Cyprus’ high-end property market grows 12.6% y-o-y in H1

The high-end property market in Cyprus saw impressive growth in the first half of 2023, with transactions totalling 1,757 and accounting for 27% of the total number of transactions - demonstrating an increase by 12.6% year-on-year, according to Cyprus Sotheby’s International Realty’s quarterly report “INSIGHTS” on Cyprus’ Residential Real Estate market.

According to Cyprus Sotheby’s International Realty survey, the top EU countries buying property in Cyprus were Germany, Austria, Poland and Greece. Looking at non-EU buyers, Cyprus was popular amongst British, Israeli, Russian and Ukraine buyers. The Permanent Residency through investment program is the key driver of demand from Russians and other non-EU citizens, while UK and EU buyers choose Cyprus for the lifestyle on offer, including the year-round sunny climate and the attractive cost of living.

The Permanent Residency through investment programme is the key driver of demand from Russians and other non-EU citizens, while UK and EU buyers choose Cyprus for the lifestyle on offer, including the year-round mild sunny climate and the attractive cost of living, it added.

Anastasia Yianni, CEO of Cyprus Sotheby’s International Realty, commented: “Cyprus’ high-end residential property market continues to demonstrate strong results. The first half of 2023 showed an increase on the market both by volume and value comparing with the same period of the last year. The number of transactions grew in the high-end houses and apartments segments. Though there was a minor 1.9% decrease in the high-end apartment segment by value, it was offset by the results of the high-end houses segment.”

In the first half of 2023, the property sales to non-EU citizens almost doubled when compared to this time last year with a total of 2,608 transactions.

In terms of value, the Cyprus residential real estate market reached €1.7b in total sales in H1, with high-end properties accounting for half of the total market by transaction value (54.3%) with €936.2m - demonstrating an increase by 0.7% year-on-year.

In H1 2023, the high-end houses segment grew both by value and by volume in comparison to H1 2022. The number of transactions with high-end houses grew by 22% year-on-year to 338 and sales numbers increased by 6.3% year-on-year to €314.4m.

The high-end apartments segment grew in volume by 10.5% year-on-year to 1,419 transactions, but declined in value by 1.9% year-on-year to €621.8m.

In Limassol, the high-end market increased in volume by 5.5% year-on-year to 943 transactions while declined in value by 5.5% year-on-year to €558.4m. The decline, according to the report, was attributable to the high-end apartment segment, which decreased by €51m or 10.9% year-on-year. Meanwhile, the high-end houses segment in Limassol grew by 15.2% year-on-year to €142m in value and by 38% year-on-year in volume.

In Paphos, in H2 2023, the high-end market grew by 14.5% year-on-year by value to €178.2m and by 36,4% year-on-year by volume to 311 transactions. The growth was mostly driven by the high-end apartments segment which increased by 38.3% year-on-year to EUR 62.9mn.

In Nicosia, the high-end market was basically stable showing a minor increase both by volume and value. The strong performance in the high-end apartments segment offset the decline in the high-end houses segment.

The total number of property transactions in Cyprus is growing as well, indicating the overall growing demand for real estate on the island from domestic and foreign buyers, said Sotheby’s. According to the Cyprus Land Registry, as of the end of June 2023, the number of sales contracts reached 7,689, compared to 6,263 this time last year.

“Cyprus is attractive for foreign buyers,” it said. “The share of sales to foreign buyers increased - with 46.5% of total property sales attributed to overseas buyers, resulting in a 36.1% year-on-year increase. Foreign sales were mainly attributed to Limassol and Paphos, with 36% and 35% of sales attributed to foreign buyers respectively. Domestic sales also grew in the first half of 2023, with a 13.1% year-on-year increase.”

“We have seen a stable demand for high-end residential property, both for houses and apartments, in all districts across Cyprus, from both domestic and international buyers,” said Yianni. “We have a moderate outlook for the high-end property market and expect a slightly negative trend in the short and medium term on the back of extremely strong previous 2022 year and the latest legislative initiatives.”

She added, “Whilst recent legislative changes may have led to some uncertainty in the market, the traditional Cyprus market drivers such as lifestyle opportunities, the residency program and the healthy ROI potential of Cyprus properties are in force, and will support the market in the long-term.”

On 2 May 2023, the regulations for permanent residency by investment in Cyprus changed. According to new criteria, to apply for permanent residence in Cyprus, a person is required to invest in a property valued at a minimum of €300,000 + VAT, by transferring the funds to the developer's account immediately, regardless of the date of delivery of the property. The funds must originate from the investor's personal account or his/her spouse. The main applicant must show proof of annual income of at least €50,000 (€30,000 before), validated by a tax return from the country of tax residence.

Also, in June, Cyprus’ Parliament passed a law on reduced VAT for first homes. This change was prompted by EU scrutiny for misleading VAT issues in the past. “The VAT incentives are important for many international buyers as reduced VAT will keep their interest in properties under construction,” Sotheby’s pointed out.

There is no distinguish between apartments and houses. All luxury properties in Cyprus will be excluded from VAT incentives. “This could reduce demand for luxury properties and put strain on many projects. These changes could reduce demand for new properties in general and as a result the construction sector can be negatively affected. However, for properties with granted building permits or submitted applications for them, the old incentive still applies which stimulated the immediate demand.”