Real estate or bank deposit: where to invest money in 2025?

published:

24.08.2025

source:

Melrose villas

When it comes to where to keep capital, investors almost always have the same choice: put money in a bank or transfer it to real estate. In 2025, this question is especially acute. Deposit rates have increased, banks promise reliability and quick access to money. But at the same time, real estate in Cyprus remains one of the most sustainable ways to preserve and increase capital. Let's try to figure it out without pathos, just the facts.

Comparison of yield: rent vs. interest

Bank deposits in Europe and Cyprus today yield 2-3% per annum. This is higher than a couple of years ago, but still does not cover inflation. In fact, a deposit is more of a "safe" than an investment.
Real estate is a different story. The average yield from long-term rent in Cyprus is 4-6% per annum, and short-term rent can bring 7-9%. Added to this is the growth in the cost of the properties themselves: in coastal areas, prices have risen by 20-30% over the past three years.
Here's what it looks like in reality:● an apartment in Limassol for €400,000 can bring €24,000 per year,● a deposit of the same €400,000 in a bank will give about €8,000-10,000.● The difference is obvious - real estate works more actively.

Currency risk and capital protection

Money on deposit directly depends on exchange rate fluctuations. The euro can strengthen, but it can also weaken, and with inflation in the long term, capital "melts".
Real estate in this sense works as a "hard asset". Land and a house do not depreciate due to the printing press. Even if the currency fluctuates, the value of the property itself and the rental flow remain. This is why during crises investors often go into "hard assets".

Liquidity and resale potential

The good thing about a bank is that the money is always at hand - you withdraw it and use it. This won't work with real estate: the sale takes months. But it's worth remembering: liquidity depends on the location.
Villas and apartments in popular areas of Cyprus - Limassol, Paphos - are sold relatively quickly. And often at a higher price than it was at the start. And if the property is rented out, then the time before resale works for the owner - the property brings in income and does not stand idle.

How real estate provides flexibility

Real estate has an important bonus - it can be used in different ways. It is not just a "frozen asset".
● rent it out daily to tourists and receive an above-average income,● rent it out long-term to families or new residents of the island and have a stable flow,● live in yourself and save on rent,● combine models: live part of the year, rent out the rest.
This won't work with a deposit - the money sits there and quietly depreciates. Real estate, on the other hand, gives you freedom of choice and the opportunity to adapt to the market.

What investors with different profiles choose

● Conservative investors - choose a deposit for peace of mind and instant access to money. Their goal is not to increase, but simply to save.● Mid-level investors - more often look towards real estate: higher income, reliable asset, plus a chance for capital growth.● Active investors - choose rent with management or combined strategies to balance income and personal use.
In practice, a "mixed model" is increasingly common: part of the funds are kept in the bank in case of unforeseen situations, and the main amount is transferred to real estate.

Bottom line

In 2025, a bank deposit is a safety net. Real estate remains a real investment that not only preserves capital, but also increases it through rent and growth in value. The key question is: do you just want to "hold your money" or do you want it to work? The answer to this will tell you where it is best to place your capital this year.