You’ve probably already seen them – the tempting social media ads featuring investment apartments in Cyprus promising dream returns, stunning views, and the perfect escape from the stress back home. And who can ignore the fact that owning a property in Cyprus can generate yields of 7-8%?

In the past two years, a wave of investors has discovered the enormous potential in Cyprus real estate investments. The market responded quickly: local entrepreneurs identified the opportunity and established an entire system of consulting, brokerage, and property management services. In every living room conversation and social gathering, stories emerge of more and more investors jumping on the bandwagon – some for vacation purposes, others for remote work in a pleasant and cheaper atmosphere, and many simply as a pure investment.

But let’s talk about the reality behind the dream. When buying an apartment in Cyprus, it’s important to understand that the decision must be professional and calculated, with emphasis on understanding the local market and its real needs. We spoke with Jordan Bear, Operations Manager of Nexston Real Estate Group in Cyprus, who brings an interesting perspective on the market.

“Cyprus indeed offers attractive investment opportunities for Israeli investors,” explains Bear, “especially when compared to the equity required in other countries when buying an apartment. However, the key to success lies in deep understanding of the local market and its dynamics. It’s true to say that in Cyprus, returns of 6-8 percent on new real estate properties with investments of 200-400 thousand euros are completely possible – but only when you understand the different areas in cyprus well.”

Bear emphasizes a critical point that many ignore: “Unfortunately, a large part of real estate companies operating towards the foreign investment market focus on marketing elements like proximity to casinos, future marinas in Larnaca, and ‘lifestyle’ with pools and stunning views – points that look good in the sales presentation but don’t necessarily translate to real demand from tenants in the field.

We, with 13 years of experience in the local market and a portfolio of over a hundred apartments in Limassol, have learned that success is measured by the ability to match the property to the real needs of the local rental market. This means understanding who the potential tenants are, what specific areas they’re looking for and why they choose those areas, and how to build properties with attractive pricing that will generate high and stable returns over time.”

Rental Potential

When examining an investment in Cyprus, it’s crucial to first understand the rental potential in the area. It’s important to understand – not every area in Cyprus is equal in terms of investment potential. For example, Limassol, which for years has been the exclusive center of growth for all hi-tech companies coming to Cyprus, offers many employment opportunities and attracts engineers and technology professionals from around the world. In contrast, Paphos and Larnaca, despite being charming tourist cities, offer more limited employment opportunities. This means that in Limassol, demand for rental apartments is high throughout the year, thanks to the thriving hi-tech community and the presence of international companies. Conversely, in cities like Paphos, rentals focus mainly on the market looking to move away from the center to pay cheaper rent, and on seasonal short-term tourism, which may significantly affect your annual return, regardless of how beautiful the view from the apartment you bought.

Right-Sized Apartment – The Key to Successful Investment

A critical point that dramatically affects the success of your investment is choosing the right size of the property you’re purchasing. In the Cyprus market, many new projects offer impressive and spacious apartments, designed mainly to attract buyers, but not necessarily ideal in terms of the return you’ll receive.

It’s important to understand: a larger apartment doesn’t necessarily generate proportionally higher rent. In other words, while you’ll pay a significant premium for additional square meters, the potential tenant won’t necessarily be willing to pay accordingly. The result? Lower return on your investment.

Here’s a simple example:

Large 2-bedroom apartment:

• 85 sqm (2 bedrooms)
• Purchase price: €360,000
• Monthly rent: €2,400
• Annual return: 7.2%

Small 2-bedroom apartment:

• 60 sqm (2 bedrooms)
• Purchase price: €300,000
• Monthly rent: €2,000
• Annual return: 8%

In other words, efficient planning of the apartment in terms of size significantly reduces the apartment’s cost, but only slightly reduces monthly rent. The meaning? Higher return on your investment.

Another important point: during periods of market slowdown or decreased demand, an apartment that cost you less will allow you more flexibility in the rental price. This is a critical point that many investors miss – the flexibility and marketability of the property are no less important than immediate return.

This is why at Nexton we focus exclusively on compact and efficient apartments that offer the optimal ratio between purchase price and rental income potential.

“Guaranteed” Return

“Guaranteed return” is one of the most dangerous traps in Cyprus real estate market, and there’s good reason to be wary of it. When contractors or marketing companies promise returns of 5%-7% for the first two-three years, what they don’t tell you is that this return is already embedded in the apartment’s price itself. Simply put – you’re paying in advance for this “guaranteed” return in the inflated price of the property.

For example, if an apartment is worth €200,000, and the contractor promises a 6% return for two years (meaning €12,000 for two years), it’s likely that he simply added this amount to the apartment’s price and set it at €212,000. So in practice, you’re not really getting a return – you’re simply getting your own money back in installments.

Moreover, guaranteeing such a return raises serious questions about the business model: if the deal is so good, why does the contractor need to guarantee a return? And what will happen after the guarantee period ends? Often it turns out that the real price of the apartment is significantly lower, and that the actual return in the free market is much lower than what was guaranteed.

There have already been cases in Cyprus where investors discovered that an apartment they bought for €220,000 with “guaranteed return” was actually worth only €180,000 – meaning they paid a premium of €40,000 for a “guarantee” that ultimately was essentially a return of their own money.

“Successful investment in Cyprus, one that will yield high long-term returns, requires deep understanding of the local market, choosing the right property, and working with experienced professionals,” concludes Jorden Bar, partner and Operations Manager of Nexton in Cyprus. “With 13 years of experience in the local market and a portfolio of over a hundred apartments in Limassol, Nexson builds properties for investors interested in optimal returns. If you’d like more information about our properties, fill out the form on this page, and we’ll be happy to share the knowledge and experience we’ve accumulated, and help you make the right decision for you.”