Cyprus Economic Pulse
Cyprus is the third largest island of the Eastern Mediterranean area and is strategically located between three continents, Europe, Asia and Africa.
It is a European member state since 2004 and Eurozone member since 1st of January 2008.
Greek is the official language; however, English is one of the most popular foreign languages spoken in the country followed by Russian.
Cyprus – The Safest Country in the World
Cyprus is classified as the fifth (5th) most secure country in the world of a total of 107 countries, in a recent international research contacted by Value Penguin. The criteria of the research took into consideration the life expectancy, number per 100k people, population, carbon dioxide emissions (CO2), traffic deaths, thefts, assaults and country policing.
Also, the same research ranked Cyprus as the first (1st) safest country in the World at the category of less than 5 million population.
The World’s Safest Countries
5 – 20M
|1. Spain||1. Switzerland||1. Cyprus|
|2. Japan||2. Singapore||2. Ireland|
|3. Italy||3. Greece||3. Iceland|
|4. France||4. Netherlands||4. Costa Rica|
|5. Australia||5. Hong Kong||5. Luxembourg|
|6. Germany||6. Israel||6. Qatar|
|7. Canada||7. Serbia||7. Malta|
|8. Poland||8. Sweden||8. Albania|
|9. Bangladesh||9. Norway||9. Slovenia|
|10. China||10. Denmark||10. Croatia|
Cyprus Taxation and Legal System
Cyprus operates in an open and market driven economy and is considered one of the most favorable jurisdictions in Europe, due to its straightforward taxation system and the investment incentives offered in various sectors. In fact, the growth of the Cyprus Economy is strongly supported by the governmental authorities, therefore the economy is constantly evolving with a healthy pace.
The Legal system is based on the English common law system with strict regulations that safeguard investments, intellectual properties and business operations.
Cyprus Economy at a Glance
Cyprus economy as per PwC report for the first half of 2019, published in November 2019, revealed that Cyprus GDP will continue to grow in the forthcoming years.
According to PwC, “Cyprus exhibited strong GDP growth for the third year in a row (3,9% in 2018), maintaining its position as one of the fastest growing economies in the EU. Based on the latest IMF forecasts (April 2019), the growth is expected to reach 3,5% by the end of 2019 and it is expected to ease further in the medium term”.
As demonstrated by IMF, the growth of the Cyprus Economy GDP is higher than the European Union real GDP growth and this is due to the international economic policies and investment incentives that Republic of Cyprus offers, for attracting foreign investments.
On the other hand, based on European Commission economic forecast for Cyprus, the unemployment percentage rate will continue its rabid decline, the public budget balance (% of GDP) will maintain its surplus and the gross public debt (% of GDP) will continue to steadily reduce.
Cyprus is among the 10 smallest countries of Europe and ranks on the 10th place on European countries GDP growth forecast according to the Summer 2019 Economic Forecast – Statistical annex of European commission.
In addition to all of the above, Cyprus solvency has been upgraded by the acknowledged rating agencies DBRS, Fitch, Moody’s and S&P.
|DBRS||BBB (low)||Positive||Nov 15 2019|
|Fitch||BBB-||Positive||Oct 11 2019|
|Moody’s||Ba2||Positive||Sep 20 2019|
|S&P||BBB-||Stable||Sep 14 2018|
Source: Trading economics
The main sector pillars of the Cyprus Economy are tourism, real estate, financial, professional and administrative services, public administration and defense.
According to CyStat and KPMG Analysis of the Cyprus Gross Value Added (GVA) by sector 2018, tourism, wholesale and retail trade sectors contribute 25%, financial professional and administrative services sectors 20%, real estate and construction sectors contribute 16%, public administration and defense contribute 19%, adding up to 80% of the Cyprus GVA.
Cyprus Real Estate Market at a Glance
Moreover, Cyprus Real estate market is constantly increasing. As stated by PwC: “During the first half of 2019, transaction volume totaled €2,5bn, demonstrating an increase of 25% compared to the first half of 2018. The significant growth observed, appears to have been fueled by a surging flow of foreign capital in the residential property sector.”
Source: The analysis was based on data from the Department of Lands and Surveys (DLS) relating to contracts of sales and sale transfers, extracted on 4/9/2019. Note: The above figures do not include :(i) Debt for Asset Swap transactions (DFAS), (ii) transaction of real estate through the sale of company shares or funds units (Share Deals) and (iii) any other transactions not filed or adequately recorded at the DLS.
According to the DLS and PwC Analysis, the Real Estate sector in Limassol contributes 44% on the overall sector value in the first half of 2019 and 33% on the number of properties sold. Whereas, the city of Paphos comes second with 25% in terms of total sector value and 22% on the number of properties sold, followed by Nicosia with 15% in terms of total sector value and 21% on the number of properties sold.
In addition, the residential property sector consists of 77% of the total value of transactions in the real estate sector, divided by 43% in residential apartments and 34% in housing.
According to 2019 KPMG study, “sales of high-end properties at the first half semester of 2018 increased by 8%, whereas 63% of the transactions were located in the city of Limassol”.
In Cyprus and especially in Limassol, there are many attractive opportunities in real estate commercial and residential units that promise an exceptional Return on Investment (ROI) and capital growth.
Except from enjoying the benefit of the Cyprus favourable taxation system, through their residential investment, entrepreneurs may be eligible to apply under the provisions and requirements of the Cyprus Investment Program, on the basis of subsection (2) of section 111A of the Civil Registry Laws of 2002-2019.
Nowadays, there are many promising new developments taking place on the island such as:
- The integrated luxury resort and casino called “City of Dreams Mediterranean” with a completion date in 2021. A world class development, one of its kind in whole Europe, in Limassol.
- “Limassol Marina”- A multi-million project with residentials and commercial units that are built by the sea. A large development project that offers apartments and villas, yachting, dinning and shopping, spa and fitness.
- “Ayia Napa Marina” – A seafront living in the Mediterranean with apartments, villas, yachting, commercial centre, dinning and entertainment, fitness and spa.
- “Del Mar”- A world-class seafront development, in ultra-desirable coastal area of Limassol in Cyprus, with unobstructed sea view offering ultra-luxury residences that will enjoy in-house services, concierge, exceptional facilities and an exclusive high-end shopping and dining plaza.
- “One” – A striking, commanding and the tallest seafront residential high-rise superstructure in Europe, offering residential units with an uplifting level of light, incredible sea views, open, generous space and the refinement of detailing.
- “Trilogy” – The largest mixed-use sky rise development in the Mediterranean region – a trio of shimmering beach front towers offering residential and commercial units, surrounded by a bustling inner plaza, right in the heart of Limassol’s affluent waterfront.
- “The Icon” – offering 54 sophisticated high-end residences on the Mediterranean coastline. A project that is designed to house exclusive residences and a spectacular infinity pool and restaurant on the 10th floor with uninterrupted views of the Mediterranean Sea.
- And many other smaller scale high-end apartment projects that promise an excellent ROI and capital appreciation.
Cyprus is, definitely, an attractive and friendly foreign investment island country that investors should strongly consider, since it combines business with an exquisite way of living.