Buy to Rent: Profitable Seaside Property in Cyprus

Kapparis is a small area in the southeast of Cyprus. Today it is regarded by investors as an ideal location for long-term investment. There are many advantages, and demand has not yet heated up enough for prices to rise above those in Ayia Napa. This article contains examples of profitable real estate options with a detailed breakdown of their returns and a full overview of the area, to make it easier to understand the situation and see the real picture.

What is included in the total investment amount

It is important to understand that the costs of buying real estate are not limited to the property price alone. They also include:

1. VAT, in Cyprus it is called VAT (when buying from a developer — 19% or 5% if the conditions for a primary residence are met, i.e. without subsequent rental);
2. furnishing;
3. legal support;
4. insurance;
5. annual operating expenses: utilities, “refresh” repairs, and more;
6. management expenses when renting out the property.

The amount may reach several thousand, however, it is successfully covered by income received from short-term or long-term rentals.

2-bedroom apartment 400 meters from the sea

Brief description: apartment with an area of 83 m2, two bedrooms, spacious loggias, a jacuzzi, a rooftop relaxation area; for residents of the complex — a swimming pool, playground, parking, security, and gym. Location: Kapparis, Malama Beach.

Investment formation

Initial and main expenses:

1. property cost: €285 000;
2. VAT 19%: €54 150;
3. furniture: €12 000;
4. lawyer: €1 500.

Total investment: €352 650

Annual operating expenses

1. furniture depreciation: €2 400;
2. maintenance and repairs: €2 850;
3. insurance: €350;
4. utilities and management: €1 550.

Total annual expenses: €7 150

Profitability for short-term rental

With 80% occupancy over 7 months and an average rate of €250 per day, the gross income is €42 600.

After deducting the management company commission and operating expenses, €26 930 remains before tax.

Tip! Profit tax is calculated according to the following scheme: on a progressive scale, Special Defence Contribution 3% of 75% of income, while the first €19 500 is tax-free, and the following amount is taxed at 20%.

In this example, the calculation will look like this: on the progressive scale, Special Defence Contribution €26 930 × 75% × 3% = €606; Income tax: the first 19 500 — 0%, the remaining 7 430 × 20% = €1 486. Total taxes: €2 092

Final ROI calculation: €26 930 − €2 092 = €24 838, or 7.05% per annum.

Reference! ROI (Return on Investment) is an indicator of the “net” profitability of investments.

3-bedroom villa, 500 m from the sea

Brief description: villa with an area of 145 m2 in a gated complex, with a parking space, private pool, barbecue area, rooms equipped with balconies, and residential infrastructure.

Investment formation

Initial and main expenses:

1. property cost: €550 000;
2. VAT 19%: €104 500;
3. furniture: €15 000;
4. lawyer: €4 000.

Total investment: €673 500

Annual operating expenses

1. Furniture depreciation: €3 000;
2. Minor repairs: €5 500;
3. Insurance: €450;
4. Utilities (including the complex) and management: €2 100.

Total annual expenses: €11 050

Profitability for short-term rental

With 80% occupancy over 7 months and an average rate of €350/day, the gross income is €59 640.

After deducting the management company commission and operating expenses, €36 662 remains before tax. The tax will amount to €4 257.

Final ROI calculation: €36 662 − €4 257 = €32 405, or 4.81% per annum.

Profitability for long-term rental

With full occupancy and rent of €3 000, the gross income will be €36 000/ year. 

After deducting the management company commission and operating expenses, €29 550 remains before tax. The tax will amount to €2 675.

Final ROI calculation: €26 875, or 3.99% per annum.

A small forecast for the next 5 years: 

1. rent increase +3%/year (approximately);
2. property price +3%/year (approximately);
3. IRR ≈ 8.1–8.4% per annum;
4. stable market growth.

3-bedroom villa at the off-plan stage

Brief description: a cozy villa with three bedrooms and its own swimming pool in a gated complex; parking, relaxation area, panoramic windows, comfortable layout, beautiful sea view.

Investment formation

Initial and main expenses:

1. property cost: €655 000;
2. VAT 19%: €124 450;
3. furniture: €15 000;
4. lawyer: €4 000.

Total investment: €798 450

Annual operating expenses

1. Furniture depreciation: €3 000;
2. Minor repairs: €6 500;
3. Insurance: €450;
4. Utilities (including the complex) and management: €2 100.

Total annual expenses: €12 100

Profitability for short-term rental

With 80% occupancy over 7 months and an average rate of €350/day, the gross income is €59 640.

After deducting the management company commission and operating expenses, €35 612 remains before tax. The tax will amount to €4 023.

Final ROI calculation: €31 589, or 3.96% per annum.

Profitability for long-term rental

With full occupancy and rent of €3 000, the gross income will be €36 000/ year. 

After deducting the management company commission and operating expenses, €28 500 remains before tax. The tax will amount to €2 675.

Final ROI calculation: €26 059, or 3.26% per annum.

A small forecast for the next 5 years: 

1. rent increase +3%/year (approximately);
2. property price +3%/year (approximately);
3. IRR ≈ 7.2–7.6% per annum;
4. stable market growth.

Why investors consider Kapparis

Kapparis has village status: this means the area is small. Part of it is located on the first line, with access to beaches and resort entertainment, while another part lies on a slight elevation, providing magnificent views with the calmest possible atmosphere.

The advantages of Kapparis for living and investment are undeniable:

1. Blue Flag beaches. The coastline of Kapparis is only 1 km long, but that is enough to spend more time by the sea. There are picturesque rocky shores where you can observe marine life, beaches with a gentle slope and soft sandy bottom for swimming with children, and a dog beach where you are allowed to come with a pet. The water everywhere is a perfect turquoise color, transparent, and very calm. Even in season there are few tourists.
2. Beautiful nature. Kapparis is famous for its orchards, greenery, and abundance of all kinds of vegetation (which, by the way, stays green and blooms all year round). The air is clean and pleasant, with no cars or industrial production.
3. Peaceful atmosphere. Even at the height of the season, it is difficult to encounter streams of tourists occupying the entire promenade. The atmosphere is as relaxed as possible, and there is no hustle and bustle at all: this is good for those who are tired of the city, noise, dust, and dream of strengthening their nervous system.
4. Convenient infrastructure. Protaras and Paralimni are 5 minutes away by car, Ayia Napa is 10 minutes away, and Larnaca or Nicosia can usually be reached in half an hour without traffic. Two new grand resorts are being built in the Famagusta area: Ayia Napa Marina and Paralimni Marina. Kapparis itself has everything you need: restaurants, cafés, kindergartens, schools, shops, pharmacies, gyms, and bank offices. 
5. Building density. The houses in Kapparis are only low-rise, and overwhelmingly these are villas and cottages. Each house has its own plot, and the houses are not “stuck” to each other. This ensures a high level of privacy and comfort. 
6. Investment attractiveness. Real estate in Kapparis is in demand for rental. Many people strive to come here for the winter to enjoy the silence, the sea, and the greenery. In season, Kapparis is popular with tourists with children and elderly people. At the same time, long-term rental brings 5–6% “net” annually, while short-term rental brings up to 12%.

Of course, in terms of leisure variety and real estate options, Kapparis cannot compare with Limassol and Nicosia. But it is chosen by different people, without the need to be at the center of active movement. After all, a coastal village offers a completely different lifestyle, which in the 21st century is in demand among different people.

Portrait of a real estate tenant in Kapparis

Besides local residents, Kapparis is loved by citizens of northern European countries: the British, Germans, Austrians, and Poles. There are quite a lot of emigrants and winter stayers from the United Kingdom: these are pensioners, people with children, and young introverted couples. Recently, the village has been increasingly populated by digital nomads from CIS countries.

A brief introduction to all types: 

1. European, including British, pensioners.They are looking for warmth, peace, and a clean environment. They do not spend the whole year in Kapparis, but most of it. They prefer to buy their own property or take a long-term rental.
2. Winter stayers. They “escape” from the long, cold, gray winter from Europe and CIS countries. They may have remote work or savings.
3. Tourists. Kapparis does not abound in any outstanding attractions, so tourists come here in summer. From April to November the flow is small but steady. Visitors are interested in the sea, beach holidays, and relaxation.
4. Families with children. Some move to Cyprus to hide from troubles (for example, military action; these may be citizens of Ukraine, Israel, Russia, etc.). Others simply want to radically change their way of life and give their children a clean, safe place to grow up. Kapparis is ideal for these purposes: children here hardly get sick, the sea can be swum in for more than 6 months, and fresh fruits and vegetables are available all year round.
5. Young couples, singles, groups of friends. The 20–30 age generation feels burnout and fatigue from the urbanized lifestyle more acutely and earlier. A radical change of country of residence, departure from the urban way of life — that is what helps to “reset.” Young people come to the villages of Cyprus for relaxation.
6. Digital nomads. Cyprus provides an opportunity to work under the digital nomad visa on a warm island. Nomads choose not noisy Limassol or business-oriented Nicosia, but quiet corners by the sea. Often this is a contingent from CIS countries, but there are European guys as well..

Kapparis attracts exactly those who are not dependent on an office, have remote work or savings, and want to live through a “reset” from big cities with their crazy rhythm.

Comparison of long-term and short-term rental in Kapparis

Investment in Kapparis real estate is suitable for those who are considering a buy-to-let format by the sea and are ready to take seasonality and management costs into account. Final profitability depends on the type of property, rental strategy, and investment structure: ultimately, gross income can exceed 7.5% per annum (from the initial property value).

When choosing a project, it is important to analyze the location, construction stage, and liquidity of the property. In the Famagusta region, both apartment complexes and villas with plots are available, which makes it possible to select a format for different investment strategies.

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