Cyprus Mail

Foreign investors bring in €500m mainly for property

By Elias Hazou

SOME €500m worth of foreign investments were made in Cyprus during the last eight months of 2013, primarily through the land-for-residency scheme, interior minister Socratis Hasikos said yesterday.

“Over the past eight months, the Republic has brought in around half a billion in new money which has gone into the economy. These numbers are based on hard facts, not hypotheses,” Hasikos told reporters.

This was particularly impressive given it occurred in the midst of the financial crisis, he added.

The minister was speaking shortly after a meeting at the Palace between President Nicos Anastasiades and leaders of the Cyprus Land and Building Developers Association (LBDA).

Hasikos said real estate and construction were the areas which primarily attract foreign investment.

“And it would be no exaggeration to say that the lion’s share of the hundreds of millions that came to Cyprus through sales to third-country nationals seeking permanent residency or [Cypriot] citizenship, was achieved through the efforts of these people,” Hasikos said, alluding to the developers.

It’s understood the numbers cited by Hasikos at least partly pertain to new investment citizenship programmes introduced by the administration last May soon after coming into office.

Most of these investments were made by non-EU nationals permanently living on the island, the rest from foreign investors with the aim to obtaining a Cypriot passport.

The vast majority of the investments during the time period in question were in real estate (home purchases), the remainder in the form of bank deposits, sources said.

Speaking about their meeting with the President, LBDA chairman Pantelis Leptos said their association had asked for more incentives and less red tape in order to attract foreign investors to the island.

Leptos noted that the construction sector employs some 40,000 people and accounts for 16 per cent of the country’s GDP.

“Supporting this sector therefore means supporting the economy as a whole,” he said.

Back in May 2013 the government announced a plan incentivising investment by foreign nationals.

Foreigners would be granted citizenship if they met certain criteria, including depositing €2m into the state treasury to purchase shares or bonds with the state-run investment company and also donating €0.5m towards the government’s Research and Technology fund.

Another way was for applicants to invest at least €5m in projects ranging from the purchase of houses, offices, shops and hotels provided the real estate is put to use. Also eligible were foreign nationals who purchased companies that were founded and were active on the island or else bought shares in companies registered in Cyprus.

Yet another option would require applicants to have deposits or own a company of which he is the main beneficiary of up to €5m in a local bank for at least the last three years.

Citizenship applications from Chinese nationals comprised the bulk of all the applications filed last year by non-EU nationals in relation to applications by investors and those who can prove they have independent means of income, both ways of earning residency.

Applications by Chinese nationals to gain permanent residency in Cyprus soared from a couple of dozen in 2012 to hundreds in 2013. In October 2013, data from the interior ministry’s migration department counted over 400 applications at the end of August.

Cumulative data on applications for the whole of 2013 were not immediately available.

It’s not clear – though unlikely – that the €500m cited by Hasikos relates to all inward foreign direct investment (FDI).

Numbers for inward FDI for 2013 are not yet available. According to Central Bank data, inward FDI stood at €979m in 2012, €987m in 2011, €578m in 2010 and €2.49bn in 2009.

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