Your Move Cyprus, Limassol Property, Property Rentals in Limassol

Key Opportunity

Mid to long term investors in Cyprus property are set to reap long term benefits of a growing tourism industry on the island. With old fashioned restrictive rules on foreign ownership having been lifted, a surge of foreign interest and corresponding market buoyancy is now characteristic of the Republic.

While the Cyprus government is currently concentrating on greatly improving the standards of its tourist infrastructure, investors are set to see vast improvements and additions to tourist amenities on the island, making for a strong and growing investment arena in which to operate. Tourist numbers in August 2007 were up 8.3% on the previous year and this figure is expected to be greater as the island continues its growth and demand is high within the quality holiday rental market.

With property prices still approximately 30% lower than in comparable Mediterranean European destinations, Cyprus is an obvious choice for investors seeking affordable prices, high growth figures and a strong tourist market in which to resell or employ their longer term buy-to-let strategies.

Timescale

Average construction time on Cyportfolio projects, from project sales release to completion of construction, is approximately 12/18 months. Mid to long term investors look to hold onto their units after construction, normally for at least 24 months from initial reservation, either to rent it out and/or benefit from capital appreciation upon eventual resale. Many long term investors wish to generate significant and reliable rental income over a period of time as sustained rental returns are their main focus, followed by capital appreciation over time.

Capital appreciation is expected to continue to perform exceptionally well over the next 5 years, particularly in view of the current drive for increased tourism by 2010, and the longer investors are able to leave capital in their purchase, the higher their potential returns will be. Tourist numbers are rising and the resulting strength in the buy-to-let market allows investors to reap in solid capital growth from their properties, all the while supplementing this income with high rental yields in key tourist resort areas.

Cyportfolio strongly recommends consulting with an Cyportfolio advisor to discuss your particular mid to long-term investment strategy in Cyprus, to ensure your chosen location best suits your needs.

Level of Complexity

In the case of off-plan purchase, full payment for the property needs to be completed at various stages of construction, prior to final completion of the purchase.

For mid to long term investors, all costs will be applicable, of around 10% of the purchase price while ongoing costs such as maintenance, community fees and utility bills will also need to be factored into the strategy finance plan. Bear in mind it's advisable to open a bank account in Cyprus in order to pay in local currency (€) for the property's utilities and other ongoing expenses.

Some good arrangements are often to be made with property management and rental companies that are usually conveniently based on or near the property. These ensure that such ongoing costs are covered and that your unit is rented out regularly. Maintaining a property abroad can therefore become no more complex than an investment closer to home.

Key Risks

A medium to long term investment strategy entails much lower financial risk than a short term plan which relies on finding a buyer within a very short time frame. Provided the right investment is made on a quality, well located project with multiple facilities, establishing a rental market and eventually a buyer for your investment should not be difficult. However, as with any investment, patience and money is sometimes required until the end user is found.

As a favourite retirement and holiday location, Cyprus attracts ever-increasing numbers of tourists and modern new resorts going up on the island are boding very well for mid to long term investors who are already enjoying relatively high growth rates. This situation of course translates to an increase in buyers and renters on the one hand, but brings with it intensified competition on the other.

By appointing independent legal representation, the client can be sure that all the necessary paperwork is in place before signing the purchase contract.

Property ownership in Cyprus can be purchased Freehold, leaving no room for ownership disputes.

Return

Cyprus has always been a popular destination for holiday makers and those seeking a quieter pace of life. Investment in Cyprus remains a good prospect with solid returns on investment of up to 20% per annum. With property prices still around 30% lower than in other comparable Mediterranean destinations, investors are not only enjoying high returns but affordable prices at which to buy. As a result the number of property transactions in Cyprus in the first half of 2007 was up almost 30%.

Cyprus has long been a popular holiday destination for British tourists, possibly because settling in is not as much of a culture shock as on other Mediterranean islands. English is widely spoken on this former British colony. For property investors, the land registry system is similar to back home. Familiarities such as these, set in the context of over 300 days of sunshine a year and 648 km of coastline, are clear enticements for the British to continue to flock to the island for both business and pleasure.

Focus is currently on successfully meeting EU criteria since its membership in 2004, while Cyprus is clearly reaping the rewards of a strong and stable economy. The property market in the Republic is set to prosper further in 2008 with the adoption of the Euro.

Rental yields are also high at an average 8% and many investors are reaping good profits by holding onto their properties for a period of years. Those who buy to let in Cyprus are also enjoying gradually increasing rental yields and in some cases investors are buying off-plan and buying into guaranteed rental arrangements. Large developers and tour operators are able to give these guarantees because of the strong and growing appeal of Cyprus as a tourist location.

Financing

Finance is widely available for EU and non-EU citizens from Cypriot banks as well as European branches. A bank mortgage loan is one of the most widely used forms of finance for property purchase in Cyprus.

A reduction in bank interest rates is enticing overseas property buyers who have already seen rates drop from 5% to 4.25% and are aware that rates could eventually drop to the European Central Bank's base rate of 2.5%. This represents great potential from an already well-established property market.

It often makes financial sense to buy property as a company. For legal, tax and inheritance law reasons you are recommended to review this option. Cyportfolio will gladly give you expert advice as to whether this is a suitable option for your particular circumstances.

Release of equity from investors' other properties, be it in their country of origin or in other investment locations, can also be an easy option to raise finance for a purchase in Cyprus.

Taxation

The purchase of property in Cyprus is not a complex procedure and for the most part, a foreign national has the same rights in the buying process as any Cypriot citizen.

Purchase taxes range from 3% on the first CYP 50,000 to 8% on CYP 100,000 and over.

Annual property tax is also due and is set at between 2% and 3.5% of the market value. Offshore status allows many foreign companies (located in Cyprus but conducting business abroad only) to benefit from many highly beneficial tax and duty-free concessions.

Capital Gains Tax is charged on disposals of real property and shares in companies owning real property in Cyprus. The first CYP10,000 of a gain is tax exempt. This exemption limit rises to CYP 50,000 if the seller has lived in the property continuously for the previous five years. In some circumstances, further allowances are granted for transfer fees, inflation and improvements made to property, but the total exemption cannot exceed a CYP 50,000 limit.

For retirees, Cyprus is has relatively tax-friendly pension income regime where pension income is only taxed at 5% and there will be no inheritance tax paid on all worldwide property for permanent residents of Cyprus.

Cyprus has double taxation treaties with 26 countries, including the UK, Russia, Greece, Ukraine, France, Italy and the USA, and there are no exchange restrictions on current international transactions. Non-residents and foreign investors may freely repatriate proceeds from their investment property in Cyprus.