Whether it is experienced investors or individuals looking for an alternative to housing or an additional property, real estate in Cyprus has become one of the hottest areas among Israelis. The proximity to Israel, the relatively low property prices, and the possibility of obtaining local mortgages are making many seriously consider purchasing on the island. But the main question is – is this investment really worthwhile for Israelis?
Affordable property prices compared to Israel
In Israel, real estate prices are constantly rising, and in major cities it is difficult to find an apartment for less than 2 million shekels. In Cyprus, on the other hand, it is possible to purchase a new apartment in a sought-after area for prices ranging from €150,000–€300,000, that is, half and sometimes a third of the price in Israel. The initial investment is much lower, and together with financing options from local banks, it also becomes accessible to private investors.
Rental returns
Tourism is a major driver of the Cypriot economy. Thousands of tourists come to Larnaca, Paphos and Limassol every year, and a large number of them prefer to rent vacation apartments instead of hotels. For Israeli investors, this is an opportunity to receive a return of 4%–7% from short-term rentals, and sometimes even more during the tourist seasons. In contrast, in Israel, the average annual return from rentals is only 2%–3%. This difference makes Cyprus particularly attractive for those looking for ongoing income.
Moderate taxation costs
One of the most notable advantages of Cyprus is its friendly taxation. The purchase tax ranges from only 3% to 8%, compared to much higher rates in Israel. In addition, there is no estate tax, and capital gains tax may be significantly lower than in Israel. However, one must take into account the high VAT on new properties – 19% – although it is possible to obtain a reduction to 5% for a first residential apartment. Overall, the taxation structure in Cyprus allows for a more convenient entry into the investment market.
Impact of currency exchange rates
Investment in Cyprus is made in the euro. On the one hand, this protects investors from local inflation in Israel and provides currency diversification in the investment portfolio. On the other hand, exposure to changes in exchange rates may affect the amount of the monthly repayment if the mortgage is in euros. Those who receive rental income also in euros can create a natural balance, but investors who think in shekel terms need to take the risk into account.
Liquidity and long-term investment
Real estate is a less liquid asset, and in Cyprus it is not always possible to sell an apartment as quickly as in Israel. However, demand from tourists and foreign investors is on the rise, and it is expected that property prices will continue to climb gradually in the coming years. Investors who are willing to hold a property for the medium-long term are expected to benefit from both rental income and capital appreciation.
Advantages and disadvantages for Israelis
Key advantages include low prices, higher rental yields, favorable taxation, and the possibility of local mortgages. Disadvantages are mainly exposure to currency exchange rates, the need to be familiar with foreign regulation, and the fact that it is a smaller market with relatively low liquidity.
Summary
Ultimately, investing in real estate in Cyprus can certainly be worthwhile for Israelis, especially those looking for portfolio diversification and higher returns than is common in Israel. It requires early planning, an understanding of the local market, and the use of appropriate professionals – but those who know how to act correctly may benefit from an investment that provides both ongoing income and appreciation over time.
