If you have a certain amount of money that you want to invest in real estate, then the most obvious option in this case is to purchase a home.
Although such a solution is considered the most popular method of generating rental income among private investors, there are people who argue that it is more profitable to invest money in commercial buildings – a small production, warehouse, beauty salon, store or office. Renting such objects, most often, costs more than renting an apartment, especially during the period of post-COVID activity of entrepreneurs, and the payback time is less.
The specialists noted that the street retail in the Cypriot rental market has a fairly good position in terms of profitability. In the city center, the average rate can reach from 8 to 10 %, while in remote areas it varies between 10-12%, with a payback period of 10 to 12 years. But, since any building is unique in its own way, it is impossible to calculate the absolute indicator of street retail.
At the same time, you can get much less profit from renting out housing in the Republic. Short-term rent brings property owners from 7 to 8% per annum , long-term – 4-5%, in the season it can reach a maximum of 10%.
In addition to the payback period and price, commercial facilities have other advantages. First of all, it is that with commercial premises there are much less difficulties with repairs, because often the tenant repairs the premises at his own expense and at his own discretion. At the same time, when carrying out repair work, the lessor is most often responsible for everything.
But you also need to understand that commercial properties are considered more complex products than apartments. The success of working with them will depend on the following factors: environment, layout, purpose (services, trade, office space, etc.), transport accessibility, availability of parking spaces and their number, location. Sometimes, due to the absence of even one of these factors, it becomes unprofitable to buy a room. Therefore, before purchasing, you should first calculate and consider everything well.
3 reasons why it is worth investing in commercial property in Cyprus:
1) The opportunity to obtain permanent residence for investment in an accelerated mode. Buyers of both commercial and residential properties will be able to participate in this program. In case of purchasing an office building, the value of which is over 300,000 euros, you will be given the right to apply for a residence permit. In addition, the investor’s spouse and dependents are eligible to participate in the program : parents, as well as children under the age of majority and financially dependent (up to 28 years of age). Also, you will be able to return your own investment in five years by selling the objects acquired within the framework of this program.
2) Large selection of commercial real estate for the start of various business sectors.
3 ) One of the lowest tax regimes among European countries (profit tax is 12.5%).
Large selection of commercial properties on the Cyprus real estate market
The most demanded are the premises intended for coffee shops, grocery stores, pharmacies and beauty salons. In rapidly developing suburbs and new areas, all areas of activity and services that may have potential demand from future residents are popular: clinics, developmental centers for babies, sports studios, various shops, etc. First of all, premises are purchased in places with a high population density and permeability.
Cyprus is a popular destination for relocation of IT companies. In 2022, there was a strong demand for offices, office space and buildings. Developers began to invest more actively in the construction of commercial facilities with office space. The rent has also increased. Investment in office buildings will be a profitable investment against the backdrop of ever-increasing demand and will bring a steady income.
Features of commercial real estate on the island
The real estate market of the Republic of Cyprus has a large selection of properties with different configurations and layouts, ideal for furnishing:
- entertainment complex;
- warehouse;
- office
- trading area.
Commercial facilities located in developing tourist areas are especially attractive for entrepreneurs and businessmen. Their acquisition can be a successful investment, because the profit from this property in these locations increases every year.
Limassol is usually very popular with buyers of commercial properties due to its location. It is considered not only a port city and the “business heart” of Cyprus, but also the place where the headquarters of large companies are located. The resorts ( Ayia Napa and Paphos), the capital – Nicosia and the industrial regions of Larnaca are in no less demand.
The most sought-after investors consider multifunctional buildings that combine commercial and residential facilities. When purchasing an object on the island, it is necessary to take into account both the geographical location of the property with all its surroundings, and the more favorable stage of construction for the purchase of this building. Thus, it is possible to invest in commercial properties at the following stages:
1) Purchase an already completely finished building.
2) Invest at the finishing stage.
3) Buy property at the beginning of construction.
4) Purchase the object after the approval of the construction plan, but before the immediate start of work ( off – plan ).
Purchasing a commercial building at the initial stage helps to save about 30% of the final price. Therefore, if you have sufficient time and funds, you can choose this investment option. But, in this case, the income from the rental of the building will not be available immediately.
Specialists of our company will be able to pick up commercial real estate for you based on your wishes. Contact us, and we will be happy to advise you and offer high-yield properties that are suitable for you.
