"We first came to Cyprus with my husband on our honeymoon about ten years ago. When our first child was born, we started coming every year," says Natalya from St. Petersburg. "The choice was simple – the flight is not far, but it's not Turkey or Egypt, it's a completely different level. Getting a visa is very easy, you practically just get a stamp at the airport. We started traveling often, we liked it, and over time we decided to get our own apartment because we traveled for at least a month, and we decided to invest our savings this way. We lived there for a month ourselves, and rented out the apartment the rest of the time," the woman says.
There are also many retirees in Cyprus. "I sent my parents to Cyprus three years ago, gave them an apartment when my dad stopped working. They can't live on their pension anyway, but there they live on the money from renting out their apartment in the capital," says Igor.
Cyprus has two programs – citizenship by investment and residency by investment. Both programs were launched back in the 1990s, but recent adjustments have made them the fastest way to move to Europe.
The citizenship by investment program is not cheap. The minimum investment is 2.5 million euros. The citizenship application is processed in three months. Living in the country is not required, but you must own real estate worth at least 500,000 euros for life.
Cyprus citizenship allows visa-free entry to 157 countries. The country is not part of the Schengen Area but is a member of the European Union.
"Citizenship by investment is of interest to wealthy and very wealthy individuals with an impeccable reputation and financial history. These are businessmen, including young ones, who do not want or cannot spend significant time in Cyprus, and this requirement is absent. But they want to obtain European citizenship in a short period, the opportunity to live and work in all EU countries," says Henley & Partners. According to Tranio, over the past two years, since application processing times were reduced, Cyprus has received over 2 billion euros in investments.
A residence permit (RP) in the country is much more affordable. To get a temporary RP, you can buy real estate of any value, there is no minimum threshold. The processing time for a temporary RP is six months. Once obtained, you must stay in Cyprus continuously for 180 days a year, otherwise you cannot renew the permit. The temporary RP must be renewed annually.
To obtain a permanent RP in Cyprus, you need to buy real estate worth more than 300,000 euros. The processing time for a permanent RP is two months. With this type of residence permit, you can come and go without restrictions. The permanent RP does not need to be renewed annually; it is indefinite.
Since the country is not part of the Schengen Area, a Cyprus RP does not provide much opportunity for visa-free travel. A resident of Cyprus can obtain a visa to visit another country at the center in Nicosia. Working with an RP is not allowed; for that, citizenship is still required. To become a citizen indirectly through an RP, you need to live in the country for seven years, with the last year being continuous.
Although obtaining an RP offers fewer opportunities than citizenship, our compatriots still actively use this program. The Cyprus RP is mainly obtained by people who actually plan to live in the country and want to move as soon as possible. According to UFG Wealth Management, about 75% of investor transactions involve properties worth between 300,000 and 1.5 million euros. For 300,000-400,000 euros, you can buy a three-bedroom house of about 250 sq m in any major city in Cyprus. For the same amount, commercial real estate is also available: you can expect a quality office of about 200 sq m or a store of 150 sq m in the center of major cities, except Nicosia and Limassol, where prices for such properties reach 500,000 euros.
Experts expect that after the crisis the country experienced in 2009 and 2013, the economy should recover in the next two years. However, a sharp increase in real estate prices is unlikely.
In recent years, real estate prices have been steadily declining. According to UFG Wealth Management, in the second quarter of 2015, compared to the same period last year, apartment prices fell by 2.6%, houses by 2.3%, retail space by 5.5%, offices by 1.4%, and warehouses by 2.4%. The main reason for the price decline in recent years is problems in the banking sector, particularly the bankruptcy of mortgage borrowers and the transfer of their properties to banks, as well as relatively high interest rates on loans.
"We are now forecasting a soft landing of the market and stabilization of real estate prices, as macroeconomic indicators have improved. However, a rebound and subsequent growth in real estate prices can be discussed more likely in the long term," Andrey Rozov, head of real estate at UFG Wealth Management, told Gazeta.Ru.
A potential investor will certainly be pleased with the low entry threshold, as real estate prices in Cyprus are two to three times lower than in France, Italy, and Luxembourg, depending on the segment. However, the yield on real estate in Cyprus is also lower. For apartments, it averages 3.8%, houses 1.9%, retail premises 5.2%, offices 4.4%, and warehouses 4.3%.
The country's authorities are trying to offer some other advantages to attract investors. In particular, the real estate transfer tax was reduced by 50% until the end of 2016. The government also proposes to exempt from income tax on future sale of real estate those who buy it before the end of 2016. In addition, proposals are being developed to reduce property tax.