Trade & Investment

Resilient FDI Destination

The Cyprus economy has bounced back rapidly from the Covid-19 pandemic and the authorities have taken the opportunity to forge ahead with digitisation, the launch of new incentives and reforms that continue to offer interesting opportunities to investors with capital and interest in the East Med region.

Cyprus has attracted formidable foreign investment over the last five years with billions of euros flowing into multiple sectors. The country’s return to an investment-grade credit rating in 2018 gave both the economy and investor confidence a much-needed boost, and the successful recapitalisation of its major banks and numerous large-scale projects have all contributed to the resur­gence of Cyprus as a top foreign direct investment (FDI) destination. The growth performance of Cyprus in the last five years has been exceptional and even ex­ceeded international expectations, while successive credit rating upgrades and new incentives have attracted billions in foreign investment, with significant inflows from the US, Asia, Russia and the Middle East. The sectors that have seen the most significant FDI are finance, especially for shipping; real estate in new luxury de­velopments and infrastructure projects that are underway across the country with significant foreign investor backing; information and communication; retail trade; and professional services, in particular head office activities. A fast-track system is also encouraging international companies to set up international and regional headquarters on the island, which is becoming an increasingly attractive gateway to both established and emerging growth markets.


For the last few years, Cyprus has been a hive of activity with several notable proj­ects already implemented or in the pipeline, strengthening the country’s image and appeal. Foreign investment flows have been significant. In the ten-year period 2011- 2020, average inflows and outflows have averaged around €20 billion per year. This investment was driven by equity, with the shipping/shipping finance and real estate sectors playing a significant role, while investment in communications is now also beginning to gain importance.

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New large-scale real estate projects, luxury marinas and tourism infrastructure, coupled with developing opportunities in the energy and shipping sectors have all reinforced Cyprus’ status as an interesting investment location. An added benefit of Cyprus is its secure and stable EU environment in a turbulent region, which provides an ideal base for regional headquarters or ancillary and support services for investors with clients in the wider Eastern Mediterranean region.

Already renowned as a popular holiday destination and a thriving business hub servicing international companies with multinational operations, the island is sharp­ening its competitive edge by streamlining processes, modernising legislation, intro­ducing incentives and speeding up licensing procedures to better cater to investors. Special schemes and incentives are in place to facilitate headquartering, which covers the sectors of technology, asset management, investment funds, shipping and higher education, ‘Olivewood’ for the international film industry, and a new government Action Plan launched in late 2021 filled with new incentives to attract non-EU indi­viduals and companies to establish operations in Cyprus.


Cyprus’ FDI appeal has been on an upward trajectory thanks to a robust economy. Real GDP growth averaged 5.3% in 2015-19 and the government’s latest projec­tions suggest that in 2021 the economy will have fully regained the ground it lost in 2020 at the height of the Covid-19 pandemic. Ongoing improvements in the macroeconomic and financial environment have also revived international interest in around 30 major development projects on the island. Investment opportunities in Cyprus’ large-scale projects span various sectors, including high-value tourism and housing developments, projects with a special focus on golf courses and luxury marinas, as well as education, energy and, more lately, the international film sector.

The liberalisation of markets in which state-owned entities used to dominate presents new opportunities in terms of FDI. The 2017 commercialisation of the country’s largest port in Limassol marked a new era for Cyprus as a commer­cial hub. The port commercialisation came in the context of the first discovery of natural gas in 2011, a dedicated Deputy Minister of Shipping in 2018, as well as the launch of the new VTTV oil trading terminal in 2014. The privatisation deal with Eurogate International GmbH and DP World Limited is expected to boost state coffers with €2 billion over the next 25 years, while the new port operators are injecting millions in upgrading services and infrastructure. The €290 million investment in natural gas import infrastructure using a floating, storage, regasifica­tion unit (FSRU), combined with the full liberalisation of electricity and EU funds for green transition, are presenting an array of new opportunities in the natural gas and renewables sectors.


Cyprus’ hydrocarbons discoveries have captured the attention of the global energy giants since US company Noble Energy, now acquired by US giant Chevron, made the first natural gas discovery in 2011 with estimated resources of 4.5 trillion cubic feet (tcf) in the Aphrodite field. ENI, Kogas, ExxonMobil, Royal Dutch Shell, and Total have all secured exploration licences and conducted exploratory drilling. ExxonMobil announced the discovery of an estimated 5 to 8 tcf in Block 10 in early 2019 and ENI announced a promising discovery in Block 6 in early 2018. In 2019 Cyprus agreed to build a subsea pipeline connecting Aphrodite to Egypt’s liquefaction plants and concluded a production-sharing deal with Noble Energy and its partners over the Aphrodite gas reservoir.

In addition to offshore discoveries a range of other new energy opportuni­ties have come to the fore. In December 2019, Cyprus signed a landmark deal with a Chinese-led consortium to build a €290 million LNG import terminal at Vassilikos. The consortium constructing the project includes China Petroleum Pipeline Engineering CO LTD, Metron SA, Hudong-Zhonghua Shipbuilding and Wilhelmsen Ship Management. The terminal will include a floating storage and regasification unit (FSRU), a jetty for mooring the FSRU and related infrastruc­ture at Vassilikos. The terminal, which will transform domestic power production from diesel to cleaner, gas-fired electricity, is the country’s biggest energy invest­ment to date. The FSRU, due for completion in late 2022, attracted €150 million in finance from the European Investment Bank (EIB), €80 million from the European Bank for Reconstruction and Development (EBRD), €101 million from the EU’s Connecting Europe Facility as well as an equity contribution of €43 million from the Electricity Authority of Cyprus (EAC). Parallel to this, Cyprus is ramping up re­newables capacity, with support from the EU’s €1.2 billion Recovery and Resilience Facility (RFF). Electricity production will also be fully liberalised by 2022. This will allow new private players operating in both renewables and gas to compete in the local market but also in a much broader regional market thanks to the EuroAsia Interconnector project to connect Cyprus, Israel and Greece via submarine elec­tricity cable and the related EuroAfrica Interconnector to connect Egypt.


Tourism has long been a driving force of the Cypriot economy and a concerted effort to diversify its offering in recent years has paid off. Ahead of the global pan­demic, expansion of capacity as well as quality upgrades saw both arrivals and expenditure break new records for four years running. A new Deputy Ministry of Tourism was established in 2019. Cyprus has been attracting new interest by developing conference, sports, health and wellness tourism and by extending the tourist season. The construction and investment in multipurpose projects and mixed-use developments such as luxury marinas, golf courses and more recent­ly the island’s first-ever and only integrated luxury casino resort, are all part of the ongoing strategy to upgrade Cyprus’ tourism product. The temporary casino and satellite outlets have started operations and the full integrated casino resort, City of Dreams Mediterranean, will have extensive facilities and five-star status. The casino resort is Hong Kong-based Melco’s first expansion outside of Asia and will be the biggest casino of its kind in Europe, with the investment for this mega project at €600 million.

Following the success of Limassol Marina, there has been a swell of interest in these types of projects. The €300 million luxury Ayia Napa Marina is under con­struction with berthing facilities and a Commercial Village now fully operational. The marina offers capacity for 600 yachts of up to 60 metres, a shipyard, and a range of luxury villas, apartments and facilities. With significant Egyptian invest­ment backing the innovative project and the seafront residences are expected to be completed by 2023. In addition, the €110 million Paralimni Marina project is well under way, with additional development incentives approved by the government in 2020. The contract for Larnaca Marina was signed with a Cypriot-Israeli consor­tium, Eldeman Holding BV and Alexandrou Corporate Services Ltd, in late 2020 and is expected to attract €1.2 billion in construction and real estate development, while a tender was signed in August 2021 with Deloitte Ltd and Triton Consulting Engineers SA for a luxury marina in Paphos.

The number of foreign investors closing multimillion-euro deals in the last few years underlines the fact that tourism-related real estate and infrastructure contin­ues to be one of the most attractive investment opportunities in Cyprus. With solid and continuous interest in the tourism sector, the country’s investment promotion agency Invest Cyprus has set up a dedicated and specialised unit, TourInvest, to promote investment opportunities in the tourism and hospitality sector. In co­operation with the Deputy Ministry of Tourism and other stakeholders, the unit focuses on attracting multi-million-euro investment into large-scale infrastructure projects that exist in diversified thematic areas.

Worthwhile investments have already been made in the hospitality industry with acquisitions and the construction of new luxury hotels of well-known hotel management chains. These include the prestigious Sun City Spa and Residences by Chinese group Jim Chang Global with an initial investment of €100 million to construct a five-star resort hotel and exclusive beachfront residences. The Radisson Hotel Group, one of the largest and most dynamic hotel groups in the world, has big plans to grow its existing portfolio in the country to six hotels and almost 1,000 rooms by 2025.

In 2019, the Luxury Collection, part of Marriott International, opened the Parklane Luxury Collection Resort & Spa resort in Limassol. Owned and oper­ated by Parklane Hotels Limited, the property marks Marriott International’s entry into Cyprus. Another major international deal in recent years was South African Atterbury acquiring two of the country’s flagship Nicosia retail outlets, the Mall of Cyprus and the Mall of Engomi, for €200 million.

In July 2020, Hyatt Hotels Corporation announced a management agreement with Anolia Holdings Limited for the launch of the first Hyatt hotel in Cyprus. The 300-room luxury resort Grand Hyatt Limassol is expected to open in 2025. The new beachfront resort will also be a key element of Zaria Resort, a mixed-use luxury development, comprised of residential apartments and private villas total­ling more than 80,000 square metres. The announcement of Grand Hyatt Limassol follows a significant expansion in Hyatt’s brand footprint in Europe over the last year, and Cyprus has proven to attract travellers from Hyatt’s key strategic markets including the UK, Russia, Greece, Germany and the Middle East.


Cyprus continues to be on the top of the list for investors, holiday-home seekers, expats and retirees, with the traditionally popular areas of Paphos and Limassol leading the way. One of the latest projects is the Sofitel Resort & Spa, a joint venture between Singapore-headquartered Oxley Holdings and Planetvision on the Limassol beachfront. The project will be the first Sofitel Resort with branded residences in Europe and is expected to be completed by 2022.

Health and wellness developments are increasingly popular, and an early example of this is the Eden Seniors Resort in Larnaca which opened its doors in 2018. Paphos is due to see the first dedicated retirement village in Cyprus – a segment that has much potential in Cyprus along with rehabilitation related projects. The €16 million retirement village, branded Lazaris Mill, will consist of 82 individual apartments, ranging from studios to larger flats and a small 24-room hotel, and provide bespoke facilities. The first residents are expected in spring 2023. Until now, no retirement villages were available on the island and whilst common in many other countries, this project is a first for Cyprus.

Prior to the pandemic the high-end residential property segment accounted for 20% of the total transaction value of real estate in Cyprus, with a keen interest from foreigners. For the whole of 2019, 66% of properties were acquired by non-EU buyers. While the pandemic slowed foreign sales, interest began to revive again in mid-2021.


Cyprus banks maintain high levels of capital adequacy and liquidity. The restruc­turing of the banking sector after 2013 has attracted important international in­stitutional investors and fresh foreign capital, and encouraged accelerated sales of non-performing loans. These developments have substantially reduced risk and enabled the financial system to operate on a more sound basis.

The island’s biggest lender, Bank of Cyprus, secured €1 billion of investment from world-renowned investors in 2014. Investors have also been able to take ad­vantage of €220 million in Additional Tier 1 (AT1) capital in December 2018 and €300 million in senior preferred notes issued in June 2021.

Hellenic Bank completed a capital increase of €150 million in March 2019 to support its acquisition of mainly performing loans from the former Cyprus Cooperative Bank. The acquisition boosted the bank’s assets to €16 billion and raised market share for loans to 30%. The capital raise brought in new international inves­tors, such as US-based Poppy Sarl (PIMCO), with the other major shareholders being Demetra Investments Ltd, Wargaming, Third Point and investment fund Senvest.

Mergers and acquisitions in the past few years have transformed the landscape. In 2017, strategic investment came via the sale of the majority stake of the Cyprus subsidiary of Greece’s largest lender Piraeus Bank, now renamed AstroBank, to Lebanese Holding M. Sehnaoui SAL – which injected €40 million in fresh capital into the bank. In July 2021, Eurobank Greece took a 9.88% stake in Hellenic Bank.


One of Cyprus’ most successful export services has been the maritime industry, which now has its own dedicated deputy ministry. The growth of Cyprus’ resident shipping sector over the past 50 years has developed a strong maritime cluster that caters to the needs of Cyprus-based companies, including banking, professional services, insurance and IT. The cluster has gone from strength to strength over the years and is consistently attracting more quality tonnage and shipping-related companies to its shores.

The decision in July 2018 by leading London ship insurer P&I Club to open a post-Brexit EU subsidiary in Cyprus, reaffirmed the island’s position as one of the top global hubs for shipping. Another triumph came in early 2019, when British shipping firm P&O Ferries decided to register its English Channel operating fleet under the Cyprus flag to take advantage of the benefits and security it provides.

Two of the industry’s most highly respected privately-owned shipmanagement companies, Columbia Shipmanagement and Marlow Navigation – both based in Cyprus – merged in 2017 to form Columbia Marlow, creating one of the world’s largest ship and crew-management companies. Another transaction constituting FDI was the 2018 buyout of Limassol-based Songa Offshore SE by Transocean Ltd, the world’s largest offshore drilling contractor for oil and gas wells, in a deal worth US$3.4 billion.

Between 2010 – when the Cyprus tonnage tax system was approved by the European Commission – and 2021 there has been a fivefold increase in the number of shipping companies that have registered with Cyprus’ specialised shipping tax­ation system, boosting the sector’s revenue by around 25%. In addition, natural gas finds within Cyprus’ EEZ and efforts to exploit it in cooperation with neigh­bouring countries have expanded opportunities for the island’s already thriving shipping sector.


Cyprus has seen a rapid expansion of tertiary education in the past few years, and is well on its way to develop the island into a regional education centre and knowl­edge hub. Cyprus has already established cooperation and synergies with interna­tional universities, most notably the University of Nicosia launching the island’s first degree programme in medicine in collaboration with St George’s Medical School at the University of London, and University of Central Lancashire – Cyprus (UCLan), being the first British university to establish a campus on the island. The Cyprus Institute has also established itself as a significant research institute with global networks of excellence supported by significant EU funding. The number of foreign students choosing Cyprus for their studies has almost tripled in the last five years, representing over 60 different countries and supporting the growth of Cyprus into a true global educational centre. This fact underlines the great oppor­tunities that exist in Cyprus for the establishment of new universities, colleges and research institutes.


A new Deputy Ministry of Research, Innovation and Digital Policy was established in March 2020 to leverage Cyprus’ potential for innovation and to support digiti­sation in the economy. This accelerated during the Covid-19 pandemic, leading to Cyprus being named as one of the five most innovating countries in the EU’s European Innovation Scoreboard in 2021. In addition, a range of initiatives are under way to support start-ups and to attract more international talent to estab­lish ventures with high growth potential. Opportunities are therefore opening up for business angels and venture capitalists looking for innovative start-ups, and to invest risk capital in exchange for equity in promising business ideas and products.

The technology and communications sector in Cyprus has become fiercely competitive, with a number of players deploying cutting edge solutions to both in­crease their local market share and generate growth through the launch of new technology and products. 5G was rolled out in 2021 with four licences issued in that year. Prior to that the sector saw new investment in July 2018 with Monaco Telecom S.A. buying the Cyprus operations of South Africa’s telecom MTN Group – which entered the Cypriot market 11 years ago and has around one-third of the market. Following the €260 million deal, the company was rebranded Epic, and the group announced strategic cooperation with China’s Huawei on developing a 5G network in Cyprus.


Cyprus’ liberalised FDI Policy, both for EU citizens and investors from third countries, along with its favourable tax regime makes it one of the most attractive investment targets in Europe. At 12.5% Cyprus’ corporate tax rate is one of the most competitive in the EU and new tax-neutral reforms that are on the way will simplify and modernise the tax system further. The country’s extensive network of double taxation treaties with 66 countries have strengthened its position as a business gateway and a preferred location for corporate headquarters. The coun­try’s skilled talent, low cost of doing business, top-tier professional services, and high quality of life renders Cyprus not only a wise business choice but also a great relocation destination.

To further enhance investor interest, the government is making staunch efforts to improve its FDI framework and has vowed to cut through red tape. Reforms ac­celerated in 2020-21 include preparations for a specialised commercial court and full-scale upgrade of the judicial system, as well as targeted incentives to better facilitate investment. These efforts have been recognised, with Cyprus seeing an increase in FDI and the registration of new companies setting up on the island.

Cyprus’ open economy, European Union status and established role as a regional business hub between three continents continue to appeal to investors. The island also hosts a thriving forex industry with many global giants basing their opera­tional headquarters in Cyprus. In addition, the investment funds sector has grown exponentially in the last few years with continuous upgrades to the regulatory framework. Assets under Management (AuM) have increased by over 200% from €2.7 billion in 2016 to €10.7 billion in the first half of 2021. If recent growth rates are sustained, industry experts predict assets under management could reach €20 billion in the next five years.

Having endured a challenging economic climate and now successfully tackling the effects of the global coronavirus pandemic, Cyprus has proven its resilience as an economy and FDI location. It has exceeded expectations and as work progress­es on implementing structural reforms to bolster the business environment, the attractive incentives and the ever-expanding opportunities will continue to attract foreign investors.

→ For more information, contact Cyprus' investment promotion agency, Invest Cyprus. 

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December 2021

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