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Investment Property in Cyprus

Buying Property in Cyprus – An investment Guide

Today there is a strong desire amongst all Cypriots for a resolution to the divide between North and South Cyprus. The real estate market in both North (Turkish) and South (Greek) Cyprus are strong in their own rights and entice holiday makers and expatriates with their 300-plus days of Mediterranean sunshine per year, a relaxed lifestyle and ease of accessibility via budget flights to the island’s three international airports.

North/South Divide: 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 will continue to drag their feet (which they have done since rejecting the Annan Plan, which the Turkish side accepted). In time there will be independent recognition of North Cyprus from the USA, followed by the rest of world.

Why Buy Property Southern Cyprus?

Southern Cyprus is generally regarded as a solid investment for all types of buyers, from large corporations to the individual investor. Excellent buy-to-let opportunities are available for investors who buy property in key tourist areas. With the introduction of the Euro, Cyprus property investment is due for changes, making it an interesting arena to watch over then next few years.

• Respectable Capital Growth

Predicted capital growth this year stands at around 12% per annum, comparing favourably with the likes of most of the Spanish Costas and the Portuguese Algarve. There are always exceptions to this figure and some well chosen resort properties in high demand areas have even been fetching between 20 and 50%. A careful Cyprus property investment can produce excellent capital returns in addition to high rental yields on properties in popular resort areas such as Limassol, Pahos and Larnaca.

The booming holiday industry offers excellent investment opportunity for those wishing to cash in on additional buy-to-let income, either in modern seaside resorts or in one of Cyprus’s stunning new golf complexes.

• EU Reassurance

Southern Cyprus is a full EU member and soon to be member of the Euro zone, attracting many investors seeking a safe and reliable economy, home from home. The Republic is a favourite option for those seeking a warm, relaxed, safe retirement destination with a highly developed EU style infrastructure, including legal systems in accordance with UK standards along with modern and efficient accounting and banking services. Added to this, as a legacy from past colonial days, English is widely spoken in Cyprus and cars drive on the left hand side.

• Competitive European Property Prices

Property prices in Southern Cyprus are a good deal cheaper than in many parts of its competitive markets of Portugal, France and Spain. Prices range from approx. £48,000 to £515,000 and legal and transfer costs are lower than in many other European destinations. Price is of course a contributing factor to the current high demand for property amongst overseas purchasers in Cyprus.

• Good Tax Regime

Property buyers in Southern Cyprus benefit from a favourable tax regime of only 10% corporation tax and double taxation treaties with 40 other countries, while pension income is taxed at only 5%. Inheritance tax is non-existent on all worldwide property owned by permanent Cyprus residents.

It should be noted that when Cyprus joins the Euro zone in 2008, the government will introduce 15% VAT on building land purchase. Wise investors are acting fast to ensure pre-tax increase deals and getting their bids in before prices go up.

• So Much to Offer

Cyprus has long been a top tourist destination and offers visitors and home owners many things: warm weather; a low crime rate; charming mountain villages; bustling towns; chic hotels and a growing sports and leisure market. For many, these features make Cyprus an ideal European holiday and relocation destination; it’s small wonder that 60,000 British owners have already chosen to buy property in Cyprus.

Why Buy Property in North Cyprus?

Northern Cyprus is certainly regarded as an exciting and emerging market. With increased regulation on past land issues and prices still at a fraction of the south, many enterprising buyers are looking to the unspoilt but increasingly well-served north for strong investment potential.

• A Strong Emerging Market

This fast emerging market is beginning to enjoy some of the prosperity of the South. This is being achieved largely by putting the development of tourism high on the economic agenda. In the wake of relaxed border restrictions with the Republic of southern Cyprus, Northern Cyprus is enjoying greater tourist numbers and offers a quieter and more authentic lifestyle than many areas of the south. Year on year, the region has been attracting increasing numbers of tourists and expatriates looking for authenticity and bargain prices.

• Bargain Prices

Property prices in the North 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 countries in the area of Europe. In Northern Cyprus, you will be looking to pay around £200 a year for electricity and water for an apartment. Many investors are wasting no time in buying into this Turkish Republic in readiness for substantial returns on investment when eventual integration with the Greek Republic takes place and EU directives kick in.

• Privatisation of Key Industries

Although tourism plays an important role in the growth of the Northern Cyprus economy, other major sectors are the tertiary sector, industry, agriculture, transportation and the health sector. A crucial step in the economic development of Northern Cyprus is the ongoing privatisation of state owned industries, creating a stronger and highly progressive economic situation.

• Holding Hands with Turkey

Northern Cyprus is receiving a good deal of assistance from Turkey and this is a key issue to the success of the Turkish Cypriot economy. Turkey has so far provided loans totalling $250 million for the implementation of projects relating to public finance, tourism, banking, and privatisation.