What are the advantages of buying commercial real estate in Cyprus?
If you have a certain amount of money that you want to invest in real estate, then the most obvious option would be to buy a home.
Despite the fact that this is the most common way for private investors to earn money on rent, there are those who claim that it is even more profitable to invest money in commercial premises — an office, a store, a beauty salon, or a warehouse. Rental rates for such objects, as a rule, are higher than for apartments, especially in the post-COVID market, and the payback period for investments is shorter.
Experts note that street retail has a good position in terms of profitability in the Cypriot real estate investment payback period. In urban areas it can be 10-12%, in the center of large cities — 8-10% (a payback period of 10-12 years). However, there is no absolute figure for street retail: each place is unique.
For comparison: renting a house in Cyprus brings a slightly more modest income. Long-term rent can bring 4-5% per annum, short—term - 7-8% per annum, and in the season - 8-10% per annum.
In addition to the price and payback period, commercial property has other advantages. These include, for example, the fact that this market is better regulated than the more difficult apartment market. Here, all contracts are formalized, and the owners pay taxes — this makes it easier to resolve disputes.
In addition, there are fewer repair problems. Since often the tenant of commercial premises does the repair of the premises, while the repair of the apartment, if it is needed, usually falls on the landlord.
However, it should be understood that commercial premises are a more complex product than apartments. The success of their work for their owner depends on a combination of factors: destination (offices, trade, services, etc.), location, layout, transport accessibility, environment. Sometimes the absence of only one of them makes the purchase of premises unprofitable. Therefore, the buyer needs to calculate everything in advance.
In addition, the advantages of investing in commercial real estate on the island include:
- A wide range of commercial real estate for opening any business in Cyprus.
- One of the lowest taxation systems in Europe.
- A good geographical location that makes the business successful in different regions of Cyprus.
- The compact size of the island, which reduces logistics costs.
- An opportunity for investors to participate in the accelerated permanent residence registration program.
Both buyers of residential and commercial real estate can become participants of the residence program. When buying an office at a price of 300 thousand euros, the right to obtain permanent residence is granted.
At the same time, not only businessmen can obtain a residence permit, but also their family members: spouses, parents, minors and financially dependent children under the age of 28. After 5 years, residential or commercial real estate purchased under this program can be sold and return your investment.
The Cyprus commercial real estate market has a wide range of offers for every taste. The most in demand premises for beauty salons, pharmacies, grocery stores and coffee shops. In new areas or rapidly developing suburbs, all formats that are potentially in demand from future residents are popular — shops of various segments, sports studios, children's development centers, medical centers and more. The fastest places to leave the market are in places with high traffic and high population density near the object.
As for office space, it is better to seek advice from DOM Real Estate specialists. Office space requires a clear business plan and a clear understanding of where these premises are located, who may need them and how long they will be in demand.
Features of commercial real estate in Cyprus
In the Cyprus real estate market, there are objects of different layouts and configurations that are suitable for creating:
- retail space
- storage space
- office center
- entertainment complex.
Multifunctional premises that combine residential and commercial real estate are especially popular with investors.
According to the location, Limassol, which is the business heart of the island, a port city and the location of the headquarters of large companies, traditionally arouses the greatest interest among buyers of commercial real estate. Equally popular are the industrial areas of Larnaca, the capital Nicosia and the resorts of Paphos and Ayia Napa.
The commercial real estate of Cyprus, which is located in developing tourist centers, is particularly attractive for businessmen and entrepreneurs. The profitability of facilities in these areas is growing from year to year, and therefore, with the right choice, their purchase can become a successful business investment.
When buying a property in Cyprus, it is very important to take into account not only the location of the object and its surroundings, but also the stage of construction at which it is most profitable to purchase this object. So you can invest in commercial real estate at a stage when construction has not yet begun, but the construction plan has already been approved, at the initial stage of construction, at the finishing stage, or buy a fully finished room.
If your wallet and time allow, then buying commercial real estate at the initial stage will save up to 30% of the total cost. However, then the profits from renting out real estate will have to wait, and in the conditions of constant crises of recent years, it is quite possible that this expectation will be somewhat delayed.
However, as the two years of the pandemic have shown, the Cyprus real estate market is quite painlessly able to overcome even the most difficult periods. The coolest specialists of DOM will protect you from pitfalls when purchasing real estate.
Have you decided to buy an apartment or a house in Cyprus? Then contact DOM! The website has a huge selection of real estate —residential and commercial. Experienced agency specialists will be happy to help you make the right choice.
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