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Cypriot land feud threatens stability

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The stability of the Cypriot economy has been threatened after a row broke out over new land proposals.

The Turkish-Cypriot offer to the Greek-Cypriots, as part of an effort to compensate victims of a 1974 invasion, has caused a storm in the country and been strongly rejected by the Greek side. However, there are concerns that this move could raise tensions in the region and damage the great strides that have been made in recent years to bring the two sides of Cyprus closer together.

It has stirred up a political storm that has resulted in some Greek-Cypriots calling for those who have backed the plan to be tried on charges of treason. This demonstrates the serious tensions that still exist in the country, despite recent efforts to improve circumstances through infrastructure developments designed to increase property investment in the island.

Although the country remains a popular destination for investors, due to the relatively cheap land prices and potential for significant property price inflation over the coming years, there remains some concern among investors over the stability of the country, given its divided nature.

As such, it has been the case that some investors have chosen to look elsewhere, such as traditional markets of France and Spain, when considering to invest their money. Others still have turned to emerging markets with more stable countries such as Bulgaria, with entry into the European Union in 2007 proving a tempting carrot for investors.

However, Cyprus remains a country of huge potential for investors, but the constant arguments between its Greek and Turkish sides means it can sometimes appear a relatively unstable place for investors.

This latest spat has destroyed any hopes that many diplomats – and indeed investors – had held that the scheme to compensate the victims might help to heal the wounds and reduce the rift between the two factions of Cyprus. But it appears that many may have misjudged the Greek-Cypriot authorities' resolve to see the unconditional return of those ousted by the Turkish army to their homes in the north of the country.

The European Court of Human Rights called on Turkey to resolve the problem and deliver "effective domestic remedies" in its judgment on the issue, but it appears that the Turkish Cypriot property commission – created in response to that decision – has failed to satisfy the Greek-Cypriot community.

Therefore, the problems between the two factions look set to rumble on, potentially holding back the investment opportunities available in the country.

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