The real estate market in the EU countries has always been interesting for foreign investors from non-EU countries. Development trends show the prospect of buying residential and commercial real estate to rent for profit or living. Let’s consider two countries – Cyprus and Italy – which offer excellent conditions for buying real estate for passive income and determine where you can invest your money.

Understanding the Cyprus Real Estate Market

The island nation’s real estate market in 2023 is at its peak over the past 15 years. Today, the percentage rate of foreign sales is the highest in history, reaching 46% on average per year. This figure highlights the continued interest of international buyers in Cyprus’ residential and commercial real estate sector.

House prices have increased by 2-9% depending on the city, which is explained, among other things, by the state’s attraction of more than a thousand foreign companies in 2022. Cyprus real estate investment is an attractive program for wealthy business people ready for a relatively significant investment in the local economy.

According to Immigrant Invest specialist Zlata Erlach, the most attractive and expensive for investors are the cities of Larnaca, Limassol, and the resort areas of Famagusta and Paphos. Penthouses, duplexes, villas, and townhouses are mostly bought here. These are the most popular real estate opportunities in Cyprus. The annual yield of these objects is about 10%.

However, it is essential to consider that those wishing to buy real estate in Cyprus who are not citizens of the EU states can purchase no more than two objects with the appropriate authorization and will have to regularly pay for them several different taxes according to local legislation.

When investing over 300,000 euros in real estate in the island state, the investor can count on obtaining a permanent residence permit. After living in the country for 5 or more years, he can get a Cypriot passport by naturalization.

Understanding the Italy Real Estate Market

Among other things, Italy is known worldwide for its various opportunities to invest in real estate. Foreign citizens can buy, sell, and rent real estate without restrictions. In addition, apartments and commercial properties on the property market in Italy are growing in value by 4% per year on average.

It is easy and convenient to buy a house in Italy. You can not even have a residence permit. However, it would be best if you still had a permanent permit to visit the country. To do this, you should confirm your stable passive income – at least 31,000 euros per year.

Wealthy individuals who become residents of Italy receive special tax conditions for attracting their funds into the country’s real estate sector. There are different tax regimes for various categories of foreigners, but this is a topic for a separate article. This question is covered in more detail on the website immigrantinvest.com.

One of the reasons that makes the country attractive for investment in Italy real estate market is the security guaranteed for all types of transactions. Every time a contract is signed, a qualified notary acts as an official on behalf of the government and remains neutral to both parties. The notary also performs several formal checks, such as:

  • the signature and legal capacity of the parties involved in the contract;
  • the tax treatment applicable to the contract;
  • the treatment of matrimonial property;
  • special benefits related to compliance checks, etc.

The local real estate market also demonstrates a high average return on investment, which is calculated based on each, separately taken region of the country. Today, it is estimated that the average ROI is about 22%. At the same time, you should consider that there are areas that are potentially more profitable than others. These are the Alps on the border with Austria and major cities: Milan, Rome, Florence, and others. Penthouses, townhouses, and villas are also in demand in major tourist areas such as the Amalfi Coast, Sardinia, Puglia, and the island of Capri.

Comparative Analysis: Cyprus vs Italy Property markets

If you compare the prices of flats and commercial buildings in Cyprus and in Italy, the cost per square meter in the first case is lower by 25-30%, depending on the object’s location. The tax system in Cyprus is also more lenient than in Italy, but there are restrictions on the number of real estate units a foreigner can purchase. However, do not immediately reject real estate opportunities in Italy. There are also many interesting offers here.

Conclusion

Since we have looked at the property market in Cyprus and Italy, we can draw conclusions and decide which country to invest in. However, it is also important to consider other factors that determine the comfort for you and your family: climate, standard of living, opportunity to study, develop business, get medical treatment, travel without visas to EU countries and others.