Cyprus is reconstructing the port of Larnaca. How will this affect the real estate market?
In Larnaca, work continues on the reconstruction of the port and marina. In April 2022, the first stage began — the modernization of the office premises in the harbor.
When the reconstruction of the port is completed, Cyprus plans to receive an income of 120 million euros annually. We tell you what is known about the project and how it will affect the Cypriot real estate market.
Larnaca is the third largest city in Cyprus and the main transport hub of the country. The city has an international airport and seaport.
For several decades, the Cypriot government has been planning to renovate the port of Larnaca: to increase the territory, build new berths and service stations.
The tender for the reconstruction of the port was won by the Cypriot‑Israeli company Kition Ocean Holdings. They will manage the port and marina for 40 years, while the real estate lease agreement is concluded for 125 years. During this time, the government will receive a fixed rent and a percentage of income. After 40 years, the Cypriot government will renegotiate the terms of the port management contract.
The Larnaca Port Project is featured on the Kition Ocean Holdings website. The costs for the reconstruction of the port and marina will amount to 1.2 billion euros. The work will take about 15 years. Developers plan to create 4,000 jobs.
1.2 billion euros
The project also involves the construction of new and renovation of old infrastructure near the port — on an area of 332,449 m².
The exterior of the buildings of residential and commercial complexes is designed taking into account the traditions and culture of Cyprus. On the territory of the port of Larnaca will be built:
nine office buildings;
six apartment buildings;
and even a private island.
How much is property in Larnaca in June 2022
The price per square meter for buying a home in Larnaca ranges from €800 to €2,400 in June 2022, according to Numbeo.com. The cost depends on the type of object and its location: apartments in the city center or on the first coastline will cost two to three times more.
The Cyprus property market has been in trouble since 2014: first, house prices fell due to the economic crisis, then — in 2020 — due to the coronavirus pandemic and the closure of the citizenship program.
The demand for Cypriot housing is growing: 10,347 real estate purchase agreements were registered by the Cyprus Department of Lands and Research in 2021. This is a third more than in 2020.
WiRE, an independent consulting company that evaluates the property market in Cyprus, notes that in 2021 prices have increased for some types of properties:
apartments — by 2,2%;
resort apartments — by 0,7%.
Larnaca stands out from other cities in Cyprus: apartment prices have been growing throughout 2021 and increased by 2,5% in the fourth quarter. The cost of renting holiday apartments rose to 6,3% at the end of the year.
Demand for Cypriot property is also growing in 2022, with 5,090 properties sold in Cyprus from January to March. Of these, 896 are in Larnaca. This is 58% more than was sold in the city last year.
Property sales to foreigners are up 87% in the first five months of 2022. They bought 431 objects in Larnaca. Almost half of total sales. This is due to the fact that wealthy people prefer to have their own housing in Cyprus in order to come to rest on the island at any time.
Most often, citizens of Libya, Germany, Austria and Israel buy real estate in Larnaca.
Most of the year the objects are rented out. The yield from renting out housing ranges from 2% to 7% per annum. At the same time, the average cost of renting a three‑bedroom apartment in Larnaca is €1285 per month — as of June 2022.
How to get permanent residence in Cyprus for the purchase of real estate
Cyprus offers investors to obtain permanent residence for the purchase of real estate worth at least €300,000. For this amount, the investor can buy one or two primary residential properties.
VAT is paid separately: the standard rate is 19%. The rate can be reduced to 5% if this is the only housing for the investor. It is not possible to invest in resale property.
An investor can also invest in commercial real estate. But then he will have to buy or rent a house on the island. Under the terms of the permanent residence program, the investor must have a permanent address of registration in Cyprus.
What are the benefits of permanent residence in Cyprus
Residence permit for the whole family. An investor can add a spouse, children and parents to the application for permanent residence.
Residents of Cyprus enjoy almost the same rights as citizens: they have the right to live, do business and study in the country without restrictions.
Additional income from the rental of real estate. Objects in large cities and resorts of the country bring investors from 2 to 5% per annum.
Tax optimization. There are no taxes on foreign income and inheritance in Cyprus, low rates of property and income tax. And the corporate tax rate is one of the lowest in Europe — 12,5%.
The prospect of obtaining a Cypriot passport. After five years, the investor has the right to apply for citizenship. The Cypriot passport gives you the opportunity to visit 176 countries of the world without a visa, including the European Union, Great Britain, Japan and Singapore.
Immigrant Invest helps to obtain permanent residence in Cyprus for investment. If you want to become a tax resident of Cyprus and live on the island, please contact investment program experts for advice.