Important factors and expectations for the South Cyprus property market

Cyprus has always been a popular destination for holiday makers and those seeking a quieter pace of life.
Investment in Cyprus remains a good prospect with solid returns on investment of up to 20% per annum.

Cyprus has long been a popular holiday destination for British tourists, possibly because settling in is not as much of a culture shock as on other Mediterranean islands. English is widely spoken on this former British colony. For property investors the land registry system is similar to back home. Familiarities such as these, set in the context of over 300 days of sunshine a year and 648 km of coastline, are clear enticements for the British to continue to flock to the island for both business and pleasure. Main property hotspots are in and around Paphos, Larnaca, Limassol and the ancient city of Nicosia.

Focus is currently on successfully meeting EU criteria since its membership in 2004, while Cyprus is clearly reaping the rewards of a strong and stable economy. The Republic is set to prosper further when it begins to use the euro in 2008.

Cyprus is considered to be a high-income country and holds 16th place in the world in terms of per capita income, making it a strong and stable country in which to invest. It enjoys a standard of living that is higher than other European Union member-states while economic performance compares very well to that of most other EU countries.

The downturn of the Cyprus Stock Exchange pushed most of the capital towards the property market, since the stock market could not rise up to investor expectations leaving the property market as the best major investment alternative in Cyprus.

The banking sector is the major financier for both investors and developers alike. Cyprus property is expected to benefit from the uncertainty and pessimistic expectations in the English property market, since many investors prefer to transfer their capital to more secure property markets with better future potential.

British investors have very strong buying power in Cyprus and they can use gearing from their investments in England to buy significantly more in Cyprus.

Interest rates in Cyprus are set up at LIBOR 5.5 plus risk. Interest rates are considered to be high but this does not seem to stop investor activity as, by liquidating their investments, they incur large cash returns which are significantly greater than the lending cost, due to the great performance of capital gains.

However purchasers are able to borrow in any currency with far lower interest rates, for example Swiss Franc at 3.6 %.

Inflation is noted at 2.54 % and unemployment is at 2.9% - both rates are encouragingly positive.

Cyprus has double taxation treaties with 26 countries, including the U.S.A, and there are no exchange restrictions on current international transactions. Non-residents and foreign investors may freely repatriate proceeds from their investments in Cyprus.

Offshore status allows many foreign companies (located in Cyprus but conducting business abroad only) to benefit from many highly beneficial tax and duty-free concessions.

Tourism

Cyprus is currently undergoing the Strategic Plan for Tourism 2010 which plans the upgrade of its facilities and resorts in line with changes in tourism trends, with the chief aim of launching Cyprus tourism well into the 21st century. This will be achieved through increasing the amount of tourist arrivals, per capita tourist expenditure, length of stay and repeated visits. We will see an increase in theme parks, agro/nature tourism, marinas and golf courses to cater for the many interests of today's tourists.

Constant improvements to air access to Cyprus ensure a steady growth in tourism figures.

The road infrastructure is considered to be of great importance in Cyprus due to an ever increasing need to cater for today's more independent and adventurous tourist, wishing to explore the island with ease. These roads will of course increase ease of transit of merchandise to every location on the island.

The current drive for improved tourist facilities to boost the Cyprus economy can only be regarded as good news to today's property investor seeking a stable tourist market on which to base a property investment with high rental potential and good capital returns.