Comparison of Investments in Premium Housing in Cyprus and Spain

PUBLISHED:

07.07.2025

SOURCE:

Melrose villas

Thinking about where to invest in luxury real estate? Cyprus or Spain? Both options are good, but very different. To choose the right one, you need to understand their differences. Let's compare.

The Luxury Real Estate Market in Cyprus: Pros and Cons

Cyprus is growing rapidly. The luxury housing market here is thriving.
Pros of Cyprus:● Stable growth. Cyprus' economy is reliable. The European Commission forecasts that Cyprus' GDP will grow by 3.0% in 2025. This indicates stability for your investments;● High demand from foreigners. Foreign buyers are very fond of Cyprus, especially coastal cities. In the first five months of 2025 (January-May), they purchased 2,812 properties, which is 15% more than a year earlier;● Tax breaks. There are some nice bonuses here. For example, the purchase of a new home for first and permanent residence is subject to a reduced VAT rate of only 5% instead of the standard 19%;● EU membership. Protects your investments and guarantees stability of regulations;● High rental income. Tourism in Cyprus is thriving, which ensures constant demand for premium villa rentals.
But there are also disadvantages. For example, the choice of properties may be smaller than in Spain. Also, the island's economy is heavily dependent on tourists.

Premium Housing in Spain: Demand and Trends

Spain is a huge market for luxury real estate with a wide selection.
The advantages of Spain include:● Huge selection. From villas on the Costa del Sol to historic houses in Ibiza or Barcelona. There are significantly more offers, and you can find properties to suit every taste;● Strong domestic market. Not only foreigners, but also Spaniards themselves are actively buying property.● This makes the market stronger and more stable;● Developed infrastructure. Excellent roads, convenient transport, developed cities, high standard of living;● Diversity. You can find a region and climate to suit every taste: from the hot south to the cooler northern parts.
But there are also disadvantages. Due to the popularity of the market, you may have to fight harder for a property. The tax system can be more complicated and not always as favourable as in Cyprus, especially for non-residents.

Yield from Renting Villas by the Sea

Let's see how much you can earn from renting out property in Cyprus and Spain.

In Cyprus, the average rental yield typically ranges from 4% to 7% per annum. Demand for property is consistently high year-round, thanks to a large number of tourists and expats. A unique feature of the Cypriot market is its flexibility: many villas can be rented out for both short and long terms, allowing investors to adapt to market conditions.

In contrast, yields in Spain are more variable, ranging from 3% to 8% per annum, and they depend heavily on the specific region. Demand for Spanish property is also very high, coming from both tourists—with over 80 million visiting annually—and local residents. The highest returns are generally found in popular tourist hotspots like the Balearic Islands, the Costa del Sol, or Barcelona.

Both options are quite good, so the choice is yours.

Status and Prestige of Locations: What Buyers Value

Where is it more prestigious to buy? There are elite locations in both places, but with different atmospheres.

In Cyprus, prestige is primarily associated with privacy, exclusivity, and new, gated residential complexes. The most popular locations include the Agios Tychonas and Mouttagiaka areas in Limassol, as well as the cities of Paphos, Larnaca, and Protaras. Cyprus is a top choice for those who value peace, seclusion, security, and high-quality modern housing.

In Spain, prestige is built on a rich history, culture, and a vibrant social scene. The most sought-after locations for luxury real estate are Marbella, Ibiza, Barcelona, Madrid, Mallorca, and the Costa del Sol. Spain is an ideal destination for people who appreciate an active lifestyle, proximity to luxury shops, fine dining, and yacht marinas, as well as properties with a rich historical background.

It all depends on your preferences and future plans.

How to Choose a Country for Investment

Your choice depends on your goals:● Reliability and predictability? Choose Cyprus. Taxes are simpler here, and growth is understandable;● Wide choice and dynamics? Spain offers more options and a larger market. Be prepared for more competition;● Profitability? Both countries are good. In Cyprus, it is easier to get a high percentage due to the compactness of the market. In Spain, you need to choose the region more carefully;● Lifestyle? Cyprus is for a more peaceful holiday and privacy. Spain is for an active life, big cities and cultural diversity.
Both countries offer excellent opportunities. The main thing is to understand what is more important to you.