Stockwatch carried a Greek-language update on the Cyprus Citizenship by Investment Programme. Some main points from this article are translated and summarised here for the benefit of our international readers, together with some commentary on investing in Cyprus. The translated and edited text is in italics below.
The Citizenship by Investment Programme has seen a slowdown in applications in 2020 due to the COVID crisis. This is preventing potential investors from visiting Cyprus to submit their applications and implementing their investments. International financial conditions are also contributing to the slowdown.
The conditions appear to becoming stricter. The Parliament is examining increasing the base investment needed from € 2 million to € 2.5 million.
There are approximately 280 applications from foreign investors from last year still pending for review. According to Mr. Kypros Kyprianou, the General Director of the Ministry of Interior:
"the specific applications were submitted in the second seven months of 2019 and are significantly reduced compared to the first five months of the same year."
According to the same source, from 1 February 2020 until today, only 180 applications are pending.
The numbers of approved passports (for primary investors) issued are:
The president of the Association of Large Investments, Mr. Andreas Dimitriadis, is also quoted in the article as pushing for an exemption of the capital tax on property investments as a further incentive for attracting investors.
"We consider it important and we are pushing in this direction for a capital tax exemption for those who will invest in real estate from now until the end of the year so that the investor who buys a property does not pay capital tax when he sells his property in the future."
He also stated that:
"… the real effects of the crisis will be realized from October onwards when companies will not be able to cope with the accumulated problems and will start firing staff",
We believe that the current situation in Cyprus and globally warrants caution in investments. If the objective is to find a safe haven, then Cyprus is ideally situated for that. After this decision, however, the question is how to evaluate investments for security and the greatest possible return.
The property sector is in a complex situation. On the one hand, there has been a wave of investments taking place for two reasons:
a. Transactions delayed during the COVID lockdown are now taking place.
b. Several foreign investors have been buying in Cyprus either for passport investments or for risk diversification.
The anticipated impacts of the COVID crisis on the Cypriot economy are visible but not yet fully expressed. Tourism, which represents approximately 20% of Cyprus’ economy, will suffer a major hit this year, with tourism arrivals likely to be 20-25% of last year.
The government support programmes for the economy continue, but unless they are renewed, there will be major turbulence from September as the employee firing furlough is lifted and from early next year as the bank loan repayment moratorium is lifted.
In the meantime, the Next Generation EU programme for support after the COVID pandemic will be delayed. Disbursement will be over 3 years (at minimum), while over 50% of the budget will be allocated to green investments, digital transformation and equivalent programmes that will not bring direct support to the companies and individuals hit by the COVID crisis.
We continue to support investments in Cyprus. For further information on how we can support you, please contact us.
Navigator Consulting Group
29 July 2020
8 July 2020