Cyprus was one of the countries hardest hit by the financial downturn with the property market struggling as banks slid into crisis, eventually forcing the country to seek help from the EU and IMF in March 2013.
The €10bn bailout also required Cyprus to wind down an insolvent bank and confiscate a slice of big deposits held at a second troubled lender. The property market reacted with prices falling by up to 20% on an annual basis between July and September in the wake of the banking crisis.
Surging unemployment at a record 17% and a gloomy economic outlook had deterred property buyers for some months although now, latest figures show that there is a significant increase in domestic and foreign demand for property and it would appear that the gloom over Cyprus is finally lifting.
In the first half of 2014, overall property sales in Cyprus to foreign buyers have increased by 20% year-on-year, with the biggest growth being recorded in Nicosia, Famagusta and Limassol.
Despite the growth coming from a very low base, Nicosia has seen an increase in transactions from 246 to 371, representing a rise of 51%, Famagusta from 89 to 136, 53% and Limassol 366 to 529, 45%
Property values in Cyprus grew steadily from 2000 to 2009 as Europeans, particularly Britons bought second homes and the country's booming banking industry extended credit. Despite continued expectations for further economic contraction, foreign buyers of Cypriot property are on the rise.
Data from Cyprus' land registry show that overall, 551 bills of sale were submitted in May 2014, an increase of 157% compared with May 2013, with foreign buyers increasing from 71 to 153, a rise of 115.5%.
Alecos Vilanos, manager of Vilanos Real Estate said: "There is significant increase in the purchase of real estate by foreigners on a national basis. This suggests that Cyprus with its attractive prices offered in combination of quality products and service, good weather, geographical and geopolitical position, the legal framework, the low corporate tax, as well as the conditions in our neighbouring countries, continues to attract the interest of foreign and local investors."
A major development of a marina in Limassol which opened to the public on June 19th is expected to draw the majority of foreign buyers. In addition, recent offshore discoveries and the development of the island's energy sector is expected to attract both domestic and foreign investors.
As in other European countries such as Spain and Portugal, Cyprus provides incentives to non-EU investors by providing permanent residency for qualifying property purchases. This visa scheme has boosted investor interest in Cypriot property and is expected to play a leading part in the recovery of the country's economy.
"There is optimism around of a full recovery of the property sector in Cyprus and in particulate in attracting a larger number of buyers and investors. Investments in property over time lead to long term benefits and never lose their values," said Vilanos, adding that:
"The Land Registry figures point to a gradual recovery of the property market with an increasing interest from foreign investors and buyers. The situation in the real estate market is showing signs of stabilisation. However, in order to achieve a complete recovery and return to normality, the restrictions concerning financing for purchase or real estate investment have to be full reinstated."