Cyprus, like many other Mediterranean countries has had a tough time in recent years economically and this has had a negative impact on the property market. Property prices hit their highest point in 2008 just as the global financial crisis was beginning to hit. Since then, combined with a banking crisis, property values have suffered badly. House prices are currently 30%1,2 below their 2008 peak.

Now that the Eurozone recovery is well underway and property prices in the west of the Mediterranean are showing good signs of growth, there are our top-ten reasons as to why NOW is the right time to move back into the Cyprus property market.

1. The Economy is improving

Fundamental to any property market recovery is an improving economy and healthy liquidity in the banking sector. On both fronts, the signs are positive.

Growth in GDP both in 2015 and 2016 has been very healthy at 2.9%. This is very competitive when compared to other western economies as well as the rest of the EU. The consensus forecast GDP growth is approximately 3% for the next few years3.

Following the banking crisis in 2012-2013, Cyprus has made significant progress in improving the credibility and liquidity of the sector. Following an intense period of downsizing, supervision and a recapitalisation of the three leading banks in the sector, capital controls have been lifted and a healthy level of liquidity has been restored. So much so, the country was successfully able to go back to the international debt markets by the end of 2014.

Since the crisis, Standard & Poor’s have hiked its rating of the country eight times to BB+ with a stable outlook. In line with this, the risk rating of Cyprus debt has improved considerably and is now rated higher than some other EU countries such as Portugal.

It is clear, investors are now buying into Cypriot assets.

2. Mega-investment projects

Following subdued demand in the residential housing sector, property developers have focussed on mega investment projects to improve the infrastructure and tourism appeal of the island. Innovative high-end large scale developments include marinas, golf resorts and even a casino resort. These projects have attracted strong support from the international investment community.

One such stunning success is Limassol marina which has transformed the town. The impressive project extends over 40,000 square metres and includes 74 villas, 162 apartments and space for 650 berths for luxury and super yachts. It has already been dubbed the ‘Monte Carlo of Cyprus’ and Limassol is now a property hot-spot on the island.

3. Cyprus emerging as a regional energy hub

The discovery of major oil and gas fields in Cyprus’ Exclusive Economic Zone (EEZ) has also created new and exciting prospects for Cyprus to become an energy hub in the Eastern Mediterranean.5 In one of the fields, US firm Noble Energy has found an estimated 4.5 trillion cubic feet of natural gas sufficient to meet Cyprus’ domestic gas demand for over 100 years. Investments of approximately €3 billion will be needed to build the exploitation structures of the field and the pipelines towards Africa and the Middle East. An important step in Cyprus’ ambitious plan to evolve as a regional energy hub is the operation of a €300 million oil storage terminal which is now operational with further investment scheduled.

4. Residency and Passport Schemes

Cyprus remains an attractive destination for the purchase of an overseas home, with foreign investors seeking to benefit from the favourable personal and corporate tax regime. As an added incentive, the government introduced in 2013 a scheme to obtain Citizenship and Permanent Residency along with the option of a full Cypriot passport providing open access to the EU.

Permanent Residency can be obtained in a little over two months for the purchase of a residential property with a minimum value of €300,000. Demand has been strong as investors use Cyprus as a gateway for their business into Europe. Figures from the Ministry of Interior suggest this scheme has attracted over €1 billion of inward investment to date.

To obtain Citizenship and a Cyprus EU passport, an investment of €2 million in residential property is required. A Cyprus passport is one of the most attractive passports globally providing free-movement within the EU, visa-free access to 150 countries globally, access to free education, healthcare and voting rights. It is estimated that this scheme has generated nearly €2.5 billion of inward investment.

5. Improving confidence in the ownership rights of Cyprus property

Historically, Cyprus has had an issue with the extremely slow issuance of title deeds which, in many cases, could take over ten years. This has created many problems and undermined the market. Thankfully, the government has taken several measures to rectify this issue.  In 2011, the government passed a Specific Performance Law designed to protect the rights of buyers and have made it much easier and quicker to obtain the title deed. Owners can now have much greater confidence in owning residential property. This has been key to restoring credibility to the market.

Timing is everything – Taxes and tax benefts for property purchasing

• For a limited time 5% VAT on the frst property purchase (frst 200m²) – Standard VAT rate is 19%

• For a limited time there are no Transfer fees if VAT applies – Standard Transfer fees are 3%-8%

*Contact AA Cyprus here and one of our staff will be happy to assist you