A former British colony, Cyprus has long held attractions for British retirees and holiday makers alike. The warm climate, beautiful beaches, countryside and sedate lifestyle, as well as great tax benefits for older folk, make it an ideal choice. Tourist figures are increasing year on year (up 2.2% in 2006) while in September 2007, an amazing 56% of total visitor numbers were British.
A multitude of low cost carriers are playing their part in attracting tourists and investors in their droves and with routes from the UK to Cyprus starting at around GBP 90, it is easy to see why demand is so high for both holiday rentals and second homes in Cyprus.
Natural and Cultural Factors
- An average 340 days of sunshine a year make Cyprus an agreeable place to visit or live and holiday in
- Outdoor activities are abundant, including trekking, golf, sailing and diving, ideal for nature lovers and water sports enthusiasts
- Beautiful golden sandy beaches and ancient monuments, eg. castles, walled cities, abbeys, Roman ruins, make Cyprus a great holiday location with varied appeal
- Cyprus offers an interesting mix of cultures, with strong UK, Greek, Middle Eastern and Turkish influences. In addition, most of the local people speak English are welcoming and hospitable towards visitors.
- Proximity to the European mainland means that Cyprus benefits from regular budget direct flights, making access to the island very easy.
Economic Factors
- Competitive prices and a low cost of living compared with other Mediterranean destinations make for an ideal investment climate
- Typical growth rates of 20% per annum in carefully selected locations
- EU inclusion since May 2004 means EU financial assistance and several other economic benefits
- The Strategic Plan for Tourism 2010 is upgrading facilities and resorts in line with 21st century tourism trends. This is set to boost an already thriving tourism industry on the island
- A successful and growing economy indicates strong potential for property investment growth in the future
- A low tax regime makes investors’ money go even further, while pension income is taxed at only 5%
Why North Cyprus presents a unique opportunity for the property investor
- North Cyprus is a great holiday and investment destination and is already very popular with British holidaymakers. It has an English Legal system (all contracts will be in English) house prices are in Pounds sterling and English is widely spoken throughout. You drive on the left hand side and do not need an adaptor for your plugs
- Strong political indications that direct flights will be allowed to the newly built Ercan International Airport within 18 months – Richard Branson has already been in talks with the TRNC (Turkish Republic of North Cyprus) and British governments and America earlier this year gave a clear signal by flying 2 congressmen directly there for talks with the TRNC government (who were met by the US ambassador at the airport) much to the dismay of the South side.
- Possibility of political settlement with South as Turkey needs to resolve the North Cyprus situation to enter the EU and America and UN are bringing strong pressure on to the Greek side to accept an Annan Plan based solution.
- Strong likelihood that if the Greek side continue to drag their feet (they have been wrong footed since they rejected 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. America helped finance the renovation of Ercan Airport and has its eye on Getickale Airport in the North (with runway long enough for B52’s) and a sea base in the Karpas peninsular in exchange for recognition.
- Prior to either of the above embargo likely to be eased or completely lifted.
- Only a matter of time before first mortgages available which in itself will send what is currently a cash buyers market into orbit.
- Title insurance also likely in the near future which will fuel the market even further.
- Prices are currently half the price of the South and less than a third of the price of Spain.
Summary
EU membership and the adoption of the Euro is spurring Cyprus still onwards. The International Monetary Fund and the European Commission endorse the Cyprus economy as a stable one in which to invest, and property prices in prime locations of the south east have risen by as much as 20% per annum over recent years.
According to Knight Frank’s more conservative growth figures, the average property price increase on the island was 12.5% in 2007 which, combined with average annual rental yields of 4-6%, represents a solid, though not booming, potential market for todays’ mid to long term investors.
Investment property in Cyprus offers outstanding potential for both buy-to-let investors in the established South with the added potential for less risk-averse investors looking to make capital appreciations in the emerging market of the North.
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