Demand for property in Cyprus from non-EU citizens hasfallen, but it is unclear whether this is due to stricter government controlafter criticism from the European Union regarding investment in exchange forpassports.
Yannis Misirlis, Deputy Chairperson of the CyprusAssociation of Real Estate Developers and Landowners (LBDA), told StockwatchFinancial News that he expects clear guidance on the reasons for the decline bythe end of the year. He said that at present we need annual demand for 600-700units in the so-called “super-prime” market (skyscrapers, more than 1 millioneuros), and since all these high-rise projects from development to deliverytake at least 5 years, the market should be able to absorb most of the units thatare on the market today (if not all).
This kind of volume does not exist today. So the demand forluxury apartments is pretty good. Following criticism from the European Unionand poor international publicity, the Cypriot government announced stricter criteria.
New rules
Applicants for investment must be verified by one of thethree international firms selected by Cyprus, which will verify the applicants'source of income. In addition to an investment of 2 million euros (2.23 millionUS dollars), applicants must also make two additional contributions of 75,000euros each to the Institute for Research and Innovation and to theState-controlled Land Management Organization.
The president of the Earth Development Organization, MariosPelekanos, said he has collected contributions from only three applicants underthe new rules. The money will be spent on affordable housing for low-incomepeople. Pelekanos said he expects at least 300 applications to be filed withina year by July 2020. President of the Cyprus Property Owners Association (KSIA)Giorgos Muskides said he is worried that foreign investors will turn to othercountries with a less demanding passport program.
“Until May, interest in investing in the passport programincreased in anticipation of stricter rules and the necessary additionalcontributions. But the introduction of the rules and the requirement ofadditional contributions of 150,000 euros led to a decrease in interest ininvestments, ”Muskides said. “Of course, in June and July there were very fewapplications, and this will become apparent when the accumulated data isannounced at the end of the year,” he added.
About six years after the start of investment in thepassport program, about 1350 applications were processed, which corresponds toonly 0.3% of passports issued to investors from third countries by all EUcountries. However, 4 billion euros invested in the real estate division wasenough to help the Cyprus economy recover from the crisis in 2013, thanks tothe revitalization of the construction sector.