Against the backdrop of the crisis that has shaken the stability of the world's leading players, Cyprus shows an improvement in its credit rating, maintains a favorable business environment and offers a high quality of life.
The island nation's economy is estimated to be one of the fastest growing in 2022 among the EU countries, with a maximum GDP growth rate of 5.5%. Looking forward to positive dynamics in the future, let us list the factors that make the Republic of Cyprus attractive for investment. Among them:
- humane tax policy, a wide range of agreements on avoidance of double taxation;
- well-developed infrastructure, well-established international relations;
- qualified labor force, the majority of the population is fluent in English;
- ease and security of doing business, effective legal system;
- attractive residence permit programs for foreign citizens;
- membership in the European Union, the possibility of free trade with other member states.
Cyprus' stable economy is diversified, thus relying on several sources of income from different sectors and markets. Below are the high potential sectors that have proven their sustainability and maximize their contribution to the state's budget. Some of them have become traditional and time-tested, while others have come to the forefront with the advent of the latest technologies.
Tourism
Nature and humans have made Cyprus one of the most beautiful places for a comfortable and memorable vacation almost all year round. Tourism is one of the key areas of the island's economy, providing about 15% of the country's GDP. The industry felt the impact of the COVID-19 pandemic but is currently showing a rapid recovery. Based on the example of last year's sharply increased inflow of vacationers in Paphos, the Ministry of Tourism expects record numbers this year. Profile organizations of Cyprus are actively working with airlines and tour operators, promoting the island not only in the high season but also all year round.
With its status as a sustainable tourist destination, Cyprus maintains the constant interest of international investment groups and hotel chains to expand its presence and financial investments in the island's infrastructure. By attracting foreign capital, major projects such as comfortable marinas and yacht clubs, golf courses, and luxury hotels are being realized. The integrated casino resort City of Dreams Mediterranean fully demonstrates the state strategy of modernization and diversification of the tourism industry.
Real estate
This industry has long been the engine of the Cypriot economy. Today's forecasts about the profitability of the real estate market, taking into account the unforeseen profits of last year, are very optimistic. The demand for almost all types of new buildings is primarily due to the movement of both individuals and businesses to the island. According to statistics, last year in Cyprus added about one hundred thousand people. Relocation of companies, in response to the preferences granted by the state, caused a shortage of office space, in connection with which, investing in this segment occurs in all cities of the country.
Demand, and with it the cost of residential real estate on the island, shows a steady growth. According to expert opinion, Paphos, which showed an intensive growth of transactions last year, will continue this trend in the current year. In seaside Larnaca and Limassol, there is an increasing demand for closed residential complexes of medium price category. Premium-class real estate still firmly holds its niche in the total volume of urban development. The quantitative growth of the population in the country requires the expansion of services and social infrastructure. In this regard, the interest of investors in restaurant and retail sites becomes quite justified. Large chain operators in Cyprus are attracted to finance the construction of hotels and other facilities related to the tourism and entertainment industry.
Maritime transportation
Given Cyprus' strategic location at the crossroads of Europe, Asia, and Africa, its maritime transportation network has developed globally. The country has the third-largest merchant fleet in Europe and the eleventh-largest in the world. Cyprus is the largest in the EU and is among the world's top five ship management centers. The industry is intensively developing due to the registration of new ships and the relocation of foreign shipping companies to Cypriot jurisdiction. In Limassol alone, the heart of the Cypriot maritime cluster, there are more than 200 such services. Their functions include ship ownership and management, insurance and shipping finance, brokerage services, and personnel training.
For a small island nation, the following figure is impressive: more than 5% of the world's merchant fleet is controlled from Cyprus. This is facilitated by a favorable industry fiscal burden, including taxation of chartered tonnage. The profitability of investments in maritime transportation is confirmed by the recently established Cyprus-based Global Maritime Fund (GMF). The organization plans to finance the development of modern maritime technologies and the training of highly professional specialists. GMF will raise capital through regional and international investors.
Information Technology
In 2019, the Cypriot government approved the "National Research and Innovation Strategy", setting a course for the development and implementation of promising internet technologies. The program recommends a special focus on software development, web design, and cryptocurrency transactions. In order to attract large IT businesses to the country, the government provided significant benefits, including a reduction in the taxation of profits, a lowering the taxable income tax rate, and an eliminating quotas on the number of foreign employees in specialized companies.
As a result, more and more global IT corporations are choosing Cyprus as their professional home. Over the last three years, the level of foreign direct investment in the communications sector in Cyprus has increased by 150% and thousands of new skilled jobs have been created. These are filled by both Cypriots and foreigners from EU and non-EU countries, which has had a positive impact on the business image of the state.
Apart from the economic pluses, this trend demonstrates a number of indirect positive effects. The economic model of the country is being transformed, turning Cyprus into an exporter of high-quality services and technologies. The development of the commercial and residential real estate sector, education, healthcare, entertainment, and transportation are all getting a boost from the expansion of the IT sector. There is a strong emphasis on creating and expanding the country's technology ecosystem so that its participants spread knowledge and expertise, and interact with Cypriot manufacturing companies, government and educational institutions.
Medical tourism
Unlike beach tourism, medical tourism on the island is in the process of unlocking its potential. The state is now developing and actively implementing a new legal framework to facilitate investment and development in this area. Cyprus has become one of the best EU countries in the fight against coronavirus and claims the title of European rehabilitation center. The popularity of medical tourism, in recent years, has grown manifold at the global level. On the one hand, this is due to the dissatisfaction of patients with the quality and cost of services offered at home, on the other hand, it is an opportunity to avoid long waiting times to visit a specialist of the necessary profile abroad.
A world-class medical infrastructure has been created in Cyprus, where effective treatment and revitalizing sea vacations are ideally combined. Over the last decade, the republic has gained a good reputation for providing qualified assistance, applying advanced diagnostic methods, and low, for the European Union, cost of services. Medical institutions of the country are characterized by well-trained personnel and the most modern equipment. High-quality standards are guaranteed both during treatment and rehabilitation, which is facilitated by the favorable Mediterranean climate. These advantages stimulate and open a wide field for investments from all over the world. The capitalization of SPA resorts, treatment, and rehabilitation centers implies high profits and relatively quick payback.
Experts of the local company Invest Cyprus, which specializes in investing in high-tech and promising developments, look into the future with undisguised optimism. The inflow of capital allows to realize new projects, improve the education system, and create jobs. All this makes life and doing business in the country brighter and more attractive. Pragmatic Japanese from the Hi-tech industry, who have chosen Cyprus for their headquarters, predict that it will soon turn into a European Singapore.
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