Why Luxury Villas in Cyprus Are a Profitable Investment in 2

PUBLISHED:

01.07.2025

SOURCE:

Melrose villas

Thinking about investing in real estate? Then Cyprus is worth a look. Why is this sunny island so attractive to investors in 2025? All the conditions are right: demand is growing, prices are rising, and there is a pleasant bonus — favourable tax breaks.

Premium Real Estate Market Trends in Cyprus

The Cyprus real estate market is predictable. This also applies to luxury housing. The European Commission forecasts that Cyprus' GDP will grow by 3.0% in 2025. Economic stability gives investors confidence in the future.
According to data from the Cyprus Department of Lands and Surveys, 8,729 property sales were completed on the island in the first half of 2025 (January to June). This is 16% more than in the same period in 2024.
The total value of all property purchases reached €2.3 billion. This is, incidentally, 10% more than a year ago. Not only are there more transactions, but they are also more expensive. For investors, this is an excellent sign.
Why is Cyprus so attractive to people? It's simple. It is very conveniently located, is part of the European Union, has excellent infrastructure and, of course, a consistently warm climate. All this together creates an atmosphere that attracts wealthy people from all over the world to invest here.

Demand for Luxury Villas Among Foreign Investors

Foreign investors are the main driver of the Cyprus real estate market. Their interest in the island is only growing. In the first five months of 2025 (January to May), foreigners bought 2,812 properties. This is 15% more than in the same period in 2024.
According to statistics, real estate is most often purchased in the following regions:● Paphos is in the lead: 901 transactions in five months (+13% compared to last year);● Limassol is in second place: 849 transactions (+24% — a strong growth!);● Larnaca is also popular: 664 transactions (+11%).
This influx of investment shows confidence in the Cyprus market. This means that luxury villas, especially in prestigious areas such as Agios Tychonas in Limassol, will always be in demand. And this is beneficial for investors.

Price Growth Forecasts in the Luxury Housing Segment

The Central Bank of Cyprus reports the overall Housing Price Index for Q1 2025 rose 1.9% quarterly and 4.8% annually. Notably, house prices grew faster than apartment prices early this year, indicating strong demand for standalone luxury homes. Cyprus remains a prime choice for premium property investments!● Houses rose in price by 1.8% for the quarter and 5.6% for the year;● Apartments rose by 1.4% for the quarter and 3.5% for the year.
What does this mean? People are increasingly looking for something more spacious and secluded. In other words, the demand for luxury villas is growing.
According to AMAN Alliance, prices across all regions rose in the first quarter of 2025.● Paphos ranks first with a 12.9% increase in prices. Houses rose in price by 12.7% and flats by 13.8%;● In Limassol, housing prices rose by 5.7% and houses by 9.1%;● Famagusta is also growing: prices increased by 7.3%;● This growth makes investing in luxury villas profitable and low-risk.
Another bonus is the reduced VAT rate. From 24 June 2025, if you buy a new home for permanent residence, the VAT rate will be 5% instead of 19%.

How Rental Income Makes the Purchase Even More Attractive

Buying a luxury villa in Cyprus is not just about capital growth. It also means regular rental income. Cyprus is not called a tourist paradise for nothing! According to statistics, 1.28 million tourists visited the country in the first five months of 2025 (January to May). This is 3.5% more than in 2024. By the end of 2025, more than 4.5 million guests are expected to visit. Imagine what the demand for rental accommodation will be like.
Imagine: you have bought a luxurious villa in Cyprus. And it brings you money. Sounds like a dream, right? But it is quite realistic. Cyprus is a real magnet for tourists, a paradise. And this constant flow of people who come here for weekends and holidays creates a huge demand for rentals.
So, how much can you earn? According to the most realistic estimates, a premium villa in Cyprus can generate between 4% and 7% rental income per year.
What's the best part? You won't have to deal with the rental routine yourself. Owners simply hand over their villas to specialised management companies. They take care of everything: from finding guests and cleaning to minor repairs.
As a result, you simply receive a net passive income without spending any of your time. So Cyprus is a real find for those looking for reliable investments and wanting to earn a stable income while enjoying life in one of the sunniest places in Europe.