Assetz® News - Cyprus offering new prospects

Cyprus offering new prospects

22nd July 2008 |

The story of Cyprus from a property investment point of view in the last few years has been fairly uncomplicated. Blessed with British-style laws and a widespread use of English as much as it is by a warm and sunny climate, the island has seen rising prices and increasing interest with its European Union (EU) membership and subsequent adoption - starting on New Year's Day this year - of the euro as its main currency.

Now matters have become a little more complicated, partly because of the inevitable risk of too much of the wrong kind of development, partly because of the way the credit crunch has affected some would-be buyers, but also because of major political developments.

Buying in the country as a whole is easy enough, according to Dr Kai Wacker of property advisors Kaimar Consultants. He said even moving there to live is straightforward, stating: "It is extremely uncomplicated to gain a residence in Cyprus provided the purchaser is an EU National. Laws are very similar to the laws in the UK."

However, when it comes to the location, politics becomes very important. Negotiations currently under way are focusing on a possible resolution to the conflict between the southern Greek and Northern Turkish parts of the island, which have been split into separate de facto states since 1974 (though the northern Turkish Cypriot Republic is only recognised as a genuine nation state by Turkey). Part of any deal will consider the property rights of those who had to move from one half of the country to the other, Dr Wacker noted.

Insisting that any buying in the north will "not be entertained", he stated: "A property purchase in north Cyprus would make you a supporter of ethnic cleansing in Cyprus. Under any potential settlement, the right to property will be retained by the legitimate Greek Cypriot owners in Cyprus."

Those buying in the country should instead look to Limassol, Larnaca and Ayia Napa, which offer the "better investment deals at present", he suggested.

One southern Cyprus location that may do very well out of a settlement with the north is Famagusta, according to Natalie Gameson of property portal showhouse.co.uk. Writing for Homes Overseas, she noted that the area, lying close to the border, was the main tourist hotspot in the country before 1974 and property values there have been tipped to rise by ten per cent by investment firm International Property Group if reunification occurs. Director of the group Geraint Thomas has said: "The area will see certainly excellent capital appreciation if it comes off."

Ms Gameson also noted developments that are taking place elsewhere, including Ayia Napa. Those evidently agreeing with Dr Wacker's view of this area include former Welsh football star Ian Rush, who commented of his own investment: "Rental returns can reach up to eight per cent in high season, with capital appreciation hitting between ten and 15 per cent."

So while the north is to be avoided entirely and Famagusta is a place to watch for the future, Ayia Napa and other places in the south continue to be recommended. Whatever the future of the whole island, it seems there are certainly plenty of attractive places to invest in Cyprus just now.