Cyprus is a popular tourist destination and one of the most attractive markets for resort property investment. Investing in accommodation on the island can be a lucrative source of income, especially with the right approach to holiday rentals.
However, there are a number of features and requirements to consider before buying. This report will tell you what to look out for when investing in holiday property in Cyprus and how to make your investment as effective as possible.
Why invest in holiday homes in Cyprus?
- Constant demand for rentals. The flow of tourists to Cyprus is consistently high due to its mild climate, beautiful beaches and rich cultural history. Even out of season, many regions attract travellers from all over the world.
- Seasonality. Or rather, its complete absence. The island of Aphrodite has around 300 days of sunshine a year, making it possible to rent accommodation almost all year round.
- Guaranteed currency income. Rental income is paid in euros, protecting your investment from fluctuations in other currencies.
- Developed infrastructure. Resorts in Cyprus are actively developing hotels, restaurants, shops and sports centres, making them attractive to holidaymakers.
What to consider before buying a holiday home?
1. Choice of location
Cyprus has several popular tourist areas which are ideal for short term holiday rentals:
Free areas of Famagusta
The Famagusta Free Areas region includes several attractive holiday villages for investors, such as Protaras, Paralimni and lively Ayia Napa. During the summer, when the tourist flow is at its peak, the demand for rentals increases dramatically, allowing investors to generate income from short-term rentals.
Ayia Napa
Ayia Napa is the 'nightlife capital' of Cyprus, popular with young tourists and party-goers. The town is famous for its beautiful beaches, such as Nissi Beach, water activities and vibrant atmosphere. Investors may wish to consider apartments and small villas suitable for short-term rentals, as tourists often prefer accommodation close to the centre. Average rental yields here are quite high, especially during the summer season. Ayia Napa is also an excellent option for investors looking for a quick return on investment due to high seasonal occupancy.
Protaras
Protaras is a quiet and family oriented resort with a more secluded atmosphere. Protaras attracts tourists with its cosy beaches, ideal for holidays with children, and many family activities. Investment in Protaras is geared towards long-term stability, as the town is popular with European families and long-term tourists. Villas and spacious apartments with sea views and access to the beach are in demand. Due to Protaras' reputation as a family resort, you can expect a stable and secure rental income. Paralimni is close by and is mainly inhabited by local Cypriots and expats looking for a high quality and relaxed lifestyle.
Limassol
Limassol is the economic and cultural centre of the island, attracting both tourists and expats, making the property market here particularly active. Limassol has a well-developed infrastructure with many office centres, shops, restaurants and beach clubs. This makes property here suitable for both short and long term rentals. Limassol attracts tourists and business travellers all year round, so letting accommodation here can generate income even in the low season. Investors can consider apartments and penthouses in modern complexes as well as luxury villas on the coast.
Larnaca
Larnaca boasts a convenient location and affordable property prices. The town is close to the international airport, which is convenient for tourists travelling to Europe. Larnaca has Blue Flag beaches, historic sites and an active tourist life, yet property prices are often lower than in other resort areas. Larnaca attracts families, young people and expats who prefer more affordable accommodation with amenities. Investors should look for apartments and villas close to the coast. Larnaca can be successfully rented out to both tourists and expats who choose to live in the city permanently.
Paphos
Paphos is renowned for its cultural heritage and mild climate, making it an attractive year-round holiday destination. The city is a UNESCO World Heritage Site for its archaeological sites and is also a popular holiday destination for the British and Scandinavians. Tourists come to Paphos not only for the sun and beaches, but also for the historical sites such as ancient Roman mosaics and the tombs of kings. Property in Paphos ranges from traditional Cypriot houses to modern apartments and villas ideal for long term rentals. Investors can count on a stable income even during the winter period.
2. Obtaining a purchase permit
Foreign nationals wishing to purchase property in Cyprus must obtain a permit from the local authorities. This is usually processed through the Council of Ministers of Cyprus and the process involves verifying your identity and sources of funds. While the process is easier for EU citizens, investors from other countries must apply. This permit can be easily obtained with a clean history and clear source of funds, the process takes approximately 2 months and can be handled by a lawyer.
3. Taxation Features
Cyprus offers one of the lowest rates of property tax in Europe, which makes investment even more attractive. It is important to consult with a lawyer or accountant to understand the tax structure and possible incentives specific to you. Next, you will need to formalise the property for rental and register it with the Land Registry. This requires an income certificate in Cyprus.
Tips for successful holiday letting
- Holiday rental registration. Renting out property to tourists requires official registration, especially if you want to avoid legal problems. Cyprus has a Short-Term Letting Act which requires you to register the property with the relevant authorities and obtain a licence.
- Property management. Given the seasonal nature of the business, it is advisable to employ a property management company to take care of the letting, cleaning and maintenance of the property. This will free up your time and ensure a steady stream of tenants.
- Optimise utility costs. Electricity is expensive in Cyprus and its cost can have a significant impact on your rental income. By installing energy saving systems such as solar panels or energy monitoring devices, you can reduce these costs.
- Provide comfort for tenants. Competition in the short-term rental market is fierce, so it is important to offer additional amenities to attract guests: quality furniture, internet, a fully equipped kitchen and modern security systems. Clients may also need help with transport and finding reliable services in Cyprus.
- Maintaining a high rating. Booking platforms operate on a rating system and tenant reviews play a key role. Creating a comfortable and clean environment, paying attention to detail and providing timely local information will help to maintain good reviews.
Investing in holiday property in Cyprus is an opportunity to generate a steady income and, with a well thought out approach, capital growth. To be successful in letting accommodation, it is important to take into account the specifics of the region, organise the management of the property competently and comply with all legal requirements. Given the popularity of Cyprus among tourists, this investment can be a really profitable solution.
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- Which city to choose for property investment in Cyprus: Limassol or Paphos?
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