In the first part of the article, we gave an overview of the general trends in the economy of Cyprus, compared the regions and evaluated the perspectives of investing in residential, commercial and tourist real estate. Let’s move from general points to specific ones and thoroughly study regions of the island.
Nicosia
Nicosia is the capital of the Republic of Cyprus. Located in the central part of the island, it is the administrative, financial and business center of the country. The city hosts central offices of large IT companies, international financial centers, and the Big Four accounting firms — Ernst & Young, PricewaterhouseCoopers, Deloitte, KPMG.
International hotel operators are actively moving to Nicosia — the Hyatt Regency and large Marriott hotel complex are already under construction, and Radisson Blu Hotel is in the planning stage.
The city has 11 A class business centers with an average rental price of 14.78 € per m². Commercial real estate is sorely lacking: many international companies choose Nicosia for relocation, because according to the company rules, their central office must be located in the capital.
The city is perfect for permanent residence and study. There are many universities here. University of Nicosia (UNIC) is ranked among the best universities in the world.
The capital has many museums and exhibitions, restaurants, bars and clubs for a rich cultural and nightlife.
Pros
- Capital.
- The biggest Cyprus city.
- Actively developing.
Cons
- The city is divided into 2 parts, to the north of the Green Line lies the occupied territory controlled by the Republic of Turkey.
- No sea.
- Hot in summer and cold in winter.
- Fast money turnover is impossible.
Investing in real estate
The city is constantly visited by residents of Cyprus and expats, so real estate is liquid. The most profitable one is commercial real estate — business centers and office buildings. At the moment, several office skyscrapers are under construction in the city, in one of them construction work has already been completed and offices are open for sale. SPM plans to build an innovation hub in Nicosia. Among residential real estate, apartments are worthy of attention.
One of the extremely promising spheres of investment is green energy: large areas for solar panels have been prepared near Nicosia.
Return on investment:
- residential and commercial real estate — 4-8% per annum;
- green energy — 4-6% per annum.
Ayia Napa
Ayia Napa is a city on the southeast coast of the island, a resort in the literal sense of the word. Ayia Napa is known for its white beaches, azure sea and picturesque views. The main attraction is the legendary monastery founded during the Venetian rule.
The holiday season lasts from May to October. The stay is quite cheap, there are a lot of young people, and the number of tourists is about 1.5 million a year. During the rest of the year, Ayia Napa is empty and deserted.
The city is actively developing middle class hotel construction — inexpensive apartments and villas.
The main problems of the region should be solved by construction projects:
- a new Ayia Napa marina is currently under construction; it will bring the city to a new level of infrastructure and service, attract wealthier visitors;
- The University of Nicosia is planning to build its campus and a large dormitory for students in the near future. This will extend the cycle of the city’s active life for the low winter season.
Pros
- Excellent resort location.
- Great potential for the hospitality industry
Cons
- Strong dependence on tourist traffic.
Investing in real estate
The most interesting objects for investment in Ayia Napa:
- student housing;
- apartments;
- middle class hotel complexes.
Return on investment: 4-9% per annum.
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Larnaca
Southeast coast of the island. Larnaca is the transport center of Cyprus. There is an international port and the largest airport in the country, which allows you to get from the city anywhere in the world.
In 2020, the authorities of Larnaca raised 1.2 € billion for the reconstruction of coastal infrastructure. The city will build 20 kilometers of a modern promenade, sports areas, restaurants, hotels, a terminal for receiving international liners, as well as a new marina.
At the same time, they rebuild the old districts of the city — houses are demolished or renovated into modern service apartments and commercial real estate. Developers are actively involved in real estate management and guarantee apartments ROI 4-5% per annum for 5 years.
Thanks to large-scale infrastructure projects, Larnaca today is one of the most promising regions in Cyprus for real estate investment. The potential growth in the value of new objects is from 15 to 35% over the next 5 years.
Larnaca is well suited for life. DJs and musicians often organize big concerts here, a historical center has its own vibe of a real southern European town.
Pros
- Large transport hub with an international seaport and airport.
- Large infrastructure projects.
- Sea, landscaping.
Cons
- Life is not as active as in the capital.
Investing in real estate
There is a lack of commercial space in the city -many companies moving to Cyprus first look for real estate here because of the airport location.
The most interesting real estate for investment in Larnaca:
- office real estate;
- apart-hotels.
Return on investment:
- residential and commercial real estate — 3-7% per annum;
- Distress Property — from 30% to 70%. You can read more about Distress Property here.
Limassol
The most southern point and business center of Cyprus, the second largest city after the capital.
90% of the IT business on the island is based in Limassol, so here we have the most expensive average rental price for class A offices of 31.00 € per m². This is 2 times higher than in other cities of Cyprus.
The city has a maximum concentration of IT specialists and a well-developed community. 40% of residents are Russian-speaking. The service sector, restaurants and nightlife are actively developing.
The city council has issued more than 20 licenses for the construction of skyscrapers; 28 high-rise buildings are under construction right now. The casino is almost finished.
Pros
- Very liquid real estate.
- Maximum concentration of IT business.
- Developed community.
- Fast money turnover in investments.
Cons
- Expensive commercial real estate lease.
- Overvalued elite real estate market.
Investing in real estate
Real estate in Limassol is highly demanded. The most liquid investments are in commercial real estate, where demand far exceeds supply.
Investments in budget residential real estate costing 300-400 thousand euros are relevant. The elite real estate market is expected to decline, as it is overvalued and does not always meet buyers' expectations.
The most interesting real estate for investment in Limassol:
- office real estate;
- budget residential real estate.
Return on investment:
- residential and commercial real estate — from 4% per annum.
- Distress Property — up to 70%.
Download Limassol presentation
To be continued…
In the third part, we’ll evaluate Paphos, Polis and the Troodos mountain range, make an overall rating and draw conclusions.
Download Cyprus regions presentation
