Foreign investors have shifted their attention from luxury properties to more budget options. Following the closure of the Citizenship for Investment programme in Cyprus, they are no longer interested in very expensive properties, with many preferring homes costing between €300,000 and €500,000, which will allow them to obtain a residence permit.
This was announced on Monday 16 September by the consulting firm Danos & Associates.
The Cyprus property market has undergone significant changes over the past year, according to new analysis. Buyers are now actively looking for properties that will entitle them to a residence permit rather than citizenship. This trend is expected to continue in 2024. Incidentally, sales of luxury properties, especially those worth more than €1.5 million, fell by 26% in 2023, indicating a decline in buyer interest. Last year, a total of 164 sales transactions were concluded for properties worth more than €1.5 million. Their total value was 440 million euros. Despite the seemingly significant figures, the share of luxury homes in the total value of transactions was only 1%, the lowest since 2013. Danos & Associates highlighted that the luxury property market in Cyprus has been in decline since 2018, following the peak years of 2016 and 2017. While sales of luxury homes were previously driven by foreign investors seeking to obtain Cypriot citizenship through an investment programme, there are now simply no such aspirants.
The company noted that the most successful year for the luxury property market in Cyprus was 2017, when the peak demand for such properties on the island was recorded. The impact of the 2017 boom played a crucial role in the revival of the property market as a whole, which suffered as a result of the 2013 financial crisis. The luxury segment saw impressive growth, with sales up 43% year-on-year. However, preferences began to change after the end of the scheme.
Prior to this, between 2010 and 2013, the segment of luxury homes worth more than €1.5 million in Cyprus remained stable, with around 40 such properties sold annually. In 2014, demand for luxury homes increased sharply, reaching a peak in 2017. Since then, sales have started to decline, with investors shifting their attention to mid-priced properties aimed at foreign buyers seeking residence permits rather than citizenship.
Despite the above, Danos & Associates experts do not rule out a moderate increase in interest in elite housing over the next few years. In addition, geopolitical factors, particularly tensions in the Middle East, are expected to drive interest from foreign buyers, particularly from Europe and Asia.
Although the luxury property market is unlikely to return to the peak levels seen in 2017, the company believes that interest in such properties will continue.
Finally, the programme for obtaining permanent residency through property investment in Cyprus, also known as the 'golden visa', remains an important factor in attracting foreign investment.
Despite the challenges of rising construction costs and new regulatory changes, foreign investors will continue to show strong interest in Cypriot residential property," Danos & Associates concluded.
