Assetz® News - Cyprus awaits property market growth

Cyprus awaits property market growth

26th April 2006 |

The island of Cyprus has long been a favourite with property investors from the UK, not least because of the relatively cheap living costs and the favourable weather conditions.

A report from Europe Travel News, for instance, claims that around 11,500 Britons already own a property in Cyprus, with over 1,000 more purchasing a home there every year. Simple advantages from an investment point of view include the fact that English is widely spoken, while being able to drive on the left side of the road is also a bonus for some.

While many will buy a property in Cyprus for a personal holiday home or a retirement home, most will hope for capital growth and Cyprus has traditionally performed well in this respect as well.

Cyprus is quickly developing into one of Europe's most dynamic investment locations, thanks largely to EU accession which has made it a much stronger player in the European property scene.

At the same time, the Financial Mirror has this week stressed the importance of adopting the euro – another move which many analysts predict will boost property investment on the island.

Responding to the statement from Demetris Christofias, leader of the AKEL party, that adoption of the euro should be delayed again, the Financial Mirror slammed his views, claiming they are based on "economically dubious arguments".

The popular view from business analysts is that dual price displays will encourage investment in the coming years, which can only have a positive impact on house prices and the prospects of property investors in the country.

The Financial Mirror has also noted that construction is already picking up, with the number of building permits authorised by the authorities rising by 2.4 per cent year-on-year in January. The value of the permits has also increased at an impressive rate, indicating that property prices are set to increase again.

Buy-to-let investment in Cyprus is particularly popular, with the enviable climate attracting a steady supply of tourists.

AngloINFO reports that in addition to the beneficial tax regime in Cyprus, the market has matured considerably over the last 15 years. Around 75 per cent of the buy-to-let investors in Cyprus are thought to invest for the long-term, reflecting the confidence held by most people that the market will remain strong.

Net returns in Cyprus range from around 4.5 pent and 11 per cent per annum, according to AngloINFO, while capital growth is generally in the region of 15 per cent.

Cyprus is one of the most popular holiday resorts for tourists from Europe and worldwide and this inevitably has an impact on rental income and house price growth. According to the Financial Mirror, the Cyprus Tourism Organisation is desperate to make the most of this source of income and there are plans to build a series of golf courses to appeal to the famously big-spending golf tourists.

Already a popular investment spot, Cyprus is showing signs of rapid development and so it is perhaps unsurprising that investors are enthusiastic about future gains.