The Cyprus Property Developers Association (CPDA) has called for real estate investments to be exempt from the provisions of the draft law establishing the National Mechanism for Screening Foreign Direct Investments (FDI), when these investments are made for residential, holiday home, or investment purposes.
In a letter to the Parliamentary Committee on Finance, CPDA President, Yiannis Misirlis, emphasised the need for a specific exemption to ensure that the framework remains open and attractive for property investment.
Support for the FDI screening mechanism
Mr Misirlis underlined that the Association’s Board of Directors supports the establishment of the National FDI Screening Mechanism, noting that it makes a significant step in aligning Cyprus with the European framework while strengthening the country’s credibility as a modern and secure investment destination.
He added that adopting clear and transparent procedures is essential for building investor trust and attracting high-quality investments that deliver multiple benefits to the Cypriot economy and society. However, he stressed that the mechanism should be implemented in a way that safeguards transparency and credibility without undermining investment momentum.
To this end, the CPDA proposes an exemption for property transactions aimed at housing, holiday homes, or investment, ensuring that the framework remains accessible and appealing to real estate investors.
Concerns from credit acquiring companies
Lisa Solonos, Director of the Association of Credit Acquiring Companies and Credit Facility Management Companies (SEDC), also expressed concerns over the draft legislation.
She warned that, as currently drafted, the law could create significant uncertainty and delays in both investment and property-related transactions. For reasons of legal clarity and practicality, she stressed the need for a precise and unambiguous definition of the properties covered by the legislation.
Ambiguity in definitions and timelines, she cautioned, would likely lead to an excessive number of applications, delays, investor frustration, and potentially deter investment in Cyprus, driving interest towards neighbouring destinations.
What’s next for the draft FDI law?
The article-by-article discussion of the draft law on FDI screening, covering investments exceeding €2 million, is set to continue next Monday, with the bill expected to reach the House Plenary for a vote later in October.
The legislation was first introduced in mid-2022, during an attempted takeover of the Bank of Cyprus by a major US investment group. The revised draft before the Finance Committee provides for the establishment of an FDI Screening Mechanism in line with EU Regulation (EU) 2019/452.
The bill includes the creation of a review team for foreign investments, particularly in critical infrastructure, with oversight led by the Ministry of Finance and involving relevant ministries depending on the sector.
It also provides for retroactive application of up to 15 months, allowing authorities to annul investments where funds originate from questionable sources. Notably, ships are exempt from the provisions due to the special regime of Cyprus’ shipping industry, though floating LNG units remain covered.
The proposed framework also regulates cases of mandatory notification and approval, criteria for screening, the review process, required information, and the powers of the competent authority, namely the Ministry of Finance.
