Trade & Investment

    Foreign Direct Investment

    The strong performance of Cyprus is bolstering the island’s status as an FDI hotspot, presenting exciting opportunities for serious investors ready to move in fast and reap the benefits of one of the fastest growing EU economies.

    Large-scale projects, tourism infrastructure, privatisations and a burgeoning oil and gas sector are all strengthening Cyprus’ appeal as an interesting investment location, and the island has already enjoyed significant inflows from the US, Asia, Russia and the Middle East.

    Cyprus has come a long way in the last few years, surpassing all expectations, a fact reflected in a 9.1% increase in foreign direct investment in 2016. The island’s improved credit standing, after consecutive upgrades by international credit rating agencies, the successful recapitalisation of its major banks, bond issues raising over €3 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 this growing investor interest, Cyprus has focused on streamlining processes to boost its economy and attract more investment through modernising legislation, promoting development projects, diversifying tourism, introducing tax incentives and speeding up licencing procedures.

    Cyprus has been acknowledged for making notable improvements in upgrading its business environment, jumping up two places in the rankings of the World Bank’s 2017 Doing Business Report, after climbing 17 places in 2016. Already known as a popular holiday destination and a safe 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 Cyprus’ macroeconomic and financial environment are reviving international interest in around 30 major development projects on the island, and with the government expecting a healthy 3% growth in 2017, the island’s 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 education and energy.

    Tourism Moving Upmarket

    Tourism has long been a driving force of the Cypriot economy, and arrivals as well as expenditure saw record-breaking numbers in 2016, with projections of international tourist arrivals reaching almost 4 million and generating expenditure of €3.5 billion 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 the island’s first-ever and only integrated luxury casino resort are all part of the plan to upgrade Cyprus’ tourism product. The casino, awarded to a consortium including the globally renowned Melco and Hard Rock, will have extensive facilities and exceed five-star status. The investment for this mega project is expected to exceed €650 million – making it the first of its size in Europe.

    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, Paphos, and Ayia Napa. The construction of the €220 million luxury marina in Ayia Napa will feature twin skyscrapers and a yacht marina with a capacity for 600 vessels – with provisions for yachts up to 60 metres. With significant Egyptian investment backing the innovative project, the seafront residences are already being marketed to investors worldwide, with a price tag ranging between €500,000 and €5.2 million.

    Tourism-related real estate and infrastructure 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 three years. These include the launch of a Radisson Blu Hotel in Larnaca and the €71 million deal on Amathus Beach Hotel in Limassol. More investment has flowed into Limassol with the new Parklane Luxury Collection Resort & Spa replacing the popular Le Meridien. The hotel is undergoing a major luxury renovation, designed by Harrods Design Studio and is estimated to cost €70 million.

    Also, Ayia Thekla in the Famagusta district has seen significant interest through a €50 million Chinese investment to construct a five-star resort hotel and exclusive beachfront residences, branded the Sun City Spa and Residences. 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 Nicosia retail outlets, the Mall of Cyprus and the Mall of Engomi, for €200 million.

    Boost in Real Estate Sales

    Property sales in Cyprus also marked a significant increase thanks to foreign buyers. Property purchases completed by overseas buyers increased 63% year-on-year in the first three quarters of 2016, with overseas buyers making up 14% of all real estate transactions.

    Cyprus continues to be on the top of 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 2017. Sales in Larnaca have also been rising rapidly from a low base.

    Interest in real estate has partly been spurred on by the incentives offered in the country’s permanent residency and citizenship programmes, which require investment in property. According to some reports the schemes are said to have brought in over €3 billion in revenue over the past two years, with most enquiries coming from Russia and China.

    Recent studies conducted by global immigration experts rank the Cyprus Citizenship by Investment programme amongst the top ten worldwide, and one of the strongest in the EU. The programme was revised in September 2016, making it even more attractive. The investment required is €2 million and a residential property worth €500,000. If an investor chooses to invest only in residential properties in Cyprus, their investment is limited to €2 million. Investment options include real estate, investment in Cyprus companies, investments in Alternative Investment Funds and bonds issued under the auspices of the Cyprus Securities and Exchange Commission (CySEC), or a combination of the above.

    Evolving Oil and Gas Sector

    Cyprus’ hydrocarbons find has captured the attention of several global energy companies, such as Eni, Kogas, ExxonMobil, Royal Dutch Shell, and Total, who have all secured exploration licences, with further drilling in Cypriot waters expected in 2017. US-company Noble Energy made the initial natural gas discovery in 2011, with estimated reserves of 4.54 trillion cubic feet (tcf) in just one of the 12 offshore blocks.

    Following deepening cooperation with Egypt, Israel, Jordan, Lebanon, Greece and Italy, Cyprus is positioning itself as a convenient regional energy hub in the Eastern Mediterranean, which also opens up opportunities for more oil and gas related business in joint operating agreements with existing consortia and commercialisation options. As a safe and stable location in a turbulent region, Cyprus also provides an ideal base for ancillary and support services for investors with clients in the region. As the energy landscape develops, another interesting prospect is the potential to develop a petrochemical industry on the island.

    Renewed Confidence in Banking

    Following Cyprus’ financial adjustment programme, the first priority was to restructure the country’s banks – and in less than four years, the sector has been transformed with its largest banks fully recapitalised. Fresh cash injections and positive bank results restored confidence and the restructuring of the industry created opportunities for more foreign participation in the sector. The island’s two biggest lenders, Bank of Cyprus and Hellenic Bank, garnered significant international investor interest, including US billionaire venture capitalist Wilbur Ross.

    Further good news came from the Bank of Cyprus listing on the London Stock Exchange in January 2017. 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 international online gaming company Wargaming and European Bank for Reconstruction and Development (EBRD).

    The banking sector has also seen some newcomers such as Swedish Ancoria Bank with an initial capital of €50 million. In addition, strategic new investment into the sector has come from the sale of the majority stake of the Cyprus subsidiary of Greece’s largest lender Piraeus Bank, to Lebanese Holding M. Sehnaoui SAL – which plans to inject €40 million of fresh capital into the bank, now renamed AstroBank. These developments have been a vote of confidence in the country’s banking sector – highlighting the attractive economic environment for investment in Cyprus.

    The sector 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.


    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 11th 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. Natural gas finds within Cyprus’ EEZ and efforts to exploit it in cooperation with neighbouring countries are also raising expectations for the island’s already flourishing shipping sector.

    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. Cyprus has also launched a new Start-up Visa scheme, aiming to attract more international talent to establish ventures with high growth potential.

    Science & Technology

    Plans to create Cyprus’ first-ever Science and Technology Park (STP), could provide strategic investors with an interesting opportunity to finance, design, build and manage a 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 further entice foreign investors, the project 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.


    Cyprus’ efforts to privatise several state-owned entities present a new opportunity in terms of FDI. A recent success was the commercialisation of the country’s largest port in Limassol, which attracted 14 international bids. It marks a new era for Cyprus as a commercial hub and will prove a major asset for the economy. The successful bidders were Eurogate International GmbH, as the majority participant, along with Interorient Navigation Company Ltd and East Med Holdings SA for the container Terminal, and DP World Limited, as the majority participant, and G.A.P Vassilopoulos Ltd for both the marine services and the multi-purpose terminal.

    The deal is expected to boost state coffers with €2 billion over the next 25 years, while the new port operators are expected to invest over €100m in infrastructure. Other targets for privatisation are the dominant telecommunications provider Cyprus Telecommunications Authority (Cyta) and the State Lottery.

    Expanding Opportunities

    Having endured a challenging economic climate, Cyprus is back on the fast track in reclaiming its title as an economic outperformer. To enhance investor interest, 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, with funds under management already tripling in the last five years and exceeding €3 billion.

    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 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 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. More work remains to be done, 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. 

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    Updated: May 2017

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