Paphos Real Estate Market
Paphos, a coastal city rich in history in culture located in the western part of Cyprus, is the capital of Paphos District. The area of the district is 1,393 km², which constitutes 15.1% of the total area of the island. According to the 2011 Census, it has a population of 90,295, out of which approximately 36% are overseas nationals compared to the average 24% for Cyprus. The local economy is mainly based on agriculture and tourism, with the district receiving about a third of tourist arrivals and having the highest number of four and five-star hotels on the island. The district is served by Paphos International Airport, the second-largest airport in Cyprus which is situated north of the city of Paphos and connects the island with a multitude of international destinations. Paphos has an A6 highway connection with the other major cities.
Paphos was awarded the title of the European Capital of Culture for 2017. One of the most prestigious cultural events in the world, this will give the city and the wider area the opportunity to showcase its history and culture while simultaneously being a catalyst for economic and cultural reinforcement. The expected upsurge of visitors to the city is bound to have a significant economic impact and help foster urban regeneration, as well as raising the city’s visibility and profile on an international scale. Previous European Capitals of Culture similarly witnessed unparalleled economic growth that can support expectations for Paphos; Pécs 2010 (Hungary) experienced a 27% increase in overnight stays, while Marseille-Provence 2013 attracted a record number of 11 million visits. The signs are already particularly positive for Paphos, with predicted hotel occupancy rates reaching 97% in August. The president of the local Cyprus Hotels Association has, in fact, stated that locals as well as foreigners seem to show an increased interest in booking holidays in Paphos this year, as the visitors can combine the beauty of the town with the abundance of events being organized due to its status as a capital of culture. This kind of significantly increased demand has led to renovations and extensions of several existing hotels, as well as the opening of new ones, so that hoteliers can sufficiently accommodate the vast number of tourists visiting the town.
It is also worth mentioning that there is an ever increasing demand for luxury residences on the Paphos beachfront, a demand that property developers are trying to respond to by creating a number of new luxury apartment and housing projects. A crucial project expected to further enhance the economic prospects of Paphos is the marina at Potima bay, located between Kissonerga and Peyia. When built, it will cover an area of 155,000 m2 and have a capacity of 1,000 berths. It is calculated that the marina will take approximately three years to be completed once the attorney-general ensures all the relevant documents are in order for the project to begin construction. Another long-awaited project recently approved and awaiting construction towards the end of 2018 is the dual Paphos-Polis Chrysochou road, aiming to make access to Polis much easier for motorists. At the same time, there are works underway already improving the existing road network, while expansion works have been programmed for the Latsi Harbour in order to cater for more yachts.
The Paphos real estate market has historically been characterized by a high proportion of demand for holiday home/ second home properties, particularly from British holiday makers and retirees. The region (especially the north-west) offers one of the most expensive and luxurious real-estate on the island due to its unique landscape and amenities on offer.
During 2004-2008 demand was mainly from the UK, with buyers acquiring real estate off-plan intending to sell them on when they were completed. Local developers catered to their requirements by constructing high- density residential projects, comprising mainly of apartments and semidetached villas.
Post 2010 demand came mainly from overseas buyers looking to take advantage of the Cyprus government’s incentive schemes for the granting of visas and naturalization of non-EU nationals. These are subject to Terms & Conditions, such as the acquisition of a VAT elected residence, i.e. a new property, for €300,000 for the former and €500,000 for the latter; demand was and remains mainly for that type of property. Alternative ways of acquiring citizenship are to invest in a range of real estate, land development and infrastructure projects, invest in financial assets of Cypriot companies or Alternative Investment Funds, or a combination of all the above, with the purchase of a €500,000 residence being the only obligatory term.