25.03.2023
The inflation rate in Cyprus is declining but still high. It stood at 6.7% in February. Interest rates are low: 1.29% on deposits of individuals and 1.27% on deposits of legal entities. In addition, there are no other investment opportunities, as the Cyprus Stock Exchange shows a low yield – about 2% per annum.
The inflationary effect is that it increases the cost of borrowing and, at the same time, increases the cost of production, making it difficult to produce goods and services, including the production of real estate, houses and apartments.
Due to the war in Ukraine, the construction of new units suffered, the issuance of building permits decreased due to increased costs. However, the demand for real estate remains stable, especially for not new houses.
According to the overall RICS index, the average property yield in Cyprus for 2022 was:
| Property type | Yield |
| Apartments | 5.30% |
| At home | 2.80% |
| The shops | 5.70% |
| Warehouses | 4.30% |
| Offices | 5.30% |
| Vacation Apartments | 5.40% |
| Holiday houses | 2.70% |
It can be seen from the sales results in 2022 that the real estate market is strong and has reached almost 6 billion euros in sales.
Apartments sell best, according to the Land Registry, as total sales not only reached 2018 levels, but surpassed them (20,799 sales in 2022 vs. 18,336 sales in 2018), with over 80% coming from locals. buyers, about 13% for EU buyers and 7% for other buyers.
A recent report from the Land Registry states that the war in Ukraine did not have a significant impact on real estate values in 2022, while sales contracts increased by about 30% (10,347 in 2021 and 13,409 in 2022).
According to the RICS index for the 4th quarter of 2022, apartments lead in sales in all sectors, as they have the highest rates. This is obvious, especially in Limassol , where the highest yield.
RICS index, Q4 2022
| Property type | Nicosia | Limassol | Larnaca | Pathos | Famagusta |
| Apartments | 5.00% | 7.00% | 4.50% | 5.50% | 4.20% |
| At home | 3.40% | 3.20% | 3.30% | 2.20% | 2.00% |
| The shops | 5.80% | 5.90% | 6.30% | 5.30% | 4.30% |
| Warehouses | 5.90% | 3.20% | 3.50% | 4.50% | 5.30% |
| Offices | 6.40% | 5.70% | 5.00% | 3.90% | 3.40% |
| Vacation Apartments | 6.70% | 4.70% | 4.80% | 5.00% | |
| Holiday houses | 3.40% | 3.00% | 2.60% | 1.90% |
RICS index, Q4 2021
| Property type | Nicosia | Limassol | Larnaca | Pathos | Famagusta |
| Apartments | 4.90% | 6.40% | 3.80% | 4.90% | 4.50% |
| At home | 2.90% | 3.00% | 2.90% | 2.10% | 2.00% |
| The shops | 5.80% | 6.10% | 6.30% | 5.50% | 4.20% |
| Warehouses | 5.90% | 3.30% | 3.80% | 4.60% | 5.70% |
| Offices | 6.10% | 5.60% | 5.30% | 3.80% | 3.60% |
| Vacation Apartments | 5.80% | 4.00% | 4.70% | 4.60% | |
| Holiday houses | 3.20% | 2.90% | 2.40% | 1.90% |
Comparing 2021 with 2022, it can be seen that the profitability of apartments and houses has increased. Therefore, investing in real estate in 2023 is a sound investment and demand remains strong, especially in Limassol , with returns of 7% for apartments and 4-6% for the rest of Cyprus, depending on location and type of property.
Property values are not expected to be “adjusted” downwards as Cyprus has a strong economy and high demand for property; with a stable supply at the moment and a decrease in the number of building permits in 2023/2024, the value of real estate will not only be stable, but may also grow.
Therefore, real estate is currently the best investment in residential real estate, especially in Limassol and Paphos. However, all cities have good yields depending on the buyer’s personal preference and available budget.
Notable is the clear increase in demand from foreigners in the Cypriot market between 2020 and 2022; sales to foreigners in 2020 amounted to 2432 transactions, in 2021 – 3057 transactions and in 2022 – 4123 transactions.
In conclusion, speaking of foreign buyers, Cyprus offers more than just a good investment in the property market.
With a minimum investment of €300,000, foreign buyers can stay in Cyprus with a residence permit and can work, study and enjoy more than 350 days of sunshine, in addition to tax and other benefits.
