With an immense contribution to the island’s GDP, Ayia Napa is successfully developing its infrastructure and undergoing a grand urbane makeover boasting great cultural diversity.

But, the city’s extensive urbane transformation is not the main reason why you should see investing in Ayia Napa as a great investment opportunity. 

In terms of real estate, I’ve compiled a relevant list of the top 7 reasons to invest in Ayia Napa this year:

7 Reasons to invest in Ayia Napa in 2023

1. Ayia Napa is a global brand 

Ayia Napa combines relaxing leisure with partying entertainment, attracting visitors from all over the world, and bringing over € 800 million to the country’s economy annually.

During the day you can sunbathe at one of Ayia Napa’s 14 Blue Flag-awarded beaches or relax in one of the luxury spa and wellness centers across the resort. If you like adventure, you can experience the rich marine life whilst diving, go on a quad safari, walk and hike the nature trails of Cape Greco National Park, and venture on water sports and boat trips. 

The nightlife offers a vast variety of clubs, bars, and restaurants to suit every taste and budget. Filled with partygoers and entertainment enthusiasts, Ayia Napa has become a renowned party destination in Europe. 

2. Ayia Napa hosts 30% of all the tourist overnight stays in Cyprus 

With a capacity of over 40,000 tourist beds creating around 5 million overnight stays, Ayia Napa welcomes more than 700,000 annual visitors hosting a total of 30% of all the tourist overnight stays in Cyprus. The resort has high occupancy rates during the summer season, with an average of 93% occupancy during the six-month peak from May until October. 

3. High demand for holiday rentals during the summer season

From early April until mid-November, Ayia Napa is crowded with tourists, and rental properties, rightly advertised, are generating significant ROI for their owners.

With my 8-year experience working in the hotel industry, I can guarantee that Ayia Napa has a strong demand for summer rentals in all types of real estate properties, whether you own a small studio apartment, a luxury seafront villa, or a hotel. 

Holiday rentals are usually booked at least six months in advance and in the middle of the summer, it is difficult to find any more properties available for rent. 

Analyzing the KPI of the short-term rentals on Airbnb in Ayia Napa, collected from Airdna, overlooking the year 2022, here are a few statistics based on approx. 750 active properties: 

Average daily rate: 

• Highest: € 129€
• Lowest: € 98€ 
• Total per annum: € 116

Occupancy Rate: 

• Highest: 68% in August, 
• Lowest: 26% in January,  
• Total per annum: 48%

Average Monthly Income: 

• Highest: € 1,792 in August, 
• Lowest: € 523 in January, 
• Total per annum: € 1120

Therefore, a property rented short-term in Ayia Napa can generate around 10% ROI per year, considering that from the total income, you should also be prepared to deduct around 20-25% for expenses, property maintenance, and agent fees. 

Estimatively, the rental price for a 3-bedroom villa to let in the Ayia Napa, during peak season is between €2,000 – €3,500 per week depending on the property’s attractiveness and proximity to the beach.

Seafront villas have a higher letting price, for example, a 4-bedroom seafront villa can be rented from €3,000 to €5,000 per week during peak season. 

4. Rising demand for long-term tenants and permanent residences 

The time when Ayia Napa is no longer considered an unwise choice for a permanent or long-term residence is finally here. Arrivals from Ukraine and Russia, but also Belarus and other countries have increased the demand for housing and many families chose to also relocate to Ayia Napa, not just the big cities.

The project for a New Public Kindergarten and Nursery School in Ayia Napa, worth €4 million, is one of the reasons Ayia Napa is becoming more appealing to young families. The new kindergarten is offering quality and modern childcare services for infants from 6 months old to preschool age. 

The “digital nomad” visa program has welcomed to Cyprus many people who are no longer tied to one place for work. Since the pandemic, Ayia Napa has increased in popularity for remote workers and freelancers who enjoy the calm of the off-season months. 

Having an excellent climate and year-round sun, Ayia Napa has a relatively clean ecological environment and low pollution. The nearby natural parks and hiking trails of Cape Greco have attracted many people in need of rehabilitation, who can enjoy the benefits of living by the sea in the quiet winter months. This normally creates a rise in the rental market, but surprisingly many individuals prefer to buy their own property. 

5. Affordable housing prices

For now, the Ayia Napa market continues to offer affordable prices when purchasing real estate, even in the city center, compared to cities like Limassol, Nicosia, Paphos, and even Larnaca, where the demand is always higher. 

If we are to compare prices between different districts, in Ayia Napa you will always get the better end of the deal with a bigger property and plot for the same price you would get a smaller property in Limassol or Nicosia. Comparing similar properties in type and size, real estate in other cities is likely to be 30-40% more expensive than in Ayia Napa. 

In the center of Ayia Napa, you can still purchase now a resale One-Bedroom Apartment for €75,000, and renovate it to a high standard for another €30,000 (including a new electric system, windows, doors, floors, etc.).  In Larnaca, you are much more likely to purchase a resale Studio Apartment for the same price, and probably not in the city center. 

The market remains a bit outdated in central Ayia Napa when it comes to apartments in old building blocks which reflects the lower cost of the flats, but the new builds, on the city’s outskirts bring in modern luxury properties built by European regulations and are raising the prices and the standard of living.

Ayia Napa’s central area is slowly improving its apartment quality, mainly due to investors flipping resale apartments and turning them into modern holiday rentals. On the other hand, this is not so great for long-term rentals or worker accommodations that are not generating as much ROI as short-term rentals and tend to remain outdated and unrenovated.

The prices in Ayia Napa are set to rise in the near future due to the developing infrastructure and a construction boom of hotels and houses, but also the sophistication brought in by the new marina. 

6. Developing Infrastructure

A vision of a revamped Ayia Napa to become “the best and most cosmopolitan tourist resort of the Mediterranean” by 2030, was put in motion by the former mayor Yannis Karousos, with a portfolio of 17 projects and an approved budget of over € 55 million. 

The new infrastructure will enhance the city’s seafront’s appearance and provide sustainable transportation and a high standard of living, whilst attracting visitors interested not only in the vibrant nightlife of the resort but also in the natural beauty and rich history of the place. 

Estimatively, the implemented projects are expected to increase the tourist arrivals in Ayia Napa by 150,000 and extend the tourist season by 3 months. 

The most significant development project is the Ayia Napa Marina, setting a high standard for all future developments in the area and raising Ayia Napa’s real estate prices. 

The Ayia Napa Marina project is a mixed residential and commercial resort with a yacht harbor and marina facilities featuring a promenade, retail shops and restaurants, high-rise apartments, and luxury seafront villas.

Property purchased in the Ayia Napa Marina or its vicinity can be one of the most profitable investments in Cyprus at the moment. 

7. Potential for high-rise buildings

Ayia Napa Marina is currently the only high-rise development in Ayia Napa that will feature two residential towers that will stand over 100 meters tall. The East Tower located in the commercial center of the marina will be completed in May 2023, and the West Tower will start construction soon. Both towers are twisted by 1.6 degrees per floor to offer breathtaking panoramic views of the Mediterranean sea.

And so, with the Ayia Napa Marina giving off a scent of Dubai and investors picking up the smell, this is probably just the beginning of high-rise developments in Aya Napa.

5 Things to Look out for when real estate investing in Ayia Napa

Even though purchasing property in Ayia Napa is one of the best investment decisions you can make at the moment, there are a few things you should know before diving head-first into it. 

I have put together a few guidelines to give you a real insight into what to look out for when purchasing real estate in Ayia Napa. 

1. Buy in winter 

If you consider investing in a property in Ayia Napa that you intend to rent out short-term in the summer, your best time to purchase is during the winter. 

The off-season not only provides a greater supply of real estate for sale in the city but will also reveal the true quality of the property you are thinking of buying.

If there are any issues related to bad weather like water leaks, dampness, and mould, they will undoubtedly surface after a few days of rain.

In the summer, when the sun is shining, these same problems are not so evident and easily masked by a fresh coat of paint. 

2. Get a Tourist Establishment Operating License for holiday rentals

Many rental properties in Cyprus were not declaring their income to the authorities and also were not operating according to proper safety measures so the government of Cyprus decided to start regulating such tourist establishments in 2019.

Now, when buying an investment property in Cyprus with the purpose of short-term rentals, by the new ‘Regulation of the Establishment and Operation of Hotels and Tourist Accommodations’ law, you need to acquire a rental license from the Deputy Ministry of Tourism by registering your property with the Cypriot Government. 

The law (34(I)/2019), has passed its two-year grace on the 6th of February 2023, and it is now fully enforceable. By not registering a property to get a license and registration number, which MUST always be displayed when advertising the property, you will be fined €5,000 or risk imprisonment.

To apply for the license, one of the documents you will need to submit is the building permit or the town planning permit, which brings us back to my next point, don’t buy anything without title deeds.

3. Don’t buy without Title Deeds

When purchasing any property in Cyprus don’t buy without a Title Deed. Many old buildings in Ayia Napa don’t have title deeds and most properties will probably never get one. 

So make sure that you are not letting anybody talk you into purchasing real estate without proper documents proving the ownership of the property.

The only cases where you can safely acquire a property without title deeds is a brand-new property or a property where the title deed is in its final stage of approval. For new builds, it can take a few years until the developer can provide individual title deeds.  

The reason why many properties in Ayia Napa lack title deeds or adequate construction guidelines is that the buildings were constructed quickly after the invasion in 1974, to accommodate people forced to relocate from Famagusta. In other words, at that time, the properties were built wherever they could as fast as possible, with thin walls without insulation, and simple electric and water systems, sometimes even without permission.  

4. Watch out for sketchy real estate agents

Setting aside the fact that in Cyprus everybody seems to be a real estate agent, if you are looking to sell or buy real estate on the island, seek the services of a registered and licensed real estate agency. 

Make sure your real estate agent has a valid license card and knowledge of the recent market trends in the area and it’s not your regular “Maria” from the village who “knows somebody that knows somebody” and works for tips.

Most real estate agents are just focused on getting listings and posting them on the internet expecting people to just call them and buy the property so they can make a quick buck. And when you meet such agents at a viewing, you can immediately realize they have no idea what they are selling. Not to mention they have no insight into the potential of the property they are pitching to you or the profit that you can generate with it. 

There are some really smart, knowledgeable agents out there too, so my advice to you regarding property investments is to do your research before choosing a real estate agent.

5. Prepare to pay taxes

After registering your business and obtaining the rental license, you also have to report your income to the Cyprus Tax Authorities every year. If you are a tax resident in Cyprus here is what you need to report: 

• Your total income from the rental properties in Cyprus. The income is taxed progressively from 0% to 35% as personal income tax, and the first €19,500 you make, is tax-free per person per year.
• GeSY (General Health System) tax of 2.65%
• VAT of 9% for rental income over €15,600 per annum
• Special Contribution for Defense (SDC) applies – which is 0% for non-domiciled persons in Cyprus for a maximum of 17 years

The rental income you earn from Cyprus real estate must be reported as “Cyprus-sourced income” in your country of tax residency if you are not a resident of Cyprus.

The bottom line to real estate investing in Ayia Napa

As the largest and most visited tourist resort town in Cyprus, Ayia Napa became a global brand and a popular destination for young people and party-goers. Known for its exquisite Blue Flag beaches, crystal clear waters, and lively nightlife, the city brings over € 800 million to the country’s economy on an annual basis. 

The infrastructure of Ayia Napa is flourishing with projects that aim to transform the resort into “the best and most cosmopolitan tourist resort of the Mediterranean by 2030” and extend the tourist season by three months. Many projects are already completed and their benefits attract more tourists and investors. 

The Ayia Napa Marina, as the only high-rise development in the area is setting a high standard for real estate properties in Ayia Napa and Ayia Thekla, and the market prices are already reflecting it. But, compared to other cities, properties in Ayia Napa remain quite affordable. 

The housing market in Ayia Napa is undeniably outdated. But there are plenty of opportunities to still buy apartments in the city center that you can revamp and rent out short-term for excellent returns.

Many apartments remain unrenovated, without up-to-date electricity systems, and with bad unpressurized water systems. A lot of these apartments don’t attract usual buyers, but certainly, they attract investors who see the potential of flipping such properties. 

Every property you own in the city, whether is a beachfront villa or a flat in the center, is set to generate profitable passive income from short-term rentals and the resort is recently seeing a rise in demand for long-term properties due to a big influx of foreign relocations and digital nomads choosing to work remotely from the city.

Ayia Napa is becoming a more appealing location for permanent residents. Together with Larnaca, they will be the most sought-after locations for investment in Cyprus in the near future. 

Located in the eastern Mediterranean sea, Cyprus is situated north of Egypt, east of Greece, south of Turkey, and west of Lebanon and Syria, thus serving as the meeting point of three continents: Europe, Asia, and Africa.

Cyprus is the third largest and also the third most populated island in the Mediterranean sea after Sicily and Sardinia. And with around 2 million tourist arrivals per year, Cyprus is classed as the 40th most popular destination in the World, awarded with 57 Blue Flag beaches.

The geopolitical division of the island of Cyprus

The island of Cyprus has been divided geopolitically into four segments since the Turkish invasion in 1974. 

The northeast portion of the island, comprising about one-third of it, or 34.85%, is de facto occupied by the self-declared Turkish Republic of Northern Cyprus, which was established after the invasion and is recognized today as a country only by Turkey. 

The southwestern two-thirds of the island, about 59.74%, is governed by the Republic of Cyprus, a country member of the European Union.

The Buffer Zone in Cyprus, also known as the Green Line, is an area that separates the two powers, patrolled and controlled by the  United Nations Peacekeeping Force in Cyprus (UNFICYP). Considered a neutral territory because neither side is allowed to hold it military or otherwise. The Green Line covers about 2.67% of the island, stretching for about 180 kilometers (or 112 miles) from Paralimni in the east to Kato Pyrgos in the west, where a separate section surrounds the coastal enclave of Kokkina.

The last division is a British Overseas Territory on the island of Cyprus, comprising two army bases, the Sovereign Base Areas of Akrotiri and Dhekelia, covering about 2.74% of the island which includes the military bases and installations, as well as other lands.

Cyprus districts

The island of Cyprus is divided into six districts, presented from west to east as follows:

1. Paphos / Pafos: located on the west side of the island, it includes the city of Paphos and the surrounding area. It is under the control of the Republic of Cyprus.
2. Kyrenia/ Keryneia: It is located in the north of the island and includes the city of Kyrenia and its surrounding area. It is under the control of the Turkish Republic of Northern Cyprus.
3. Nicosia / Lefkosia: located in the center of the island, it includes the city capital of Nicosia and the surrounding area. It is a district divided between the two sides, with the northern part under the control of the Turkish Republic of Northern Cyprus and the southern part under the control of the Republic of Cyprus.
4. Limassol / Lemesos: located in the south of the island, it includes the city of Limassol and the surrounding area. It is under the control of the Republic of Cyprus.
5. Larnaca / Larnaka: located in the south of the island, it includes the city of Larnaca and the surrounding area. It is under the control of the Republic of Cyprus.
6. Famagusta / Ammochostos: located in the east of the island, it includes the city of Famagusta and the surrounding area. The district is mainly under the control of the Turkish Republic of Northern Cyprus, and a significant portion of the district remains uninhabited due to the ongoing conflict. The southeast part of the district, also known as the Free Famagusta is controlled by the Republic of Cyprus.

The official languages spoken on the island of Cyprus are Greek and Turkish, and the population is predominantly Greek Cypriot and Turkish Cypriot.