Cyprus’ citizenship for investment scheme has helped the property sector, created jobs and generated VAT revenue, Phileleftheros reported on Sunday citing a Finance Ministry study.
Of the €6.6b in transactions by the 1864 foreign investors granted Cypriot citizenship in the period of July 2013 to August 2018, €3.7b went to the property sector of which €2.2b was used to buy residence with most of the investments in Limassol and Paphos districts.
The newspaper gave the following breakdown:
- In 2013 applicants invested €79.3m in real estate and €44.2m for a primary residence
- In 2014 applicants invested €101.1m in real estate and €43m for a primary residence. In the same year, after the programmed was revised as regards investments in real estate and infrastructure projects, investments rose to €124.9m and another €133.6m was invested in primary homes
- In 2015 applicants invested €138.5m in real estate and infrastructure works and €424.8m in primary residence
- In 2016 applicants investments in infrastructure and real estate stood at €136.9m. Another €724.9m was invested in primary residences
- In 2017, there were investments of €42.8m in real estate and €132.9 in permanent residences. After the scheme was revised investments in real estate were €409.2m and in primary residence €458.7m.
- In 2018 up until August, €367.9 m was invested in real estate and €407.2 m in primary homes.
Phileleftheros noted the rise in real estate prices with the biggest increase recorded in 2017 and 2018 primarily for apartments in the Limassol, Nicosia and Paphos districts and houses in Famagusta, Paphos and Limassol.
Buyers in Limassol are mostly Russians. Larnaca has seen interest from Lebanese nationals and Paphos from Russian and Chinese nationals. In Famagusta buyers are Russian, Lebanese and Chinese.
Nicosia saw few transactions and any increase in property prices is not due to the citizenship programme while Famagusta also saw a small number and the impact from the programme was on houses. In Larnaca the increase is small and is due to increased demand with the buyers mainly Lebanese. Higher real estate prices are not linked to the programme, it said.
Rents have also risen particularly in Limassol.
Increased investments have boosted employment in the construction sector where the number of employees rose from 1970 in 2016 to 3020 in 2017 and 3357 in the first nine months of 2018.
The value added of the construction sector rose by €110m in 2016, €207m in 2017 and €150m in 2018 while NPLs of the sector fell by €2.3b.
There was a positive impact on other economic sectors such as professional services, education, consumption and additional tax revenue.
State revenue from VAT from the construction sector rose by 30% between 2016 -2017 and the revenue is expected to be higher, the paper added.
Cyprus’ citizenship-for investment scheme has been revised four times, most recently earlier this month.