Market Growth In Cyprus
When planning an investment in Cyprus, it is important to research the many factors that make Cyprus the opportunity it is today. Below are many considerations to be taken into account.
Important Factors and Expectations for The North Cyprus Property Market
The TRNC is currently embracing economic growth, announcing plans for developing tourism in the wake of relaxed border restrictions with the Greek Cypriots. North Cyprus is already a great holiday and investment destination and is very popular amongst British holidaymakers. Most of the tourist locations are currently centered around Ammochosto. For more information see our section on the Costs and Taxes in North Cyprus.
Today there is a genuine wish amongst all Cypriots for a resolution to the divide between North and South. Real estate has never been better positioned to receive some great potential returns on investment in a solid, emerging market which is beginning to enjoy some of the prosperity of the South. Property prices are currently half the price of the South (and less than a third of those in Spain).
The cost of living in Northern Cyprus is low compared to other European countries, including the Southern part of the Island. In Northern Cyprus, you will be looking to pay around £200 a year for electricity and water for an apartment. Many houses and apartments are built with solar water heating systems, which ensure cheap running costs even in winter.
Locally produced or Turkish products are generally cheaper than their European counterparts. Goods imported from Europe tend to be higher in price than in their country of origin. However, cigarettes and alcohol are very cheap.
Tourism plays an important role in the growth of the Northern Cyprus economy, followed by the tertiary sector, industry, agriculture, transportation and the health sector respectively. Another important step in the economic development of Northern Cyprus is privatisation of state owned industries.
Assistance from Turkey is key to the success of the Turkish Cypriot economy. Under the current protocol, Turkey has provided Turkish Cypriots loans totaling $250 million for the implementation of projects relating to public finance, tourism, banking, and privatisation.
Today, North Cyprus will need to reach political settlement with the south and Turkey will need to resolve the North Cyprus situation in order to enter the EU. Meanwhile, America and the UN are putting strong pressure to the Greek side to accept an Annan Plan based solution. It is highly likely that if the parties on the Greek side continue to drag their feet (which they have done since rejecting the Annan plan, which the Turkish side accepted), there will be independent recognition of North Cyprus from the USA and then the rest of world.
Important Factors and Expectations for The South Cyprus Property Market
Cyprus has always been a popular destination for holiday makers and those seeking a quieter pace of life. Investment in Cyprus remains a good prospect with solid returns on investment of up to 20% per annum.
Cyprus has long been a popular holiday destination for British tourists, possibly because settling in is not as much of a culture shock as on other Mediterranean islands. English is widely spoken on this former British colony. For property investors, the land registry system is similar to back home. Familiarities such as these, set in the context of over 300 days of sunshine a year and 648 km of coastline, are clear enticements for the British to continue to flock to the island for both business and pleasure. Main property hotspots are in and around Paphos, Larnaca, Limassol and the ancient city of Nicosia.
EU membership since 2004 means Cyprus is offers a strong property market, reaping the rewards of a stable economy. The Republic is set prospering further from the adoption of the Euro in January 2008.
Cyprus enjoys a standard of living that is higher than many other European Union member-states while economic performance compares very well to that of most other EU countries.
The banking sector is the major financier for both investors and developers alike. Cyprus property is expected to benefit from the uncertainty and pessimistic expectations in the English property market, since many investors prefer to transfer their capital to more secure property markets with better future potential.
British investors have very strong buying power in Cyprus and they can use gearing from their investments in England to buy significantly more in Cyprus.
Interest rates in Cyprus are approximately 4%and investors are buying up now as, by liquidating their investments, they incur large cash returns which are significantly greater than lending costs, due to the great performance of capital gains in many prime Cyprus locations.
Inflation is noted at 2.3 % and unemployment is at 3.8% - both rates are encouragingly positive.
Cyprus has double taxation treaties with 26 countries, including the U.S.A, and there are no exchange restrictions on current international transactions. Non-residents and foreign investors may freely repatriate proceeds from their investments in Cyprus.
Offshore status allows many foreign companies (located in Cyprus but conducting business abroad only) to benefit from many highly beneficial tax and duty-free concessions.
Cyprus is currently undergoing the Strategic Plan for Tourism 2010 which plans the upgrade of its facilities and resorts in line with changes in tourism trends, with the chief aim of launching Cyprus tourism well into the 21st century. This will be achieved through increasing the amount of tourist arrivals, per capita tourist expenditure, length of stay and repeated visits. We will see an increase in theme parks, agro/nature tourism, marinas and golf courses to cater for the many interests of today’s tourists.
Constant improvements to air access to Cyprus ensure a steady growth in tourism figures, and in summer the new international airport at Ecran in Northern Cyprus welcomes over 90 flights per week from many worldwide destinations. The airport at Getickale is tipped for American finance and renovation to help ease future congestion. Additionally, the road infrastructure is considered to be of great importance in Cyprus due to an ever increasing need to cater for today’s more independent and adventurous tourist, wishing to explore the island with ease. These roads will of course increase ease of transit of merchandise to every location on the island.
The current drive for improved tourist facilities to boost the Cyprus economy can only be regarded as good news to today’s property investor seeking a stable tourist market on which to base a property investment with high rental potential and good capital returns.
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