Investment Property in Cyprus

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Investment Property in Cyprus

Buying Property in Cyprus - An investment Guide

The property markets in both North and South Cyprus are very strong in their own rights, with southern Cyprus (Greek) aiming at the residential tourist, second home buyer and full time resident markets, whilst the North of Cyprus (Turkish) is offering some great prices for new properties that are essentially aimed at the short term and holiday market place. Currently over 2.4 million tourists visit Cyprus each year, attracted by the pleasant year round climate, the stunning landscapes and vistas, the friendliness of the locals and the social melting pot that Cyprus offers. The easy access from most countries in Europe via budget airlines to the three international airports and the relaxed Mediterranean lifestyle are appealing not only to tourists but also international investors who also benefit from the tax laws in Cyprus

Both Greek and Turkish Cypriots would like to resolve their differences and find a resolution to the divide between them, But for the point of this article we will separate the two as currently both have their owns strengths and have certain nuances that differ regarding the buying procedure .

Why Buy Property Southern Cyprus?

Southern Cyprus offers investors an established tourist destination, a solid country in which to invest for both private investors and corporate entities. There are some excellent buy-to-let opportunities for serial investors that enjoy the short term rental market. Cyprus also offer some quality developments that are more suitable for longer term rental for investors more interested in longer term capital appreciation

As of January 2008, Cyprus changed over to the Euro, which in domestic terms will benefit the Cypriots both regarding local investment and international investment from the EU which wil be used to improve the infrastructure and assist growth in tourist as well as residential areas.

Respectable Capital Growth

Cyprus south has been achieving an average of 10-12% in recent years with some areas exceeding this â€" Southern Cyprus has seen annual capital growth of no less than 8% since 1974. A carefully chosen investment property in Cyprus can yield very healthy capital returns as well as high occupancy levels and high rental returns, especially in areas such as Larnaca, Paphos and Limassol where there are established tourist trends.

Tourist visitors are increasing year on year in Cyprus and there is an increasing demand for quality rental properties. Also since Cyprus entered the EU, there has been a vast amount of interest in second homes and primary residences for expatriates in search of a new lifestyle in the sun. There are a number of excellent seaside resorts currently on the market with more in the planning stages and some stunning new golf course complexes aimed at the longer term visitor and local residential market

EU Reassurance

Southern Cyprus has joined the EU as a fully fledged member state and this January adopted the Euro as its local currency. These two facts have attracted international investors in search of a strong and reliable economy, a home from home and the possibility to profit from this growing market. The Greek Cypriot side of the island is a favourite option for those investors and relocating families due to its established infrastructure, its health departments, schools, the safety and that there are numerous communities of expatriates from various countries for those unwilling to live in predominantly Cypriot areas.

The legal system in place in Cyprus is in accordance with UK standards: the banking institutions and accounting practices are excellent and very tax friendly. Given that Cyprus was once one of the British colonies for a long period of time, English is widely spoken, so learning Greek is not essential, although it would be polite to at least learn a few phrases.

Competitive European Property Prices

Investing in property in Cyprus can be a great deal cheaper than in many other Mediterranean destinations such as southern Spain and Portugal. Transfer costs, stamp duties and legal costs also represent a considerable saving. The price of property in Cyprus is obviously one of the principle factors involved for investors purchasing in Cyprus and with the demand for quality real estate throughout the country, prices are increasing with developers in some areas struggling to keep up

Good Tax Regime

The tax situation in Cyprus is, as mentioned previously, beneficial for many investors as it has double taxation treaties with over 40 countries and there is no inheritance tax charges on property owned by residents in Cyprus. Corporation tax is only 10% and for retirees, their pensions are only taxed on 5%

As of January 2008 Cyprus has adopted a 15% VAT charge on NEW BUILDING LAND purchased after December 31^st 2007. This means that any land purchase today will incur a 15% charge. What does this mean to you the investor? It simply means that any off plan properties purchased now will be able to tale advantage of the land purchase made by the developers last year or prior to that. You will still pay your VAT on the property purchase but this will relate only to the percentage of the land on which the property stands. Once these developments have been sold and developers begin to construct off plan projects on the land they have purchased since the beginning of 2008, there will be an obvious jump in prices as the developers will also be increasing their prices in order to recuperate the added cost that they have incurred when purchasing the building land.

The upside to Cyprus adopting the Euro is that interest rates have been forced into line with other members of the EU and this has made borrowing money substantially cheaper in Cyprus.

2008 is expected to be a huge year for the property market in Cyprus as many overseas buyers AND local nationals have waited for the transition to take place in order to take advantage of the new legislation and currency developments

Final Comments on investing in the Cyprus real estate market.

• Cyprus is an established tourist destination for many countries throughout Europe

• The Climate is excellent year round

• Crime figures are low

• There is a growing sports and leisure market

• New investment in hotels and other tourist infrastructure

• A member of the Euro Zone

• Cyprus is quickly becoming the chosen destination for families to relocate as well as for pensioners to retire to

• Safe and secure with strong legal system