Prices for Cypriot real estate mainly remained at last year's level
As reported to Metrinfo.Ru magazine by Gordon Rock, in 2008 Russians invested about 430 million euros in Cypriot real estate. For many of them, even a temporary stay in Cyprus is an opportunity to find themselves in a different world. Buyers are attracted by the mild Mediterranean climate, cleanest beaches, good ecology, diverse terrain allowing to choose real estate in both mountain and coastal areas, but not far from the sea. Good transport links have been established with Cyprus. Flight to Larnaca and Paphos airports takes from 3.5 to 4 hours from Moscow.
The real estate market in Cyprus is diverse and most buyers can find everything they want there. What is especially pleasant for our buyer is the absolute readiness of the housing for use. The only issue that a new owner has to solve is furniture transportation, and then move in and live. No construction around, complete resort comfort. That is why real estate in Cyprus is so popular, because it is real.
The Best Island on Earth
Since 2004, the country has been an EU member. Cyprus is famous for its high level of healthcare and education. Not surprisingly, students from many European countries study at Cypriot universities, and teachers from well-known Western universities are invited. Moreover, not only the state but also private companies are interested in high quality education.
Many Russians are attracted by the high level of security. According to Interpol statistics, the crime rate in Cyprus is only 6% of that in England and 9% of that in Germany.
It should be added that Cyprus has one of the most favorable tax regimes in Europe - corporate tax is only 10%, VAT is 15%, there are no withholdings on dividend payments, double taxation avoidance agreements are in effect, and much more. People living in Cyprus for more than 183 days a year are considered tax residents, and income up to 19.5 thousand euros is not taxed at all.
The visa regime has always been an obstacle to entering the country. But Cyprus has done everything to mitigate it. Foreigners purchasing real estate and their family members are granted a long-term (up to 3 years) multiple-entry visa without limit on the number of trips. Moreover, the visa is processed at the Cypriot consulate in just one to two days. What's more, you can simply limit yourself to an electronic application sent to the embassy website, which after approval can be printed and presented upon entry into the country.
According to Ekaterina Teyn, director of the residential real estate department at Chesterton, a serious advantage in favor of Cyprus is the recently adopted decision by the authorities to issue residence permits to real estate buyers with a value of 300 thousand euros or more, who have a guaranteed income abroad. 'Such a permit provides grounds for obtaining a European passport,' emphasizes the expert.
How to Choose a Developer
Today many developers operate in Cyprus, building both single units and residential complexes. Experts advise first of all to focus on large developers with a track record, having implemented several projects, possessing land resources and other property complexes.
For example, the company Cybarco was founded in 1945, Pafilia in 1977, and Leptos in 1960. The result of more than 25 years of work by Aristo Developers is over 250 residential projects. The Leptos Group unites more than 30 companies, has implemented over 300 projects, built several thousand units, the company's land bank is one of the largest in Cyprus, in addition, Leptos Group owns large land holdings in Greece – in Athens, Paros, Santorini, Crete...
Cypriot law is also oriented towards protecting real estate buyers. As Andreas Khuloudis, head of the Russian representative office of Pafilia, said, the buyer should know that according to Cypriot law, a delay in the delivery deadline of up to two months is allowed. But if the developer delays the delivery of the house for a longer period, the seller must compensate the buyer for lost profits, which are calculated based on the average rent of that property. That is, essentially, pay for his forced rental of housing.
Cypriot Real Estate in 2010
The financial crisis has affected purchasing activity in the country. According to Chesterton, the most affected regions of Cyprus are Paphos and western Cyprus as a whole – these are mostly purely resort real estate. The least impact of the crisis was felt by residential properties in Nicosia – the capital, a center of business activity, and in Limassol.
Knight Frank believes that the most affected were developer projects whose target audience was English retirees. They left the market due to a drop in purchasing power caused by the weak pound sterling, and finding new buyers turned out to be problematic due to the specifics of these projects, located in remote areas and often without sea views.
However, the market is trying to recover. As explained by Elena Nekrytova, head of the resort real estate sales department at Novoe Kachestvo, many banks have simplified the conditions for issuing mortgage loans and lowered interest rates. And the developers themselves have met buyers halfway. If before the crisis most of them set an initial payment of 30% of the cost of housing (for the remaining amount one could take a mortgage or installment plan from the developer for up to 10 years), then since 2009 the payments have decreased. In particular, Leptos Estates in a number of projects reduced this amount to 10%-20%. Installment from the developer is given at 9% per annum.
Prices mostly remained at the 2009 level – the average cost per square meter is 1,865 thousand euros for apartments and 2 thousand euros for houses. For some properties, mainly those under construction, discounts of up to 30% are still available. But for spacious villas and apartments in demand by Russians, located in guarded complexes with their own infrastructure, with panoramic sea views, 30-60 minutes from the airport – the price correction was insignificant (up to 10%).
As for future price behavior, we would not forecast any trajectories, at least until the situation with the Greek crisis and its impact on Europe becomes clear.