Trade & Investment

    Foreign Direct Investment

    Large-scale projects, privatisations and a burgeoning oil and gas sector are firmly placing Cyprus on the map as a hotspot for investment from the US, Asia, Russia and the Middle East.

    Confidence in Cyprus has seen a boost with foreign investors eyeing the country with renewed interest. The island’s improved credit standing, after consecutive upgrades by international credit rating agencies, successful bond issues raising well over €2 billion in international markets, and numerous large-scale projects, have all contributed to the resurgence of Cyprus as a top foreign direct investment (FDI) location. Recognising the growing interest, Cyprus has focused on streamlining processes and was ranked in the ten economies with the most notable improvement in upgrading the business environment, climbing 13 places in the rankings of the World Bank’s 2016 Doing Business Report. Already recognised as a popular holiday destination and a business hub servicing international companies with multinational operations, the island is growing its investment appeal with more incentives and improvements to its FDI framework – making this a ripe time to invest in the Cypriot market.

    Large Scale Projects

    Improvements in the macroeconomic and financial environments are reviving international interest in 28 major development projects in Cyprus, and with the economy showing good vital signs, Cyprus’ FDI appeal is on an upward trajectory. Investment opportunities in Cyprus’ large scale projects span various sectors, including housing and tourist developments, projects with a special focus on golf courses and luxury marinas, as well as health, education and energy. A key development in 2016 is the launch of Cyprus’ first-ever Science and Technology Park (STP), which provides strategic investors with an interesting opportunity to finance, design, build and manage the landmark project. The planned STP will create applied research and development centres as well as office and support facilities tailored for science and technology companies, as well as promote business incubators to expand the range of opportunities for research and development investment. The tender notice was published in 2015 and has already garnered international interest. To sweeten the deal for foreign investors, Cyprus also offers various incentives, such as tax breaks, greater flexibility in authorisation procedures and easier application process for residence and employment permits. In addition, investors will have tax-breaks for expenditure on acquiring patents or copyrights, buying shares in innovative businesses and start-ups, and additional breaks for the cost of buying fixed assets to be used in innovative operations. To expand the scope of the project, strategic investors could also build an on-site hotel accommodating up to 100 guests, featuring restaurants and a conference centre, and an array of government-funded projects up to €3 million, including a road network and setting up power, telecoms and water supply.


    Cyprus’ efforts to privatise several state-owned entities in 2016 presented a brand new opportunity in terms of FDI and were expected to bring in over €1 billion in revenue. Targets for privatisation are the dominant telecommunications provider Cyprus Telecommunications Authority (Cyta) and the commercialisation of the activities of Limassol Port, which received 14 international bids in January 2016. The port privatisation has now been successfully completed, with port services offered to bidders in three parts: the licensing for the container terminal and for the provision of maritime services for 25 years, and the licensing for a multi-purpose passenger terminal for 21 years. A consortium comprising of EuroGate International GmbH, which has the majority holding, Interorient Navigation Company Ltd, and East Med Holdings S.A, was granted the concession for the port’s container terminal. The port’s maritime services were awarded to a consortium of one of the largest ports operators in the world, Dubai-based DP World Limited (majority holder), P&O Maritime and GAP Vassilopoulos Public Ltd. The successful port privatisation is set to further strengthen Cyprus’ status as a key shipping hub. The commercialisation of operations at the port of Limassol, Cyprus’ maritime capital, is expected to bring in €2bn to state coffers over the next 25 years.

    A Burgeoning Oil and Gas Sector

    Cyprus’ hydrocarbons find has captured the attention of several global energy companies, such as Eni, Kogas and Total, who have all secured exploration licences. The country’s energy sphere saw yet another boost in November 2015, with British oil and gas company BG Group acquiring a 35% stake in Cyprus’ offshore Block 12. US-company Noble Energy made the world-class natural gas discovery in 2011, and so far has confirmed reserves of 4.54 trillion cubic feet (tcf) in just one of the 12 offshore blocks. Cyprus’ latest and third offshore licensing round in July 2016 attracted six bids, with international oil and gas players scambling to find more significant  deposits in the East Mediterranean. The licencing round saw more bids from the existing companies in Cyprus as well as new entrants including ExxonMobil, Qatar Petroleum and Norway's Statoil. Further exploration is expected in 2016 and 2017, with oil deposit discoveries also a possibility. Cyprus’ aim of becoming a regional energy hub in the Eastern Mediterranean also opens up opportunities for more oil and gas related business, and for investors to use Cyprus as a base to service their clients in the region – following deepening cooperation with Egypt, Israel, Jordan, Lebanon, Greece and Italy. Another interesting prospect is the potential to develop a petrochemical industry in Cyprus. 

    Renewed Confidence in Banking

    Following Cyprus’ financial adjustment programme, the first priority was to restructure the country’s banks – and in less than three years, the sector has been transformed and its largest banks fully recapitalised. Fresh cash injections and positive bank results are restoring confidence and the current restructuring of the industry has created opportunities for more foreign participation in the sector. The island’s two biggest lenders, Bank of Cyprus and Hellenic Bank, have already garnered significant international investor interest, including US billionaire venture capitalist Wilbur L. Ross. New York-based hedge fund Third Point became a major shareholder in Hellenic Bank in 2013 and strengthened its position by purchasing €7.7 million worth of convertible bonds, with additional cash injections from Belarussian-owned international video game company Wargaming and European Bank for Reconstruction and Development (EBRD). New opportunities are springing up in the wake of rebuilding the Cypriot banking sector. The country is providing opportunities for new players to enter into the market and encouraging healthy competition and a wider scope of services. Investment opportunities that could be tapped into by international banks and financial groups are mergers and acquisitions, private equity and venture capital projects as well as financing of large infrastructure projects.

    Tourism Moving Upmarket

    Tourism has long been a driving force of the Cypriot economy and arrivals as well as expenditure have seen record-breaking numbers in 2015 and further growth in 2016, with projections of international tourist arrivals reaching almost 4 million and generating expenditure of €3.5bn by 2025. Cyprus has been attracting new interest thanks to its efforts to diversify its offering, by developing nautical, golf and wellness tourism and by extending the tourist season. The construction and investment in multipurpose projects such as luxury marinas, golf courses and more recently an integrated luxury casino resort – which has already attracted big global casino operators – are all part of the plan to upgrade Cyprus’ tourism product. Marina projects in particular have seen a surge of investor interest, following the success of Limassol Marina, and plans are in place to establish new luxury yacht marinas in the country’s major coastal towns of Larnaca, Ayia Napa and Paphos. Tourism-related real estate continues to be one of the most attractive investment opportunities in Cyprus, evidence of this is the number of foreign investors closing multi-million-euro deals in the last two years. These include the launch of a Radisson Blu Hotel and the sale of the seafront project ‘The Kimon’ in Larnaca, the €71 million deal on Amathus Beach Hotel in Limassol and foreign investors entering into a €20 million share capital increase agreement with the Le Meridien Limassol Spa & Resort. Other major international deals were the acquisition of ‘The Alexander the Great Beach Hotel’ in Paphos and South African Atterbury acquiring two of the country’s flagship retail outlets, the Mall of Cyprus and the Mall of Engomi, in the capital city of Nicosia.

    Residency and Citizenship by Investment

    Property sales in Cyprus also marked a significant increase thanks to foreign buyers. During the first seven months of 2016 property sales in Cyprus saw an increase of 28% and residential prices for both houses and flats increased by 1.5% and 1.2% respectively, according to the RICS (Cyprus) July report on Q1 2016. Around 20% of sales are driven by foreign buyers, proving Cyprus continues to be on the list for investors, holiday-home seekers, expats and retirees, with the traditionally popular areas of Paphos and Limassol leading the way – a trend likely to continue throughout 2016. This has partly been spurred on by the incentives offered in the country’s permanent residency and citizenship programmes, which require the purchase of property. The schemes brought in over €2 billion in revenue over the past two years, with most enquiries coming from Russia, China and the Middle East. Recent studies conducted by global immigration experts rank the Cyprus’ Citizenship by Investment programme amongst the top ten worldwide. New legislation has been enacted providing additional benefits to investors in the property market, such as a 50% reduction in transfer fees for all sales and a 100% exemption from capital gains tax for profits on properties purchased by 31st December 2016. Cyprus also passed a new law in July 2016 to slash property taxes by 75% this year and abolish them altogether in 2017.

    Education & Research

    Cyprus has ambitious plans to develop the island into a regional education centre and knowledge hub. The island has already attracted cooperation and synergies with international universities, most notably the University of Nicosia launching the island’s first degree programme in medicine in collaboration with St George’s Medical School at the University of London, and University of Central Lancashire – Cyprus (UCLAN), being the first British university to establish a campus on the island. Since joining the EU in 2004, the number  of foreign students studying in Cyprus has doubled and today 30% of students are foreigners – a figure which highlights the great opportunities that exist in Cyprus for the establishment of new universities, colleges and research institutes. Over the past six years, Cyprus has also harnessed nearly €80 million in EU funding for Cypriot-led research projects. In this regard, opportunities are opening up for business angels and venture capitalists looking for innovative start-ups, and to invest risk capital in exchange for equity in promising business ideas and products with high market potential.


    The maritime industry has been one of Cyprus’ most successful export services. The island is considered one of the top global hubs for ship owning and shipmanagement services and is home to some of the world’s most influential names in shipping. Today, Cyprus is the largest third party ship management centre in Europe and the largest crew management centre in the world, while the island’s international ship register is the third largest in Europe and the 10th largest in the world. The growth of Cyprus’ resident shipping sector over the past 40 years has also meant the development of a strong maritime cluster that caters to the needs of Cyprus-based companies (including banking, professional services, insurance and IT). The cluster has gone from strength to strength over the years, and is consistently attracting more quality tonnage and shipping-related companies to its shores.

    Expanding Opportunities

    Although the current economic climate remains challenging, Cyprus is determined to get back on the fast track and reclaim its title as an economic outperformer. To allay investor concerns, the government is making staunch efforts to improve its FDI framework and has vowed to cut through red tape to better facilitate investment. These efforts are beginning to bear fruit, and Cyprus has seen an increase in both bank deposits and in the registration of new companies setting up on the island. Cyprus’ open economy and established role as a regional business hub between three continents continue to appeal to investors. The island also hosts a thriving forex industry with many global giants basing their operational headquarters in Cyprus. More recently, the investment funds sector has seen more traction and could develop into a multi-billion-euro industry.

    A Solid Future

    Cyprus’ liberalised Foreign Direct Investment Policy, both for EU citizens and investors from third countries, along with its favourable tax regime makes it one of the most attractive centres for FDI in Europe. At 12.5% Cyprus’ corporate tax rate is one of the most competitive in the EU, and its extensive network of double taxation treaties with close to 60 countries has strengthened its position as a business gateway as well as a preferred location for corporate head offices for multinational companies from around the world – using the island as a regional base for centralised services. The current restructuring of Cyprus’ economy is presenting many opportunities and advantages for serious investors who can move in early. First-in investors can reap the benefits of the efforts made by a pro-business government determined to succeed in regaining the growth of previous years. Rebalancing the economy and addressing structural problems will not be achieved overnight, but the remarkable progress made so far, the attractive incentives as well as the ever-expanding opportunities emerging in the wake of the reforms, have certainly been recognised by foreign investors.

    Investor Support and Incentives

    Cyprus provides grants and other forms of financial assistance to encourage the growth of higher-value sectors. Among these are government financial assistance to business start-ups in various areas of the economy including energy, technology, manufacturing, agriculture and e-commerce – as well as the provision of a 100% tax deduction until 2016 on expenditure for the acquisition of fixed assets related to innovation, research, information, communications and renewable energy sources. The Human Resource Development Authority of Cyprus (HRDAC) also provides grant funding to support a wide spectrum of training needs for companies of any size registered in Cyprus, and the Research Promotion Foundation (RPF) promotes the development of scientific and technological research in the country, with a national framework programme for the financing of research, development and innovation projects. Cyprus’ investment promotion agency, InvestCyprus, is responsible for attracting foreign direct investment to Cyprus, and supporting investors through the entire process. With direct access to ministries, government departments and stakeholders, InvestCyprus can influence the fast-tracking of set-up requirements and to provide investor aftercare services.

    August 2016

    Cooperation Partners
    • Logo for Ministry of Energy, Commerce, Industry and Tourism
    • Logo for Cyprus Chamber of Commerce and Industry
    • Logo for Invest Cyprus
    • Logo for Cyprus In Your Heart
    • Logo for CFA Cyprus
    • Logo for Cyprus International Businesses Association
    • Logo for Cyprus Shipping Chamber
    • Logo for Cyprus Investment Funds Association
    • Logo for Association of Cyprus Banks