International expert opinions assess the real estate sector of the Republic of Cyprus as the most promising and profitable in Europe. This is based on economic stability, price attractiveness and the implementation of new infrastructure projects.
At the moment, the market is very active, with a good response from buyers: houses and apartments with an optimal price-quality ratio are dispersed quickly enough. Timely investment in Cypriot real estate opens up the possibility of diversification of business and guarantees a stable income. Taking into account the factor of time popular wisdom can be interpreted as follows: do not postpone the purchase of the object for tomorrow, if the conditions allow you to do it today.
Residential real estate
The increase in the cost of Cypriot apartments for 2022, in some cases, reached 15-20%. Moderate forecasts realtors promise a slowdown in price growth, but demand for this type of real estate remains high. Rising credit rates have reduced the interest of Cypriot residents in new buildings, while the percentage of foreigners exceeded the mark of 50 and is steadily moving up. Most buyers from European countries fall on the Scandinavian region, the UK and Germany, which can be confidently called the most developed countries of the Old World. Such investors have a high purchasing power and, in the process of addressing the Cypriot real estate market, are able to make it play up.
Investors from third countries, in addition to real estate, attracted by the possibility of obtaining a Cypriot residence permit. A significant percentage of this category of buyers are citizens of Russia, which in the conditions of application of international sanctions policy, seeking to obtain official status of one of the EU countries. Cyprus provides such an opportunity through the purchase of new residential or commercial real estate worth 300 thousand euros + VAT. Apartments in the price category 300-500 thousand, located in Limassol and Larnaca, are in high demand, so those wishing to buy them should hurry. Every month housing from this segment is further and further away from the coast of the azure sea.
The rise in prices for building materials has become worldwide phenomenon. Their share in the project of an individual house is more than 60%, and the total cost of the estimate in the process of construction can increase by 20-30%. The President of the Building Contractors Associations of Cyprus stated that such an increase in price prevents the majority of Cypriots from investing in new private homes. As a consequence, the country's construction industry is reducing the number of small projects in favor of larger ones, such as office buildings and high-rise residential complexes. In light of the industry policy presented, buyers of detached homes should act more decisively, also due to the factor of rising land costs.
Last season's discovery, with a 22% increase in residential real estate sales, was the picturesque Paphos. The local market is predominantly represented by a large number of villas and apartments in low-rise complexes. According to expert opinion, the region offers the best quality of life on the island and is an ideal place for those moving to Cyprus in search of a more relaxed pace of life. Properties located in Paphos are in high demand from tenants, especially during the high sea season. Local properties are most often chosen by residents of northern Europe and especially the former Cypriot metropolis, the United Kingdom. Over time, the British diaspora of Paphos is increasing, and with it the prices of real estate offered by developers.
Investments in the housing sector in Cyprus are among the most profitable in Europe. At the moment, the market is favorable situation for investors who expect to sell the apartment in the future at a higher price or use it for passive rental income. The rate of return on real estate in Cyprus reaches 7% per annum, which exceeds the same indicator in the Mediterranean competitors, such as Greece, Italy and France. Tourist season on the island is the longest in the region, which is also an undeniable bonus for the landlord. The maximum interest for such targeted use are apartments and villas located near the coast or business districts of seaside towns and Nicosia.
Tourist and office real estate
Tourism remains the most important sector of the economy of the Republic of Cyprus. Investment in hotel real estate or a project with a plot of land for further development is a promising and legitimate placement of capital. The Cyprus market offers a wide range of tourist industry facilities: private villas, apart-hotels, hotels and resorts with developed infrastructure. After the end of the pandemic, the flow of tourists to the island is constantly growing, so the profitability of the business is sustainable and can reach 5-7% percent per annum. However, the factor of growing cost of coastal land plots and construction materials may negatively affect the investor's balance sheet.
The relocation of about a thousand companies to the island has completely reshaped the business real estate market. On the one hand, the annual growth of rental value for some locations has reached 100%, on the other hand, offices in coastal cities have become scarce. Buying premises of this class, especially in the business capital of Cyprus - Limassol, the investor is guaranteed to receive a stable rental income, mainly from companies that have moved from abroad. In parallel with the classic lease, office leasing is actively developing in Cyprus, where the tenant confirms a firm intention to buy the premises from the owner. Replenishing the ranks of professionals from high-tech sectors stimulates entrepreneurs to organize co-working spaces and other platforms for creativity and professional activities.
Healthcare real estate
According to statistics, for every Cypriot doctor in 2022 there were about 250 patients, which is outstanding for EU countries. At the same time, the relocation of citizens from other countries to the island has been rapid. In order to preserve the patient-doctor ratio and insure Cyprus' high quality healthcare system from "overheating", the opening of new medical facilities at the moment seems rational. It should be noted that investing in such real estate has a high degree of profitability, also due to the actively developing government program to turn the country into an international center of treatment and rehabilitation.
Real estate in the service sector
Investing in premises for opening a restaurant, in light of the increasing population of Cyprus, is an excellent option for pragmatic entrepreneurs. The sunny island is famous for its delicious and healthy Mediterranean cuisine, and spending time in a local restaurant is preferred not only by tourists, but also by most locals. It is not difficult to notice that when moving to Cyprus, citizens of other countries bring elements of their national culture into the local society. At the same time, they need to visit familiar and traditional public institutions, especially during the period of adaptation in a new place. As a consequence, acquiring a site for opening an Irish pub, a German beer hall or a Russian restaurant at the moment is expedient and quite marginal.
The construction of new residential complexes and renovation of urban neighborhoods fuels entrepreneurial interest in investing in retail outlets and areas for the beauty industry. In this case, their owners have several options for doing business: to lease the premises, to open their own store or salon, to join an international consumer network.
In cities that receive the maximum number of foreigners, this direction seems to be the most promising. In their native countries, residents, and especially residents of big cities, are used to shopping and visiting stylists without leaving the agglomeration or their neighborhood. At the moment, the largest shopping centers of Cyprus are located in Nicosia, which means that the conditions of Limassol, Paphos and Larnaca allow for the successful development of the retail and beauty industry.
According to the forecast of European financial analysts, in 2023 the flow of foreign investment in real estate in Cyprus will increase. The value of properties will continue to rise as construction costs increase and as a reaction to economic and geopolitical events. As a conclusion, the most efficient allocation of capital can be described in two words: here and now.
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