Attracting people to Cyprus has never been difficult. With its enviable climate, relaxed way of life, great food and beautiful beaches, it is an attractive place to do business and live. And it is this enviable lifestyle that has helped drive the country’s real-estate sector.
But the fortunes of real estate in Cyprus have been mixed in recent years, especially in the wake of the country’s financial crisis, due in part to bank overexposure to overleveraged property companies. “Prices have dropped by 20% to 30% in some cases, but in others – where they are very expensive assets – they’ve actually increased,” says Pantelis M Leptos, president of the Cyprus Land and Building Developers Association.
The market is broadly divided into two sectors: domestic and international. “The domestic market was hindered by the Troika’s demands,” says Mr Leptos of the austerity measures laid out by the EU, the International Monetary Fund and the European Central Bank. “But it’s a completely different ballgame in the international market. Yes, we had a downturn. Most foreign buyers were British and this stopped in 2009. We’ve found alternative markets since then in South Africa, the Gulf, China, north Africa, Russia and Ukraine. And that’s because the basic advantages of Cyprus that you had before the crisis are still here.”
Still got it
Basking in the 28-degree temperature of mid-November, it is easy to see that Cyprus has lost none of its attractiveness. “What we need back in the market is client finance,” says Mr Leptos. “Prices are quite keen and people are taking advantage of this. Once this stock has been absorbed, I expect prices of likeable projects to rise.”
There are a number of large-scale developments in the pipeline, including residential projects and commercial schemes such as marinas, golf courses and theme parks. This local market is adapting itself to global market needs. “We’re seeing more green buildings, more smart buildings, projects that offer more than just a house and a swimming pool,” says Mr Leptos. “We’re seeing concierge services, gated communities, communities with club houses and health spas. This is what people want and this is what is easier to sell.”
The Cypriot government has introduced a raft of residency and citizenship schemes to encourage non-EU citizens to invest in property. These include giving them the opportunity to acquire a permanent residency permit when they buy a private home worth at least €300,000 and deposit a minimum of €30,000 in a local bank for three years.
To acquire Cypriot nationality, non-EU residents can invest a minimum of €2m in National Investment Company shares and/or bonds and €500,000 in the country’s Research and Technology Fund; or make a direct investment of €5m; or deposit €5m in a local bank for three years; or pay corporate or value-added tax of at least €500,000 annually for three years before making an application.
“Cyprus is stable but the countries around it are in turmoil and this is increasing its attractiveness,” says Mr Leptos. “We represent a good investment and a good plan B for people from these countries and their families.”
Mr Leptos sees considerable opportunities for construction in the hotel industry. “There’s a shortage of beds, especially for tourists who are looking for alternative bases as a result of the Arab Spring and Cyprus is a good place for them. New resorts are being built for tour operators and the holiday home market for Europeans is sure to return.”
This market should also be boosted by the recent Open Skies deal with Russia, which frees flight restrictions between the two countries. With more tourists coming to Cyprus, so too will potential holiday homeowners. President Nicos Anastasiades says the Open Skies deal should extend the tourist season and bring an extra 300,000 visitors to its shores in the winter months.
Yiorgos Lakkotrypis, Cyprus's minister of energy, commerce, industry and tourism, agrees: “The fact that we’re opening up to Russia all year round has focused a lot of attention on other infrastructure projects because it means there is a bigger potential market for them.”
Recent developments in the energy sector will also feed the real-estate market. “There is going to be more demand for office blocks to deal with this, as well as storage facilities and accommodation for gas company staff," says Mr Leptos.
So, what is Cyprus’s message for would-be investors? Mr Leptos is confident: “Come now because prices are going to go up.”