Cyprus enjoyed a three-year housing boom until 2008. Then the market began to fall, mainly because of lower demand from British buyers, who comprise around 70% of all foreign buyers in Cyprus. The UK recession, and the weakening of the pound against the euro, prompted British buyers to look for non-Euro destinations.
Residential property prices have fallen by as much as 20% and 30% in the past three years, with the most affected being Paphos, Sotira and other areas popular with foreign holidaymakers and retirees, according to real estate valuer Anthonis Loizou. There are no long-term house price statistics in Cyprus, though the Royal Institution of Chartered Surveyors (RICS-Cyprus) released its first Property Price Index for Cyprus in Q1 2010.
Areas that rely on local buyers, mainly from Nicosia, have been doing relatively better, with prices in Protaras and west of Larnaca (Pervolia, Kiti, Tersefanou) recording smaller drops. The Department of Lands and Surveys registering an average increase this year of 20% in property sales volumes in Cypriot-oriented areas such as Paphos, Limassol, Nicosia, and Larnaca.
EU nationals who are residents in Cyprus may own as much property as they wish. Non-resident EU nationals may own as much land as they wish, but if they wish to buy any other sort of property, ownership is restricted to one house or one apartment for which approval from the ‘Council of Ministers’ is needed.
Regardless of their residency status, non-EU nationals must seek the approval of the Council of Ministers before they can own any type of immovable property. Furthermore, unless there are exceptional circumstances, their ownership will be limited to: an apartment, a house, a building plot or land up to approximately three donums (4,014 sq. m.).
Owners wishing to rent their property to the tourist market should seek a permit from the Cyprus Tourism Organisation.
Residential property prices have fallen by as much as 20% and 30% in the past three years, with the most affected being Paphos, Sotira and other areas popular with foreign holidaymakers and retirees, according to real estate valuer Anthonis Loizou. There are no long-term house price statistics in Cyprus, though the Royal Institution of Chartered Surveyors (RICS-Cyprus) released its first Property Price Index for Cyprus in Q1 2010.
Areas that rely on local buyers, mainly from Nicosia, have been doing relatively better, with prices in Protaras and west of Larnaca (Pervolia, Kiti, Tersefanou) recording smaller drops. The Department of Lands and Surveys registering an average increase this year of 20% in property sales volumes in Cypriot-oriented areas such as Paphos, Limassol, Nicosia, and Larnaca.
EU nationals who are residents in Cyprus may own as much property as they wish. Non-resident EU nationals may own as much land as they wish, but if they wish to buy any other sort of property, ownership is restricted to one house or one apartment for which approval from the ‘Council of Ministers’ is needed.
Regardless of their residency status, non-EU nationals must seek the approval of the Council of Ministers before they can own any type of immovable property. Furthermore, unless there are exceptional circumstances, their ownership will be limited to: an apartment, a house, a building plot or land up to approximately three donums (4,014 sq. m.).
Owners wishing to rent their property to the tourist market should seek a permit from the Cyprus Tourism Organisation.
Analysis of Cyprus Residential Property Market »
RENTAL YIELDS
Last Updated: Jan 24, 2011
Gross rental yields on apartments in Cyprus are rather low – ranging from 2.7% to around 4.6%. Though we do not have data for houses, we believe that yields for houses are lower.
Rental yields of around 3%-4% would not normally cause us to get excited about property investment, and Cyprus is no exception.
As a matter of semi-academic interest though prices in Cyprus have not been stable, the ratio between prices and rents has in recent years been very stable. This suggests that any price or rent changes in Cyprus have been driven by real fluctuations in underlying demand, not any bubble phenomena.
Rental yields of around 3%-4% would not normally cause us to get excited about property investment, and Cyprus is no exception.
As a matter of semi-academic interest though prices in Cyprus have not been stable, the ratio between prices and rents has in recent years been very stable. This suggests that any price or rent changes in Cyprus have been driven by real fluctuations in underlying demand, not any bubble phenomena.
TAXES AND COSTS
Last Updated: Aug 01, 2011
Rental Income: Rental income exceeding €19,500 is taxed at progressive rates. Standard deductions for income-generating expenses are deductible from the gross income.
Capital Gains: Capital gains realized from the sale of immovable property is taxed at 20%, with a lifetime exemption of 85,430 if the property was owner-occupied for at least 5 years.
Inheritance: There are no inheritance taxes or estate duties in Cyprus.
Residents: Residents are taxed on their worldwide income at progressive rates, from 0% to 30%.
Capital Gains: Capital gains realized from the sale of immovable property is taxed at 20%, with a lifetime exemption of 85,430 if the property was owner-occupied for at least 5 years.
Inheritance: There are no inheritance taxes or estate duties in Cyprus.
Residents: Residents are taxed on their worldwide income at progressive rates, from 0% to 30%.
BUYING GUIDE
Last Updated: Apr 11, 2007
Total roundtrip transaction costs range from 8% to 14% of the purchase price. The buyer pays around of 3% to 9%, whereas the seller pays the remaining 5% for the agent’s commission. The transfer tax rate ranges from 3% to 8%, depending on the purchase price of the property. If the property is in joint names, the property value is halved, leading to lower transfer fees.
LANDLORD AND TENANT
Last Updated: Jul 17, 2006
Rent Control: The rental market can be divided into two broad categories: Houses controlled by the Rent Control Law (1983), and the free market.Foreigners are not covered by the provisions of the Rent Control Law, except the non-Citizen wife of a citizen of the Republic, and legal entities controlled by non-residents.
Tenant Eviction: Eviction of tenants is relatively difficult, especially in the case of ‘statutory tenants’ protected by the Rent Control Law. It takes an average of 360 days to evict a tenant.
ECONOMIC GROWTH
Last Updated: Sep 14, 2010
Slow economic growth
The Mediterranean island of Cyprus, known as the birthplace of Aphrodite — the goddess of love and beauty, lies off the southern coast of Turkey and the western shore of Syria.Cyprus has been divided between the two-thirds government-controlled area and the remaining one-third is administered by the Turkish Cypriots. Despite the political conflict existing, Cyprus is one of the most popular vacation spots and retirement location as it is blessed with natural beauty that ranges from golden beaches and coastlines to rolling hills and forest clad mountains. It also has over three hundred days of brilliant sunshine each year.
Cyprus acceded into the European Union in May 2004 and started to adopt Euro as their official currency in January 2008. Since its accession to EU, GDP growth remained high at an average of 4.2% in 2004-2007.Service sector including tourism contributes significantly to GDP at 79% and employs 71% of the labour force.
Amidst the economic crisis in the EU and other developed countries, Cyprus has been relatively shielded from it, because of lesser reliance on exports, prudent fiscal policies in the past, euro adoption, resilient financial sector and limited exposure to subprime mortgages.
Due to economic linkages with the recession-inflicted countries, GDP growth in Cyprus slowed to 3.66% in 2008, and is expected to slow further to 0.3% in 2009. Unemployment rose to 4.6% in Q1 2009 from 3.65% in 2008.
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