Foreign buyers pump blood into Cyprus property

Foreign buyers have fueled the turnaround of Cyprus' real estate sector, drawn by the country's citizenship-for-investment program and other tax incentives, said KPMG said in a report published Monday.

"As a result, over one quarter of the property sales contracts submitted in 2016 and over one quarter of the property sales contracts submitted in the first six months of 2017 involve overseas buyers", the report, signed by Michael Michael and Anastassis Yiasemides, said.

Other incentives contributing to the boost in real estate relate to transfer fees, reduces VAT and the abolishment of immovable property tax, it added.

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Large scale projects, including residential, commercial and hotels units, have also been planned for the island nation. For the first time since the 2013 financial crisis, new hotels buildings are being constructed and are close to completion, said the report.

Cyprus' real estate sector has been rebounding strongly after the country's economic crisis saw the island's second biggest bank wind up and deposit above 100,000 euros at Bank of Cyprus being slashed by nearly half overnight in exchange for rescue money from international creditors.

Among the challenges still faced by the economy and the property market, adds KPMG, are the large amount of red loans Cypriot banks have on their balance sheets as investor interest on homes being foreclosed by banks remains low. Additionally, many companies in the property sector are highly leveraged and unemployment levels remain high, it said.