Cyprus Real Estate Market Overview: Housing Costs, Popular Areas for Investment and Conditions for Obtaining Permanent Residence

The Citizenship by Investment program does no longer work in Cyprus, but there are still plenty of bonuses for investors in real estate on this island. Alexander Styranovsky, a representative of Cybarco Developments Ltd., told us more about this. The expert also shared with us information about the places where the cheapest real estate is sold in Cyprus, what prices are currently set for purchasing housing and renting, and approximately how much you can earn on real estate in this sunny country

Recently, the demand for short-term rentals has increased significantly.

Latest news and popular properties on the Cyprus market

— From the latest news on the Cyprus real estate market, I can highlight:

• Rising real estate prices. Property prices in Cyprus have increased throughout 2023, especially in popular tourist areas such as Limassol and Paphos. In the first quarter of 2024, the average price per square meter was 2426 euros, which is 7.3% more than in the first quarter of 2023.
• Mortgage interest rates are rising, as in many other countries. Currently, the average mortgage interest rate in Cyprus is around 3.5–4.5%. However, the actual rate a borrower will pay may vary depending on factors such as credit history, mortgage amount and loan term.
• Increased demand for short-term rentals. The rise in tourism has led to increased demand for short-term rentals, pushing up prices for apartments and villas in popular destinations. Platforms like Airbnb and Booking.com are in high demand, leading to an increase in the flow of investment into this sector.

Speaking about demand, I note that it has also increased in the segment of long-term rental real estate, especially in popular tourist and urban areas. This is due to the large number of expats who come to Cyprus to work or study.

Residential real estate has also been very popular in the last few years. This is due to population growth, immigration and interest from foreign buyers.

Real estate properties in high demand:

• Affordable housing. Apartments and houses at affordable prices are in great demand from local residents and foreigners on a limited budget. The Government of Cyprus offers housing subsidy schemes to support low-income buyers.
• Luxury real estate. Luxury apartments, villas and penthouses are attracting growing interest from wealthy citizens and investors. These properties offer a high level of comfort, exclusive amenities and a prestigious location.
• Property in coastal areas, which include, for example, Limassol and Paphos. They attract buyers with their picturesque location, sandy beaches and tourist attractions. 
• Properties for short-term rental. Investors and property owners are increasingly investing in properties suitable for short-term rentals due to high demand and income potential.

It is important to say that despite the high demand, the problem of the Cypriot market is the limited supply of housing — this leads to competition and a further increase in prices.

Property prices in Cyprus have increased by an average of 10% over the past year.

Sales volumes and prices of housing in different cities of Cyprus

— According to the Cyprus Land and Survey Department, a total of 17,689 residential properties were sold in Cyprus in 2023, an increase of 22.5% compared to 2022.

Sales distribution by quarter:

• First quarter: 3712
• Second quarter: 4317
• Third quarter: 4727
• Fourth quarter: 4933

By property type:

• Flats and apartments: 12,733
• Houses: 4956

By districts:

• Limassol: 6351
• Paphos: 4419
• Nicosia: 3824
• Larnaca: 2043
• Famagusta: 1052

— Property prices in Cyprus continue to rise, albeit at a more moderate pace than in previous years. According to the Cyprus Land and Survey Department, in the first quarter of 2023 the average price of residential property was 2426 euros/m², which is 7.3% more than in the first quarter of 2022

I will give specific examples of prices for apartments and houses in major cities of Cyprus:

Apartments:

• Nicosia: 2100–3500 euros/m²
• Larnaca: 1800–2800 euros/m²
• Limassol: 2500–4000 euros/m²
• Paphos: 2000–3200 euros/m²
• Famagusta: 1600–2500 euros/m²

Houses:

• Nicosia: 2500–4000 euros/m²
• Larnaca: 2000–3000 euros/m²
• Limassol: 3000–5000 euros/m²
• Paphos: 2200–3500 euros/m²
• Famagusta: 1800–2800 euros/m²

Property prices in Cyprus have increased by an average of 10% over the past year.

It should be noted that the figures shown are averages and the actual price may vary depending on factors such as location, size, age and condition of the property.

The cheapest housing in Cyprus is sold in the following areas:

• Famagusta: The average price for residential property is around 1600–2500 euros/m².
• Larnaca — about 1800–2800 euros/m².
• Paphos (suburban areas) — about 2000–3000 euros/m².

The most expensive housing in Cyprus is sold in the following areas:

• Limassol (city center and coastal areas): the average price for residential property is around 3,000–5,000 euros/m².
• Nicosia (city center and prestigious areas) — about 2500–4000 euros/m².
• Paphos (coastal areas) — about 2500–3800 euros/m².

The cost of utility bills in Cyprus can vary depending on the size and type of property, as well as the region. On average, you can expect the following monthly expenses:

• Electricity: 50–150 euros
• Water: 20–50 euros
• Garbage: 10–20 euros
• Internet: 20–50 euros

It is no longer possible to obtain citizenship by investment, but permanent residence is still available.

The attractiveness of the Cyprus real estate market for investors

— According to the Cyprus Land and Survey Department, the most active buyers in Cyprus among foreigners are:

• Russians
• Chinese
• Lithuanians
• British
• Ukrainians
• Israelis

The most popular regions among foreigners for buying a home are Limassol, Paphos, Larnaca, Famagusta.

Despite the recent cancellation of the Citizenship by Investment program, the Cypriot property market remains attractive to investors for the following reasons:

• Favorable taxation, including low real estate tax and no capital gains tax for off-island individuals.
• High rental income. Cyprus is a popular tourist destination, which creates opportunities for high income from rental properties.
• Relatively affordable property prices compared to other European countries.

In addition to the above, the Cyprus government offers a number of bonuses for investors in Cyprus real estate, including:

• Reduced VAT rate on new buildings. Investors purchasing new buildings are entitled to a reduced VAT rate of 5%.
• Inheritance tax benefits. Spouses and children inheriting property in Cyprus are exempt from paying inheritance tax.
• Possibility of obtaining a residence permit through real estate investment. Foreign buyers of property worth €300,000 or more can apply for a permanent residence permit in Cyprus.

Other advantages include a favorable Mediterranean climate with long hot summers and mild winters, beautiful sandy beaches, low crime rates and the widespread use of English.

— There are several ways to make money on real estate in Cyprus:

• Rental. Rental income averages 5–8% of the property value per year.
• Resale of real estate. Capital gains can vary depending on market conditions, but on average investors can expect to earn returns of 5-10% per year.
• Real Estate Development*: The returns from real estate development can be higher, but they also come with greater risk. Investors can expect returns of 10-20% per year.
• Shared ownership of real estate. Income depends on ownership percentage and type of property.

* Real estate development includes the following stages: purchasing plots, drawing up a business plan and detailed plans, arranging financing, design, construction, sale or rental of developed real estate.

I would like to note that it is always important to weigh the risks and remember that any real estate market can be unstable and there is no absolute guarantee of making a profit.