commissioning of the facility. The amount of annual income has increased. Now it is not less than 50 thousand euros.

It is worth noting that the Government of Cyprus is conducting a verification of the origin of funds that are used for the acquisition of real estate for the purpose of obtaining a residence permit. The main purpose of these actions is to prevent the illegal legalization of money and to ensure the transparency of financial transactions.
Another change since June 2023 concerns an amendment to the law on reduced VAT rate for the first real estate purchased in Cyprus. At the moment, the preferential VAT rate will not be applied to the construction of real estate. Changes may negatively affect the level of demand for real estate by foreign investors.

Although recent changes in legislation may cause some uncertainty in the Cyprus real estate market, traditional demand factors such as lifestyle, residence permit programs and high potential return on investment, It remains relevant and can support market sustainability.