Cyprus is a popular vacation destination, especially for Europeans who come from the dreary corners of the continent. The island boasts over 300 days of sunshine, a Mediterranean lifestyle, and a friendly population that speaks adequate levels of English to facilitate communication with visitors. Tourists can hang out at the beach, climb Mount Olympus, hideaway in quaint mountain villages, check out byzantine churches, and visit monasteries.
The trend of international buyers purchasing second homes on the island has significantly increased since it joined the EU in 2004. “The desirability of this Island is reflected in the number of conquests that have taken place over the years leaving a mixture of architectural styles, cultures and historic places,” said Harry O’Neill, Sales & Marketing Manager of ERA Cyprus Real Estate. “The Island’s climate is is very conducive to healthy living with a diet of fresh fruit and vegetables, fish and salad products to be enjoyed in the heat of the summer and the balmy breezes of winter.”
Known as the “jewel of the Mediterranean”, the Republic of Cyprus is located in the eastern part of the famed sea. It is closest neighbors are Turkey, Syria, Lebanon, Israel, Greece and Egypt. Some 2.4 million visitors flock to the island every year, making tourism by far its largest industry.
Covering an area of 3,572 square miles, Cyprus is home to roughly 800,000 people but there hasn’t been an actual census covering the whole island for decades. Most Greek Cypriots belong to the Greek Orthodox Church while their Turkish counterparts are Muslim.
Cyprus has a complicated history. It was once part of the Byzantine Empire and fell under the Arabs for a brief period. The Ottomans and later the British ruled over the prized island. Shortly after it gained its independence from Britain, it was plunged into violence between Greek Cypriots and Turkish Cypriots.
The tense inter-communal standoff took a turn for the worst after members of the Greek Cypriot community tried to overthrow the island’s government with the intent of annexing it to Greece. The fact that the coup d’état was backed by the Greek government next door didn’t help. Turkey responded by invading Cyprus and claiming sovereignty over 37 percent of the island.
Now, decades later, the Republic of Cyprus controls only 59 percent of the island. Areas in Northern Cyprus, controlled by Turkey, firmly remain under the grasp of Ankara. The UN run Green Line physically separates the two areas effectively creating a border. “The two sides of the Island operate like two different countries with crossing points where passports must be shown, even by a Cypriot,” said O’Neill.
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One can not talk about the Cyprus economy without discussing areas run by the island’s government separately from areas controlled by the Turkish. In 2008, the IMF put the Greek Cypriot economy among the 32 advanced economies of the world and predicted for it to show some growth in 2009 despite the global economic slow down. The Turkish controlled North hasn’t fared as well. Its per capita GDP is estimated to be $11,800, according to Hurriyet, a Turkish daily – a little more than a third of its Greek counterpart at $27,171.
Cyprus seems to have retained some of the British colonial influence. “[The island] was a British colony until 1960 and this means that 95% of the population speaks excellent English, so you don’t have to worry about language differences,” said Anne Hall from Cyprus Property World. “In addition, there is more than a passing similarity with the British legal and financial systems and cars drive on the left,” she said. The island residents are very family oriented and nurture a safe environment in which to raise children.
Cyprus property market
Current property trends in Cyprus are definitely on the buyers’ side according to ERA Cyprus Real Estate. Banks on the island have been less affected by the global financial crisis and are in a position to extend credit to those who wish to invest in the property market. The falling exchange rate between the Sterling and the Euro has translated in a major slow down of British buyers looking to the island to purchase their vacation homes. Developers are ready sweeten deals to close sales.
“The Cyprus real estate market is undoubtedly suffering the effects of the recession in the UK and northern Europe,” said Hall. “Traditionally around 70% of foreign buyers in Cyprus have been from the UK but the combination of those buyers tightening their belts, and sterling weakening against the Euro, there has been a noticeable drop in sales, particularly in areas most popular with UK buyer such as the favourite holiday spot of Paphos.” Other areas are still attracting buyers from different countries, according to Cyprus Property World. Limassol has traditionally been popular with Russian buyers and there has also been an increasing interest from buyers in South Africa, Israel and the Middle East.
Cyprus has a very well established infrastructure, making reaching the island simple. “Transport to and from the Island is well established with daily flights to major hubs such as London, Frankfurt, Amsterdam, Athens, Dubai and Moscow making access to Cyprus’ two international airports a very easy task,” said O’Neill. Popular property hot-spots include Paphos, Larnaca, and Limassol.
Buying property in Cyprus
There are restrictions on non-EU property investors in Cyprus. International buyers from countries outside of the European Union have to get permission from the Council of Ministers before going forward with their purchase. “Under current legislation in Cyprus it is necessary for any non-Cypriots who are not E.U. Citizens or permanent residents of Cyprus […] to obtain approval of Acquisition of immovable property from the Council of Ministers,” said O’Neill. “In addition, a non-EU citizen can only purchase an apartment, or a house or villa which is under construction or built on an area not exceeding 4,014 square meters…” he said.
The application to purchase property can take anywhere from two to three months, according to ERA Cyprus Real Estate. On top of a completed application form, additional documents, such as – a bank statement reflecting financial viability, a clean criminal record, and a purchase contract for a property are needed. EU citizens, on the other hand, have the same rights as citizens of the island. They can freely acquire property in Cyprus.
Although the property buying process is very transparent in Cyprus, investors should be cautious about acquiring property in the Turkish controlled North, according to ERA Cyprus Real Estate. No other country except Turkey recognizes Northern Cyprus as a separate state from the rest of the island. It is currently possible to buy land owned by displaced Greek Cypriots in these parts. However, investors must beware of such short cuts. The European Court recently ruled against a British couple who, lured by the cheap prices, bought property built on land owned by a Greek Cypriot. “This has caused alarm for all property owners in the North because any title deed issued since 1974 by an illegal regime has no validity and buyers are now left in a precarious position, having [purchased] properties on [that are built on] ‘stolen’ land,” said O’Neill.
In addition, in order to avoid potential issues, property buyers should use a registered real estate agent, according to Cyprus Property World. “In Cyprus agents must be registered with the government to sell property and must meet stringent requirements,” said Hall. “It’s also a good idea of check whether they are members of the Cyprus Real Estate Agent’s Association (CREAA) although this isn’t mandatory. In addition, an experienced local, English-speaking lawyer will help you avoid problems.”
Cyprus offers a variety of property options ranging from beach front villas fetching millions to studios selling for €40,000, according to ERA Cyprus Real Estate. The size of the land on which a particular property is located is an obvious factor in setting prices, especially on an island. Cyprus is no different in this regard. As it currently stands, a one bedroom apartment can start at around €65,000 in Famagusta, €87,000 in Larnaca, €111,000 in Limassol, and €61,000 Paphos.
Real estate professionals are optimistic about the future of the Cyprus property market but indicate that the 20 percent a year growth rate the market showed between 2006-2008 is unsustainable in the long term, according to ERA Cyprus Real Estate. “The recent worldwide slump has brought a halt to this meteoric rise,” said O’Neill. However, the island hasn’t been as affected as the rest of Europe because of its small size and limited supply of land, according to Cyprus Property World.
Cyprus’ EU membership has brought lots of European investment in new marinas, golf courses, conference centers and other infrastructure projects, according to ERA Cyprus Real Estate. Larnaca International airport is adding a new terminal. Paphos has upgraded the capacity of its existing international airport to handle more passengers. Budget airlines have taken notice and are adding flights to the island. “The future looks very good,” said O’Neill.