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Is Cyprus an Ideal Investment Destination?

March 7, 2019by Winstonfield

This is the million-dollar question which investors urgently need to answer. 

One can argue that the question is answered when you analyze the features and characteristics of the Cyprus jurisdiction. 

According to the fundamental principles of portfolio management, the major factors that investors need to evaluate are the average anticipated return on investment (ROI) and the investment risk. The average expected return measures the future cash flow of the investment, while the investment risk measures the possibilities of deviation of the anticipated cash flow.

When investors are evaluating a jurisdiction, they must analyze the following sectors in order to minimize their investment risk, maximize ROI and earn a significant profit:

  • Economy
  • Legal system
  • Taxation system
  • Political environment
  • Real Estate market
  • Safety
  • Geographical location

Cyprus as an Investment Destination

Cyprus is a country island situated in the Eastern Mediterranean area. It is the third largest island of the area and it is very close to Africa, Middle East and Southern Europe countries.

Its geographical location, from the ancient years is characterized as strategical, since it is between three continents, Europe, Asia and Africa that enables cross trades.  

When Cyprus entered the EU family, back in 2004, the island was rendered into an investment and tax heaven country which ensures transparency, stability and reliability in business practices. 

Hence, Cyprus has always been characterised as a thriving business hub, with diversified powers and a provider of an extensive spectrum of multifarious investment options with evolving progress in the field of economy.

Cyprus economy draws resources from various activities that mainly concentrate at the sector of services. In fact, a high percentage of Cyprus GDP results from the sector of tourism, financial services and shipping industry.

Furthermore, the prosperity of Cyprus Economy is heavily supported by its government.  The government’s focus is in developing Cyprus as an Investment Destination with an attractive, straight forward tax system and several other incentives such as corporate tax rate of 12.5%, tax exempt status of gains from the sale of securities and dividends received from overseas along with more than 67 double taxation treaties etc.    

Additionally, Cyprus solvency has been upgraded by the renowned rating agencies Fitch ratings and DBRS, Moody’s, Standard and Poor’s. Most rating agencies gave the green light for investing in Cyprus.  

Who could possibly ignore the island’s beauty and quality lifestyle?

The sunny skies and the awarded renowned beaches make Cyprus a well-known vacation destination in the Mediterranean.

Tourism is one of the major economic pillars of Cyprus. According to World Travel & Tourism Council report for Cyprus “The total contribution of Travel & Tourism to GDP was 22.3% of GDP in 2017 and is forecast to rise by 6.2% in 2018 and rise by 3.8% pa, 29% of GDP in 2028”. 

This major increase in the tourist industry led to capital investment increase and additional employment opportunities, and, resulted in a direct, positive impact on the prosperity of the overall economy. 

In addition, Cyprus governmental authorities intensively support the tourist product of Cyprus and they welcome overseas capital investments aiming to improve the overall infrastructure of the island.  There are a lot of examples of this nature that can be mentioned such as Limassol Marina, Ayia Napa Marina, City of Dreams Mediterranean by Melco-CNS consortium etc.

Also, the island is characterized by a high per capita income, international experience workforce, uppermost standards of highly expertise professional system and excellent infrastructure.

Cyprus is a renowned European Union business hub for foreign investments, offshore businesses and activities.

The simple and straight forward tax system, the low registration and management costs of a Cyprus company, the legal framework based on common law are important factors which positively affect business activities and transactions.

Furthermore, Cyprus is ranked as the fifth (5th) most secure country in the world, in a recent international research of a total of 106 countries. The research criteria were the carbon dioxide emissions, life expectancy, country policing, thefts and terrorist attacks. 

Added to that, it has emerged as the third (3rd) most secure country in Europe and the safest country in the world in terms of countries with a population of less than 5 million residents.

What is more, the Real estate market in Cyprus is booming.  There are many attractive opportunities in real estate commercial and residential units that promise a secure initial capital, an excellent ROI and capital appreciation.  

In accordance, overseas investors express a lot of interest in investing in real estate properties, which will qualify them in order to acquire an additional citizenship through the Naturalization of Investors in Cyprus by Investment scheme.

According to 2019 KPMG study, “sales of high-end properties at the first half semester of 2018 increased by 8%, whereas 63% of the transactions were located in the city of Limassol”.  

Taking everything into consideration, Cyprus has all the necessary elements, which make the island a competitive, attractive, flexible and friendly foreign investment state.

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