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Spain’s New Property Tax May Shift Investor Focus To Cyprus

by THEFUTURE.TEAM

January 17, 2025

Spain’s decision to introduce a 100% property tax on purchases by non-EU residents, announced on 15th January, is poised to alter the dynamics of the real estate investment landscape in Europe. While the move aims to address Spain’s mounting housing crisis, it could inadvertently divert foreign investors to other markets, including Cyprus.

Tackling Spain’s Housing Crisis

The tax, a bold initiative by Spanish Prime Minister Pedro Sánchez, is intended to curb soaring property prices and ensure affordability for locals. Spain has faced a significant shortage of housing, worsened by high inflation, rising interest rates, and insufficient new construction. In 2023 alone, non-EU residents purchased 27,000 properties in Spain, with many acquisitions driven by profit motives rather than personal use, Sánchez noted.

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The lack of available housing has sparked frustration among the local population as demand continues to outstrip supply, further driving up prices. This new tax is part of a broader strategy to prioritize housing for residents and stabilize the market.

The Cyprus Perspective

As Spain tightens its regulations, some investors may look elsewhere, and Cyprus could emerge as an attractive alternative. Pavlos Loizou, CEO of the analytics firm Ask Wire, suggests that while changes in Spain might present opportunities for Cyprus, the overall impact is likely to be limited.

The Cypriot rental market has already seen significant investment, and the entry of new players may not drastically shift the status quo. Moreover, Loizou highlighted that Greece has also introduced tighter regulations, including restrictions on short-term rental licenses and a sustainability tax for platforms like Airbnb, which could steer investors towards more lenient markets like Cyprus.

In Cyprus, short-term rentals remain relatively unregulated. Although the government has established a rental property registry, less than 40% of properties are formalized, leaving room for investors to operate with fewer restrictions.

Broader Implications For The Region

UK analysts suggest that Spain’s tax reforms may deter non-EU investors, prompting them to seek out markets with more favorable conditions. Cyprus and Greece, along with larger markets like Turkey and Italy, are well-positioned to benefit. However, experts caution that regional competition could limit significant growth in demand for Cypriot properties.

An Evolving Landscape

While the new Spanish tax has raised concerns among foreign investors, Cyprus may attract those seeking less restrictive property markets. However, sustained demand will depend on the government’s ability to strike a balance between regulation and investment incentives. In the meantime, Cyprus remains a promising, albeit competitive, alternative for property investors navigating Europe’s shifting real estate landscape.

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Only 1% Of Cyprus Farms Use Precision Farming Technologies

Cyprus remains one of the European Union’s least digitised agricultural economies, with just 1% of farms using precision farming technologies in 2023, according to Eurostat.

The findings come as the EU continues to encourage the adoption of digital tools aimed at improving agricultural productivity, efficiency and sustainability.

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Internet Access Expands, But Digital Uptake Lags

Internet access has improved across the bloc, although adoption remains uneven. Eurostat found that 43% of EU farms had internet access in 2023, with northern and central European countries leading the way.

Denmark, Germany, Slovakia, Latvia, the Czech Republic and Austria all reported internet access rates above 90%.

Greater connectivity, however, has not translated into widespread digital adoption. Farm management information systems, which help farmers manage day-to-day operations, were used by only about 11% of EU farms. France was a notable exception, with around 60% of farms using the technology.

Precision Farming Concentrated In Larger Operations

Robotics adoption also remained relatively limited, with only about 7% of EU farms using robotic technologies. Overall, around 18% of farms with utilised agricultural area employed at least one precision farming technology or practice in 2023.

These included robotics for plant protection, band spraying, variable-rate application, precision crop monitoring and soil analysis. Despite representing fewer than one in five farms, these holdings accounted for around 44% of the EU’s utilised agricultural area.

The figures suggest that precision farming remains concentrated among larger agricultural businesses, where investment in digital technologies is typically easier to support.

Cyprus Lags Behind EU Leaders

Luxembourg, Finland and Estonia recorded the highest shares of utilised agricultural area managed by farms using precision farming technologies, each exceeding 75%.

At the other end of the ranking, Cyprus recorded just 1%, while Greece and Romania reported between 10% and 15%. The results indicate that Cyprus remains at an early stage of digital adoption in agriculture, even as precision farming becomes more widespread across parts of the European Union.