Acquisition of immovable property by aliens (non EU members)
The Cyprus Real Estate Market
The Cyprus Real Estate market has two main demand sources. The local and the foreign market. The foreign market comprises by approximately 60% by the British and 30% by Russians and the rest 10% by other nationals. These percentages tend to change in favour of the Russian market with a reducing British demand due to the global economic situation.
Our 2012 Expectations
Following the top sales period of the year 2007, the year 2011 was the worst ever, with a drop in foreign demand by 85% and local by 45%. In fact foreign demand exceeded that of the local by almost 13% during the peak period. The year 2010 was expected to bring some hope to the 2011 market, but this did not materialize for 2011. Foreign demand has picked up, but not to the extent expected. Pafos has remained the favorite area for the British, as the Russians is for Limassol. The eastern Famagusta region as well as Larnaca has not done well at all and the overall Cypruswide 2010 recovery by +5% (increase in the volume of sales) has been so created by the Nicosia market. It was hoped that in 2011, the market will show signs of a recovery but the results do not support us towards this. We depend, as an economy, (on the real estate) on the British and the Russian markets and whereas the Russian market is improving in numbers, the budgets are falling (now around €½ mil., as opposed to the 2007+2008 of over €1 mil.). The new strict bank regulations regarding funding and the delays that are now experienced in securing such loans, is another factor of a downturn in sales, as is the local high borrowing rates. We provide for your information the following statistical analysis, which may show the trend, which shows the average budgets. For house purchasers.
|Foreign||€1million||€1million||€½ million||€½ million||€½ million||€220.000|
Real Estate prices between the period of 2003 – 2008 were increasing at an average rate of 12% - 18% p.a. depending on location, but the global economic recession has affected the local property market as well. Demand has been reduced causing local property prices to fall. In general real estate prices in the tourist area, have reduced by around 30%-35% and in residential areas by approximately 20%-25%. Bargains are now evident and especially prices from resales, primarily offered by foreign buyers – mainly British are evident.
Indicative of the situation are the following statistics based on sales contracts:
|Sales Local||±||Sales to foreigners||±||Total||±|
This state of the market is expected to continue over the next two foreseeable years. After this period as supply is taken up so will prices begin to improve.
Cyprus has proved to be an increasingly popular place for doing business, retirement and/or for the acquisition of holiday homes by foreigners. Demand, which is continually increasing [save the recession], is forthcoming mainly from European Countries, mainly ex eastern block countries, whereas there are signs of an emerging demand from China recently.
The upsurge of demand for property by foreigners is attributed to many factors including the relatively low cost of living and its high standard [as well as the low crime rate]. In addition, the unique hospitality of the local population, the attractive climate, the increasingly important role of safety and security, have played an important role. The recent measures for permanent residence permits and passports with recent estate acquisition has also its affects where as the recent tax system in Europe is a drain in it self for business.
Demand and market activity has caused local property values to show a steady and at times sharp appreciation, especially over the last years up to the end of 2008. Good properties especially resales are still abundant and local property prices are still much lower than those of other European countries such as Spain and Portugal by approximately 15% overall for holiday homes and for other properties more than 25% less.
Cypriots and E.U members [and companies] are allowed to purchase real estate property without any restrictions.
Other foreigners and non - EU members (Aliens) are only given permission to purchase one of the following:
:: One apartment or
:: One house or
:: A building plot or land up to three donums (4.000m²)
Offshore entities may also acquire premises for their business (no limit on the extend) or for the residence of their foreign employees provided the residence is registered on the employees' names. For the transfer of real estate on an alien's name, the permission of the Council of Ministers is required (now the District Officer) .
This permission is obtainable by all bona fide cases, provided that the property is not intended for commercial exploitation. In certain cases, however, the Council of Ministers will grant the approval for acquisition for commercial purposes if the particular project will enrich tourism and employment. E.U. members are exempted from such restrictions and are treated as locals as from the 1st May 2004.
For more information visit Antonis Loizou & Associates www.aloizou.com.cy