Foreign investors in Cyprus are increasingly turning their attention from luxury properties to more affordable housing, prioritizing residency permits over citizenship. This shift, highlighted in a 2023 report from real estate firm Danos, marks a significant change in market dynamics.
The Cypriot real estate landscape has transformed, with demand moving away from luxury homes towards properties that offer residency permits. This change reflects a departure from the previous focus on high-end residences under the disgraced ‘golden passport’ scheme, which was ‘definitively and irrevocably terminated’ in November 2020.
The trend, which first emerged in 2023, is expected to continue into 2024, according to Danos International data. Luxury property sales, particularly those exceeding €1.5 million, saw a sharp decline in 2023, indicating a downturn in the premium segment of the market.
Danos reported that while there was a slight year-on-year increase in transactions of homes priced above €1.5 million in early 2024, the market is still recovering from a significant drop in sales in 2023. The luxury segment saw a 26 per cent decrease in 2023 compared to the previous year, with 164 transactions totalling €440 million recorded. Despite the large sum, luxury properties accounted for only 8 per cent of the total transaction value, the lowest share since 2013.
The luxury property market has been in decline since 2018, following peak sales in 2016 and 2017, driven by foreign investors seeking Cypriot citizenship through the Cyprus Investment Programme. In 2017, a record 260 luxury properties, valued over €1.5 million, were sold, reflecting a 24 per cent increase in demand. This boom helped revive the broader property market, which had been struggling since the 2013 financial crisis, with luxury sales growing by 43 per cent in 2016.
However, after the citizenship programme ended in 2020, demand for high-end properties waned as foreign investor interest shifted towards mid-range homes aimed at securing residency permits. Danos noted that the market for luxury properties had remained stable from 2010 to 2013, with around 40 sales per year, but surged after programme changes in 2014, peaking in 2017. Since then, the market has slowed down.
Looking ahead, the Cypriot real estate market is expected to see moderate growth, despite challenges. Kyriakos Kiliaris, Chief Marketing Officer at Danos, believes that stabilizing interest rates will help regulate demand. While the luxury market is unlikely to return to its 2017 peak, foreign investment will continue to support the wider property market.
Additionally, geopolitical factors, particularly tensions in the Middle East, are expected to sustain interest from European and Asian buyers. The Cyprus Residency Programme, known as the ‘golden visa,’ remains a key driver of foreign investment, offering residency to non-European citizens who invest in Cypriot real estate.
Despite rising construction costs and regulatory changes, Kiliaris stated that foreign investors remain strongly interested in the Cypriot property market.
