Market in Depth

Foreign investors returning

Lalaine C. Delmendo | February 21, 2022

Cyprus' housing market remains buoyant, mainly driven by strong domestic demand, coupled with returning foreign investors.

During the year to Q1 2022, the nationwide residential property price index rose by a modest 3.2%, following y-o-y increases of 2.6% in Q4 2021, 1.2% in Q3, 0.3% in Q2 and 0.9% in Q1, based on figures from the Central Bank of Cyprus (CBC). However in real terms, prices actually dropped 3.7%. The huge gap between the nominal and real figures is mainly attributed to surging inflation. In June 2022, nationwide inflation reached 9.6%, the highest level since December 1981.

By district, during the year to Q1 2022:
  • Nicosia, Cyprus' capital, apartment prices rose by 3.4% but house prices fell slightly by 0.2%.
  • In Limassol, apartment prices rose by 6.9%, and house prices increased by 2.1%.
  • In Larnaca, both apartment and houses prices rose by 2.4% and 1.3%, respectively.
  • In Paphos, apartment prices rose strongly by 10.2% while house prices increased by a more modest 4%.
  • In Famagusta, apartment prices rose by a robust 8.3% while house prices increased by 2.4%.

After falling sharply in 2020 due to the pandemic, demand has started to bounce back remarkably last year. During 2021, total property sales in Cyprus soared by 30% y-o-y to 10,347 units, according to the Department of Lands & Surveys. The strong recovery in demand continued this year, with nationwide sales surging by 42.3% y-o-y to 5,090 units in the first five months of 2022.

However, residential construction activity is weakening again. In the first four months of 2022, the number of value of residential building permits fell slightly by 0.5% and 1.6% y-o-y, respectively. Dwellings authorized also declined by 7.4% y-o-y to 3,104 units in Jan-Apr 2022.

Cyprus house prices
Overall, Cyprus' real estate market is expected to remain stable during the remainder of the year, mainly driven by strong domestic demand, coupled with recovering tourism.

In the first five months of 2022, tourist arrivals totalled 849,058 people, sharply up from just 156,825 in the corresponding period of 2021 and 246,556 in the same period of 2020. However, it remains far below the record 1,121,361 tourists recorded in Jan-May 2019.

Analysis of Cyprus Residential Property Market »

Rental Yields

Cyprus Rental Yields are moderate, ranging from 3.8% to 5%

Property prices. Due to solid property demand, apartment prices in Cyprus have increased. During the third quarter of 2021, Cyprus property prices rose by 1 percent per quarter, according to the Central Bank of Cyprus.

Rental Yield:

Larnaca: the average cost of a 75 square metre (sq. m.) apartment is around EUR 3,000 and monthly rents tend to be around EUR 10 per square metre (sq. m.), earning a rental yield of 3.8%. You can generate a rental yield of 4.91% for a 120 square metre (sq. m.) apartment that costs EUR 2,000 and EUR 11 per square metre (sq. m.) per month..

Limassol: the average price of an apartment is between the range of EUR 4,000 to EUR 5,000, generating a rental yield of 3.88% for a 150 square metre (sq. m.) apartment and approximately 5.64% rental yield for a 120 square metre (sq. m.) apartment. Smaller apartments will earn proportionally higher rental returns.

Nicosia: the cost of a 120 square metre (sq. m.) apartment is approximately EUR 2,000 per square metre (sq. m.) and EUR 9.26 per square metre (sq. m.) per month generating a rental yield of 5%. Gross rental yields here are higher than in Larnaca.

Property rents. A 120 square metre (sq. m.) apartment in Larnaca, Limassol, and Nicosia costs around EUR 1,000 to EUR 2,000 per month to rent. If you are looking for a buy–to-let property in Cyprus, Limassol apartments will give you a higher yield.

Over the years, gross rental yields in Cyprus have remained steady. Buying prices are low and capital gains seem possible.

Round trip transaction costs are moderate on residential property in Cyprus. See our Cyprus residential property buying-guide.

Read Rental Yields »

Taxes and Costs

Rental income tax is low to moderate in Cyprus

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 are 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 35%.

Read Taxes and Costs »

Buying Guide

Total transaction costs can be high

Total roundtrip transaction costs range from 7.60% to 16% of the purchase price. The buyer pays around of 4.60% to 11%, whereas the seller pays 3% to 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.

Read Buying Guide »

Landlord and Tenant

Cypriot laws are pro-tenant

Cyprus beachfront propertiesRent 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.

Read Landlord and Tenant »


Cypriot economy projected to slow

In Q1 2022, Cyprus’ seasonally-adjusted economic growth stood at 5.6% from a year earlier, following y-o-y expansions of 5.9% in Q4 2022 and 5.8% in Q3 2022, primarily driven by strong household spending, according to the Statistical Service of the Republic of Cyprus (Cystat).

Cyprus gdp inflation
“The Cypriot economy surprised on the upside in the first quarter of 2022, mainly as a result of the faster-than-expected recovery of tourism and the continuing expansion of exports of other services, notably business services and IT,” said the European Commission.

Despite this, economic growth is projected to slow to 2.1% for the full year of 2022, following an annual growth of 5.5% last year and a contraction of 5% in 2020 on the onset of the Covid-19 pandemic, based on forecasts by the International Monetary Fund (IMF). The European Commission (EC) is a bit more optimistic, expecting the Cypriot economy to grow by a modest 3.2% this year.

“The prospects for the [tourism] sector remain positive for the summer season, based on data on planned international flights and surveys on reservations for tourist accommodation, despite a sizeable loss of the historically important tourism from Russia,” said the European Commission. “However, weakening consumer confidence combined with soaring inflation and increasing interest rates are expected to result in a considerable slowing down of households’ consumption and investments in the second half of the year.”

Cyprus recorded a budget deficit equivalent to 1.8% of GDP in 2021, sharply down from 5.6% of GDP in 2020, mainly due to an impressive 16% increase in revenues, according to the Cyprus Statistical Service (Cystat). For comparison, the shortfall stood at €409.1 million (US$417.8 million) last year, from €1.21 billion (US$1.24 billion) in 2020.

Cyprus unemployment
Gross public debt fell to 103.6% of GDP in 2021, after rising to a record 115% of GDP in 2020. Yet it remains higher than the 91.1% of GDP registered in 2019 before the pandemic.

In June 2022, nationwide inflation reached 9.6%, up from 9.1% in the previous month and the highest level since December 1981, mainly driven by increases in housing and utilities prices and transport costs, according to Cystat. Inflation averaged 0.6% in the past ten years.

Seasonally-adjusted unemployment rate in Cyprus stood at 4.8% in May 2022, down from 5.1% in the previous month and 9% in a year earlier, according to Eurostat. From an average of just 4.8% from 2000 to 2011, unemployment had surged to an average of 11.3% from 2012 to 2021, based on figures from the IMF.