A visa scheme tied to investment has lured overseas buyers. The citizenship schemes are undoubtedly popular, bringing €4bn into the economy up to last year
The road to Limassol, a sprawling city on Cyprus’s south coast, is peppered with billboards for glossy new housing developments. The average European might struggle to read them though — they’re usually written in Russian or Chinese. English sometimes feels like an afterthought and Greek is often nowhere to be seen.
The billboards are indicative of the city’s prime property market which in the past five years has been overwhelmingly driven by foreign money. According to Alexandros Moulas, director of Savills’ international development consultancy team, the Cypriot government “has both attracted foreign investment and also allowed domestic developers to seize a completely new set of opportunities”.
And seize them they have — the city is undergoing a high-end building boom that is rapidly reshaping the skyline.
On the waterfront, cranes rise over the construction of ONE, a 37-storey tower by developers Pafilia. The three-storey penthouse is not due to complete until next year but has already sold for €19m, according to the developers. When it’s finished, the owners can legitimately say they have the highest home in the tallest building in Cyprus, at least until the Trilogy towers are built down the street. Though not due to complete until 2023, these three towers, which will reach up to 38 storeys, have secured €40m in sales and reservations, according to the developers Cybarco.
A two-bedroom apartment on the 30th floor of Trilogy West is available through the developers for €2.08m. At Limassol Del Mar, a 168-unit development due for completion in 2020, a three-bedroom apartment overlooking the Mediterranean is being marketed through Leptos Estates for €3.695m.
Artist’s impression of an apartment at ONE, where prices start at €2.5m
There is currently a remarkably high demand for new and high-quality residential units along the beachfront, Demand mostly comes from foreign buyers and investors — mainly Russians — but there’s also considerable demand from Arab countries and China. says Lefteris Constantinou, director at local agents estates.
Estate agents have been quick to cotton on: the citizenship programme has become a standard feature for most property advertisements in Cyprus. Some are more brazen than others. “Get Cyprus citizenship in 180 days,” the website of BuySell Cyprus announces. “You will be able to travel, live and work anywhere in the 28 countries of Europe.” And “You will be a citizen of a tax heaven [sic] within Europe.”
Others are more circumspect. “The majority of our clients are lifestyle users,” says Michalis Hadjipanayiotou, chief executive of Cybarco. “They buy property based on product, location and pricing but, ultimately, they are investing in Limassol because they can see its huge potential.” Cybarco says it doesn’t overtly promote the citizenship scheme as a matter of principle — but it does publish a section about it on the Trilogy website.
The citizenship schemes are undoubtedly popular, bringing €4bn into the economy up to last year, according to government data. In March, some 51 per cent of all property sales in Cyprus were bought by non-Cypriots.
However, concerns have been raised about the over-reliance of new developments on buyers who are citizenship or visa applicants. “It is my opinion that most of the buyers for passports do not really intend to stay forever in Cyprus,” says Antonis Loizou, an analyst and estate agent. Buyers only have to retain property bought under the scheme for three years; his firm expects that after that period, a large percentage will sell their property at prices well below what they originally paid. “The prime property market in Limassol has been driven by Russians for years,” says Constantinou. “Even before the announcement of the incentives.”
The recent increase in foreign investment has put inflationary pressure on goods and services, including, naturally, property prices.
Last year, house prices in Cyprus rose by 33 per cent, according to PwC. Rents in Limassol have risen by about 25 per cent over the past two years, according to Loizou. Meanwhile, the mean seasonally adjusted salary in Cyprus in the last quarter of 2017 was €1,892 — roughly what it was in 2009.
“The price of absolutely everything has gone up, and salaries haven’t,” says Thetis Tchacos, 28, who works in the shipping industry and is looking to rent or buy a property with her boyfriend. “It sometimes doesn’t feel like the government is taking the local population’s needs into account when it comes to these projects.”
- The income tax threshold is €19,500. After that, rates start at 20 per cent and rise progressively to 35 per cent for income over €60,000
- Expats are only considered domiciled in Cyprus if they have paid tax there for 17 of the past 20 years, or if their father was domiciled there. Non-domiciled individuals get tax exemptions on personal investment income, even if they are considered tax-resident
- Cyprus is warm even in the winter, and is estimated to get 326 days of sunshine a year