THIS year has seen a huge increase in the number of South Africans buying property in Cyprus. Cyprus is the third-largest island situated in the Mediterranean and offers a climate similar to SA along with first class medical and education facilities, among other amenities, which is one of the reasons why it is a popular property investment destination.
However, according to a local company Cypriot Realty which has relocated hundreds of South Africans to Cyprus, the main attraction is the permanent residency scheme. "As part of the European Union (EU), this scheme is currently the most cost effective compared to other EU countries, added to which the permanent residency is for life."
Ellinas explains that to qualify for permanent residency on the fast track process, which takes between four and six weeks to approve, the main applicant needs to purchase a new residential property for the minimum value of €300,000 + VAT.
"There are also other qualifiers: proof of offshore income, funds remitted into a fixed deposit account, and a clean police record, but the main qualifier is the purchase of a residential property."
For South Africans, the fact that they don’t need to live in Cyprus as there is no minimum stay period, coupled with the fact they can rent out their property and only need to pay two-thirds on purchase, is a big advantage
While Cyprus has had its share of problems with the eurozone situation, a recent discovery of a large offshore natural gas deposit sees it back on the road to prosperity. "This gas find has stimulated the Cyprus economy and offers ideal opportunities for South Africans to open a business in the mining engineering and allied sectors," says Ellinas.
Aside from the permanent residency opportunities, she says that it’s the excellent quality of life and the solid return on investment opportunities that are driving property investors to seriously consider Cyprus. One of the reasons why investors are looking to Cyprus is the excellent appreciation of property due to the demand for holiday accommodation in its busy tourist locations within walking distance to the beaches, near the promenade or on a bus route. "These properties are always sought after by investors wanting to enjoy a solid euro-based income for six months of the year." There is also a high demand from foreigners wanting to relocate to Cyprus or own a holiday home there.
"As long as there is a cold winter in Europe, there is always high demand for property in Cyprus."
Ellinas believes the natural gas discovery in Cyprus’ exclusive economic zones will employ thousands of foreigners who will either purchase property or want to rent. In addition, being an island there is limited space and a limited number of properties within a 7km wedge of the sea — where people can see the sea, smell the sea or be within a short distance from it.
Cyprus also has one of Europe’s lowest personal tax structures, which means that rental income earned in Cyprus needs to be in excess of €19,500 nett a year before any tax is due. Buying a property in a legal entity is also favourable as Cyprus has the joint-lowest corporate tax rate in Europe with Ireland — capped at 12,5%. There is also no inheritance tax in Cyprus, advantageous for legacy planning.
On a lifestyle level, Cyprus has a plethora of activities available from golf and hiking to sailing and bowls. This, coupled with its low cost of living despite a volatile exchange rate and its double-taxation treaty with SA, makes it an ideal investment node.
"Buying a home overseas is not only a major financial and emotional commitment, but a decision that can be made easier if you get advice from professionals. It is recommended that you always check exactly what you are buying before signing any contracts — the cost of the trip across to the island initially to do the groundwork could save thousands in the long run. A new investment property in a new country is the achievement of a lifetime and an investment in the future for the next generation. In Cyprus the options are the best. Living is laid back and you set your own pace," Ellinas concludes.