Steven Clarke asked:


Individuals looking for a retirement home or second home overseas may find their answer in a property in Cyprus. The property in Cyprus market has been booming for the last five years, but is the bubble about to burst, or can continued growth be expected?

Foreign investment in property in Cyprus has dropped in recent months as a result of the ‘credit crunch’ and a strong Euro. However, despite the fact that the pricing of property in Cyprus is strongly dependent on the level of foreign investment, there is strong potential for growth in the both the North and South of the island.

A major factor driving demand is that the island of Cyprus is serviced by at least three different airports, with international flights accepted at Larnaca International, Nicosia and Paphos. This has prompted low cost air carriers to open negotiations to establish new routes to Cyprus. Increased budget air travel can be expected to drive visitor numbers in the years ahead, and the World Travel and Tourism Council is predicting an annual increase in visitor numbers of 4.5% to Cyprus this year. This will result in increased demand for property in Cyprus with subsequent rises in property prices and rental values.

Additionally, the climate is a major attractor to visitors to the island. Like many other Mediterranean locations, Cyprus has a temperate climate that provides warm sunny winter days as well as a guarantee of long hot summers, with temperatures that can be expected to reach 30 degrees centigrade. This means that there is visitor demand for rental of property in Cyprus all year around.

What is more, winter rainfall ensures that the island is lush, green and verdant for winter, spring and early summer. All property in Cyprus can be guaranteed to be within easy reach of an area of outstanding natural beauty, including vineyards, mountain ranges and beautiful coastlines.

Of greatest appeal to tourists and potential investors in property in Cyprus, is the fact that the island of Cyprus is surrounded by hundreds of miles of open, sandy beaches. Investors can choose between a location that provides miles of undeveloped seafront locations, or a location with beaches that are near to established lively tourist areas such as Ayia Napa, which is more ideally suited to service the demand provided by the young adult and family holiday markets.

These features of the island of Cyprus are relatively unlikely to change in the near future, and all of them represent good reasons for potential buyers to invest. However, there are a number of political issues that a potential purchaser of a property in Cyprus must take into consideration when making an investment decision.

In 1974, Turkey invaded Northern Cyprus after the attempt by Greece to formally annex the Island. Cyprus has remained a divided island ever since with two separate Republics established, although only the Southern Republic of Cyprus has ever been formally recognised by international authorities.

Following the introduction of an elected government, the Southern Republic of Cyprus was formally accepted into the European Union in 2003 and the Euro was formally adopted as the local currency in February 2008. This has provided political and economical stability to the South of the island, which has prospered in the last five years with major growth in the value of property in Cyprus.

Whilst the ‘North - South’ divide is reflected in prices of property in Cyprus, Northern Cyprus properties have received a boost after the disestablishment of border crossings in 2005. Furthermore, recent improvements in the political situation have increased the likelihood of the development of a long term resolution of the dispute that has divided Cyprus into its northern and southern regions.

As with all investment decisions, it is wise for any potential investor in property in Cyprus to take expert advice and to ensure that full advantage is taken of any local financial and investment incentives before making a final decision to go ahead.



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