Cypriot property developer sees strong Middle East demand

Supplied/Leptos Estates

• Limassol Blu Marine property development attracts investors to Cyprus
• Foreigners moving to Cyprus benefit from zero capital gains tax

Middle East investors make up almost a third of the €100 million ($106 million) total sales so far in a new high-end property development in Cyprus.

The €300 million Limassol Blu Marine project is the latest to be undertaken by Leptos Estates, the largest property developer in Cyprus, behind the government and the church.

“Cyprus has been for many years left to sleep for various reasons, but now it’s beginning to wake up. We are beginning to see a little bit of the Dubai phenomenon,” Pantelis Leptos, co-president, Leptos Estates, told AGBI.

“People from around the world have migrated here, are living here, earning and spending money here.”

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Limassol Blu Marine is situated 330 metres from Limassol Marina, with apartments facing the Mediterranean Sea. The development includes a 50 metre infinity swimming pool, gym, bistro and health and wellness facility.

Leptos revealed that, previously, almost 97 percent of the company’s property sales came from the British market, although he said that the make-up of customers includes 31 different nationalities.

“For the last two years there was a shortage of properties to let. Now we’re reaching a point where there are more buyers than properties. There are so many different people, so many different nationalities,” said Leptos.

According to the Residential Property Price Index from the Central Bank of Cyprus, property prices on the island nation recorded a 4.7 percent increase in the second quarter of the year compared to Q1 2021. Apartment prices were up 7 percent year-on-year, while house prices showed a 3.5 percent increase.

Cyprus has long touted itself as the ‘Silicon Valley of Europe’ and Leptos claimed the tech industry is already seriously challenging tourism in terms of contribution to the country’s GDP.

“Obviously with new people coming to live and work in Cyprus, they require a home to stay in and so they buy them, or investors buy-to-let. They need restaurants and shopping malls, and schools for their children and so on. Construction is pushing the economy,” he said.

The country’s economy has been hit hard in recent years, from the global financial crisis in 2008, to its own banking crisis in 2013, the recent coronavirus pandemic and the ongoing war between Russia and Ukraine. 

However, it is forecast to grow by 5.5 percent in 2022 on better-than-expected tourism arrivals, although the outlook is tempered by energy market turbulence which will sap demand later in the year, the island’s Central Bank said, as quoted by Reuters.

It has forecast growth of 2.5 percent next year, on expectations of a long-drawn out conflict in Ukraine and its impact on the economy.

Foreigners moving to Cyprus gain a number of benefits, from zero capital gains tax, zero foreign income tax and no inheritance tax. Buyers get permanent residency status if they buy a property worth €300,000 or more which gives them access throughout the EU.

Leptos admitted the island nation’s permanent residency programme previously contained too many ‘loopholes’, which were exploited by some unscrupulous investors.

However, he said lessons have been learned and a far more robust scheme is now in place, and the country is attracting an increasing number of investors from the Gulf region.

In November 2019, in an effort to mitigate the risks coming from unvetted foreign investment, the Cypriot government revoked the citizenship of 26 investors who had received their EU-Cyprus passports through the programme.

Leptos said: “Ours was an emergency programme, because in 2013 we discovered that our banks needed money and instead of doing what they did in the UK with a bail-out from the government, it was a bail-in, they took the depositors’ money. And then they shut them down.

“Cyprus was in desperate need of money and the programme was created so as to bring fresh money into the economy. We didn’t really need the people. We took other country’s programmes, and we turned it around.

“The main criteria was they needed to have the funds and they didn’t need to live in the country. However, that has now stopped and when it was stopped it was investigated by international companies, which was strict and thorough.”

Earlier this year, AAA Associates Immigration Services revealed the global citizenship-by-investment market is predicted to reach $100 billion by 2025, from its current $21.4 billion valuation.