The last few years have been extremely challenging and unstable for the World Economy. Covid-19 had a major impact on the markets, costs and investments. Cyprus, of course, was no exception and with specific reference to the residential real estate market, the sudden abolishing of the “Citizenship by Investment Program”, according to which the acquisition of residential properties could entitle the purchasers to a Cypriot Passport, just added fuel to fury.
Nevertheless, the demand for residential property has been very buoyant since the beginning of 2022, with reported sales increasing in excess of 40% in the first four months of the year compared with the same period in 2021. The figures are particularly encouraging, as they demonstrate an increase compared with pre-Covid figures.
The increase in sales is attributed to several factors, including the implementation of a State aid scheme in the form of interest rate subsidy for the acquisition of properties and the raising of the ceiling for eligible loans. Furthermore, the lifting of Covid related travel restriction enabled foreign investors to travel to Cyprus and purchase properties.
In parallel, investments from Israel have increased considerably, both at corporate and private levels. This can be attributed to the following factors:
- The extremely high prices of residential property in Israel itself, encourage investors to seek investment opportunities abroad.
- Rental yields in Cyprus are relatively attractive compared with those in Israel.
- Most Israelis who are purchasing residential properties are cash buyers and do not seek banking finance.
- The transactional related costs and taxes, the ongoing property maintenance costs and the beneficial tax regime, all add to the attractiveness of such investments.
- The proximity of Cyprus to Israel and ease of travel, are considered advantageous for Israeli purchasers who are purchasing holiday homes and who are “lifestyle purchasers”.
- Cyprus is considered to be a safe and stable country, an EU / Eurozone member and so economic and currency fluctuations are a diminished risk.
- Finally, Cypriot Permanent Residency is optional for purchasers of new properties who meet the requirements.