26.04.2023
Cyprus has been attracting foreigners with tourism, real estate investment and business for the past 30 years. This brought significant amounts of money into the economy, passed on experience to local residents, and fostered business development with more affluent clients.
However, since a special operation began on Ukrainian soil in early 2022, more than 20,000 Ukrainians, Belarusians and Russians have moved to Cyprus, with many settling in Limassol in order to take advantage of preferential tax treatment. Fintech companies from the warring countries have also moved to Cyprus, bringing new wealth and talent. The Russian-language communications company Vestnik Kipra reported that in May 2022, 3,000 new IT specialists appeared on its staff, some of which earn more than 5,000 euros per month. The mayor of Limassol estimated that over 10,000 Ukrainians moved to the city after the war.
The Cypriot government’s “Headquarters Initiative” has also attracted foreign companies to set up headquarters and offices of firms on the island, resulting in 4,524 families applying for resettlement through August 2022.
In addition, recent political changes in Israel have caused a surge in emigration requests from its citizens: since January 2022, Ocean Relocation receives over 100 requests per day. Cyprus has also been a popular destination for Israelis, with around 10,000 people applying for residency in Cyprus since 2020.
information International reported that about 12,000 Lebanese have also arrived in Cyprus, most of them between the ages of 25 and 40.
These developments have brought new challenges and opportunities for Cyprus and its people.
The influx of migrants to Cyprus has led to an increase in demand for rental housing, especially in popular destinations such as Limassol and Paphos. Many of these migrants earn much higher wages than the average local worker, sometimes more than 5 times the average Cypriot wage. As a result, it is not a problem for these high-paid migrants to pay 1,500 euros in rent.
The increase in demand for housing, combined with the high salaries of these migrants, has led to a significant increase in rental prices in Limassol and Paphos. In 2016, it was possible to rent a two-bedroom apartment in Paphos for about 300 euros, and in Limassol for about 400 euros per month. Now the minimum rent for a two-bedroom apartment in Paphos is 1,000 euros, while in Limassol it can exceed 1,400 euros per month. This means that many locals find themselves “out of the market”, especially in the most attractive areas of the island.
The increase in rental prices has had a direct impact on the sales market, as foreign investors seek to purchase properties with a yield of about 6%. Property rental income is a key determinant of property value as investors are willing to pay more for apartments that can be rented out at a higher price.
People who have recently moved to Cyprus and are currently working on the Internet or in fintech companies have not only invested their time and effort in the country’s development, but also invested heavily in the local real estate market. This means that they will most likely stay in Cyprus for a long time and will not leave quickly. As a result, unless there is government intervention, it is unlikely that real estate prices will drop significantly any time soon.
The government may need to take certain measures to regulate the real estate market, such as imposing additional restrictions on foreign investment or providing incentives to encourage investment in other sectors of the economy. However, it is expected that until such measures are taken, the property market in Cyprus will remain stable and prices will continue to rise.
