Cyprus: An investment idea

Authored by Dillon Bhatt, Head of International Business Development, Millwood Kane   Great fortunes are built through real estate investments and the ever-expanding network of the Indian HNI Investors today are aware of that. The new age Indian HNI Investor today believes in diversifying their real-estate portfolio across various cities and even countries.   International real estate investments have long been a profitable option for many Indians, compared to investments in the local markets, the returns on capital and rental yields are higher if invested in the right foreign locations. As the domestic economy hits a slowdown, Indian investors look at investments in other lucrative markets, both mature and developing whether that be London, New York or even Cyprus that offer higher returns.   Outpacing Europe’s elite, Cyprus has surpassed expectations and the booming real estate market across all types of property has provided the added fuel to local and foreign investors.   Cyprus Real Estate sales are on the rise since 2019 with January figures showing a 10% increase compared to January 2018. The spike is a result of improved market conditions, the abolition of immovable property tax and immigration by investment schemes. The largest share of overseas property sales on the island is dominated by non-EU nationals including Indians.   While for most Global Indian Businessmen financing their real estate has been easy using their global taxable income, others utilize the Liberalized Remittance Scheme (LRS) to transfer currency internationally to fund their real-estate investments.   An Indian resident individual can send remittances under the Liberalized Remittance Scheme (LRS) for purchasing immovable property outside India. In case members of a family pool their remittances to acquire a property, then the said property should be in the name of all the members who make the remittances. Property can also be acquired jointly with a relative, subject to legal guidelines from the Indian government. Also, it is my understanding that for Indian companies who wish to invest abroad, the remittance limit is four times the value of the company.   On all International remittance matters, it is best to speak to your professional advisors to make sure you follow the correct process. Once you have this process underway, you can borrow between 60% to 65% of the value of your property from a bank in the country you are purchasing. Cost of borrowing is also low throughout Europe with interest rates between 3% and 5% per annum.   Most global cities have transparent real estate regulations. For instance, both the US and most of Europe have highly evolved regulations, robust healthcare facilities, world-class educational institutions and in most cases a far better quality of life.   Technological advances and growing wealth is indeed shrinking the world for Indians. As the world gets smaller many Indians consider buying properties in global cities, not just for their investment values but with the intention of perhaps settling in those cities. For this reason, many Indian HNIs are now investing in real estate attached to various immigration by investment schemes as their future generations opt to live abroad. It is widely known that many countries offer Residency or Citizenship by investment. However, with a sudden increase in the minimum investment and heavier requirements for the EB-5 US Immigrant Investor Visa Program, other viable programs offered by Cyprus, Canada and Australia provide attractive alternatives. Cyprus’s Permanent Residency scheme is huge success as you are investing in your own new home instead of the investment being a sunk cost as in some other immigration programs. This is whereby you are granted the right to permanently reside in Cyprus (a full EU member state) without requiring to give up your Indian citizenship. This is available by investing from a minimum of €300,000 plus VAT (approx. 2.4cr plus VAT) in your new home. It’s interesting to see what you can get for that investment in a place like Cyprus when compared with India - a beautiful 3-bedroom apartment or a townhouse with a pool only 2 minutes walk from the sea, with a substantial potential for capital appreciation and strong yield. The next time you think of moving abroad, think of it as an investment, if you choose to invest in the right real-estate market your move for a new life could also prove to be a profitable one.