Cyprus Real Estate News and Property Market Reviews

Cyprus could be the only EU member state to see growth in 2009 and the Mediterranean island state is working on alternative measures to combat fallout on its economy from the world financial crisis, according to reports.

According to the EU’s spring economic reports, The Cyprus economy would grow 0.3 per cent in 2009 and 0.7 for 2010. This compares to negative growth rates forecast in all of the other 26 member states, ranging from -9 per cent in Ireland - with even worse predictions for some Eastern European countries up to -0.9 per cent in Malta and Greece.

Joaquin Almunia, European Monetary Affairs Commissioner speaking after the European Commission issued downwardly revised economic forecasts and Growth rates would only turn modestly positive in the second half of 2010.

Commenting on the situation in Cyprus, he said that in view of the ongoing global crisis, economic growth was expected to slow significantly in 2009 “but still remain in positive territory, domestic demand should continue to drive growth.”

Government officials stressed that the Cypriot banking system is sound and the government pays special attention to its tourism and the construction industry in particular. Kyriakos Karaiskakis, manager of Lartis Developers Ltd said that Cyprus has plans to woo potential buyers from Russia, Iran and other countries.

The government offered assistance to the construction industry in late 2008 with a EUR 25 mln stimulus package and in recently Cyprus has the highest rate per population in the EU, with the housing stock expanding by 30% in the past decade. The Central Bank of Cyprus is also confident that the economy as a whole and the financial system will both weather the current global economic crisis.

Popularity: 14% [?]

Increasing number of nationals from Dubai and the UAE are taking their money out of the country and into the nearby safe haven of Cyprus.

As the global economic downturn hits the UAE, a growing number of people are taking their savings and putting it into Cypriot property to hedge against the current economic turmoil in stocks, shares and plummeting property prices. Property companies have been hit hard, with two of the UAE’s biggest firms losing almost 10% of their stock value. Morgan Stanley recently forecasted that the average price of a property for sale in Dubai would fall by around 10% by 2010, in light of the fact that a number of new-build residential developments are now being completed.

Derek Hatton, director of Morpheus Investments commented: “Cyprus is only a few hours flight away, and as a member of the EU, has a stable and accountable economy. As A result, top-end investors are heading to Cyprus to store their money away from the uncertain conditions in the Emirates. Many Dubai nationals are also heading to Cyprus and setting up their business operations here as it has one of the lowest corporate tax rates in the entire EU.”

Dubai based airline Emirates is making a series of enhancements to its services to Cyprus and it has already launched daily services between Dubai and Larnaca International Airport. The flight would depart Dubai on a daily basis at 8:15 am, and arrive in Larnaca at 10: 25 am. The flight will depart Larnaca each day at 7:30 pm, and land in Dubai 3 hours and 10 minutes later. According to Nabil Sultan, Emirates Senior Vice President, Commercial Operations, Europe, ” After 14 years of services, we are extending our commitment to the island and significantly improving connections to and from Dubai.”

According to the Knight Frank Index, Cypriot house prices have remained constant throughout the global economic downturn and the properties have recorded an average of 9% growth across the island in the last three months of this year.

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There is a growing trend amongst Developers in Cyprus to look for new areas away from the traditional holiday hotspots, it has been stated.

The latest trend among developers of apartments and resorts is to move away from the traditional centres such as Paphos and Limassol and the most notable fact about such out-of-town properties is that they are much cheaper to buy than in the cities, the difference being as much as 40 to 50 per cent, but with the possibility that prices will catch up in time and may make for outstanding assets in the future for the investors who buy early.

Meanwhile, Monarch Airlines has increased its summer flights to Cyprus. The budget carrier revealed that it is adding two flights per week to Larnaca from Birmingham, adding to the 19 already flying from Gatwick, Luton and Manchester. Liz Savage, Managing director noted that there had been “huge demand” for the service from the midlands, he commented: “we have received with over 10,000 advanced bookings already taken and the first flight almost fully booked.”

This clearly indicates that low-cost travel to Cyprus remains strong and people still clearly looking to travel despite the recession but perhaps seeking to watch their budgets more closely. So for those investing in rental property, there are opportunities in many places in Cyprus, often ones that investors would not have previously thought of but perhaps also in places they may have considered in the past only to be deterred by the price tags and see if they really can pick up bargains now.

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Cypriot developers and homeowners could see new interest from Russian buyers as growing number of property investors from Russia are choosing to buy properties in Cyprus, experts have revealed.

According to the Royal Institute of Chartered Surveyors (Rics), Cyprus has always been a favorite for Brits and there is a very strong ex pat community lured not only by the Mediterranean island lifestyle and exceptionally good weather but also combined with low taxes. Growing interest from Russian investors over the last two years to invest in Cyprus is also fuelling Growth in Cypriot market.

Sam Orgill, MD of ProACT Partnership, experts in tax issues, and investment and legal matters for buyers of properties in Cyprus says, “Many Russians established shipping businesses in Limassol on the back of favorable international business tax treatments by Cyprus in the 90’s. Despite joining the EU, an affordable tax regime continues to make Cyprus attractive to Russians”. Besides, the country appeals to their character; the Cypriots have a long history with the Russians linked by religion and location. Apart from the tax advantages, Direct flights from Moscow and St Petersburg to the new expanding Paphos airport help fuel the high interest. Many properties in the Limassol area are being purchased for offices .In Paphos the areas is chosen more as holiday homes or as their main residence.

Jonathan Salsbury, Cybarco UK manager, said Cyprus had been seeing Russian investment “for some time” and investors are now looking for second homes as well as business opportunities. He commented: “Limassol has recently undergone a significant re-birth – upgrading facilities – which has in turn attracted a wealthier buyer and maintained steady price rises.”

According to Cybarco, the Russian expats has grown Limassol; the local property market could get an increase in investment as some Russians to find a second home as they have seen the potential for capital growth in property due to the forthcoming Limassol Marina.

In related news, a Russian organization is planning to build a Disneyland holiday resort in Larnaca, which is set to jump-start the island’s property market. Over one million extra European tourists are expected to arrive in Larnaca every year to visit the 1,000-room Greek-themed attraction, as well as hundreds of thousands of other worldwide visitors.

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Larnaca makes a remarkably fertile ground for property investors, second home buyers and retirees from across Europe because of excellent infrastructure, according to British Airways magazine.

Alexander Garrett has written an article Larnaca at large in the December 2008 issue of the British Airways magazine ‘Business Life’ about that how the town is pressing its case to be considered by anyone planning a home in the Eastern Mediterranean. He has written that there are plans to encourage overseas property investors to the Larnaca area as the creation of a significant golfing resort, plans for the marina both of which are currently stalled due to government deliberations but the problems are expected to be sorted out soon. The town officials have stated that Larnaca is to get a facelift, which is expected to be completed by the summer.

Larnaca has a number of natural and already established benefits and features - it has an international airport which is being significantly expanded to the tune of 600 million euros and already tourism numbers and flight volumes through the airport are up. Larnaca has a long sandy beach right up to which the town has already been developed. In addition to these factors, the good news for potential property buyers or real estate investors is that the price of property in the Larnaca area is significantly lower than in Limassol, Paphos and Nicosia. For instance, property investors can currently purchase a bespoke, luxury family house which has been kitted out with the highest grade furnishings for just over CYP 400,000 whereas such a luxurious property in Nicosia would set you back upwards of CYP 600,000.

Property in Larnaca in Cyprus today is an exceptional investment as the town is under major redevelopment and improvement, the climate is outstanding and the availability and quality of properties in this part of Cyprus are impressive.

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According to the Cyprus Statistical Service (CYSTAT), there is increase in the number of building permits issued in January 2009; investment activity in the construction sector is showing signs of recovery as Building permits constitute a leading indicator of future activity in the construction sector.

The total area of projects that registered building permits in January increased by 11.6% to 278.9 thousand sq. meters compared to 249.8 thousand sq. meters in the corresponding month of 2008, when they had decreased by 5.3% compared to 2007. The value of building permits authorized rose for the eighth straight month, rising by 6.9% over January 2008 to EUR 234.1 mln, suggesting that developers are still making money and these building permits is for the construction of 1,585 dwelling units which is also up from 1,229 in January 2008, according to financialmirror.com reports.

The area of the projects in Famagusta registered an increase of 41.6% to 29.3 thousand square meters from 20.7 thousand square meters. In Paphos, 30.8% to 53.7 thousand sq. meters from 41 thousand sq. meters in January 2008, while in the commercial port of Limassol it is 6%, in Larnaca of 2.9% and in Nicosia of 3.8%.

In related news, the Bank of Cyprus is offering attractively priced loans of up to EUR 1.5 billion earmarked for housing, business and the hotel/construction industries. Vassos Shiarly, The Bank of Cyprus Group General Manager Domestic Banking has stated that € 800 million are geared to soft loans for housing and businesses wishing to own their own premises.

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The coastal towns of Cyprus are an ideal spot for property-hunters seeking an affordable holiday home, it has been claimed.

Overseas investors wanting to buy property abroad should have Famagusta top in their list, particularly Protaras, Paralimni, Cape Greko and, perhaps the most infamous, Ayia Napa, According to experts at The Overseas Guides Company.

Famagusta is capital of the Famagusta district in the east coast of Cyprus. It is located in a bay between Capes Greco and Eloea, east of Nicosia and possesses the deepest harbor in the island. Famagusta is one of the finest examples of mediaeval architecture in the eastern Mediterranean. The new town (also known as Maras or Varosha) lies just to the south of the walled old-city of Famagusta.

As a seaport, Famagusta is a center for the export of agricultural products and livestock; other major economic activities include cotton spinning, the distillation of brandy, and fishing. The resort is packed with tourists not only during summer, but all through the year as its friendly pace of life through the colder months attracts tourists.

This is likely to be welcomed by owners of rental accommodation in the coastal town, as the season in which they can potentially have tenants in Famagusta is growing year-on-year.

According to the Cyprus mail, Ayia Napa is another coastal village on the southeast of the island, has less than 1000 citizens but during the summer months it sees the arrival of approximately 10,000 tourists and has built up a reputation as a wild party-town. The town is also likely to attract more interest from retirees who wanted to spend their post-working life overseas.

Kim Brown of The Overseas Guides Company commented: “This extended season, coupled with prices far lower than areas such as Paphos, and the warm weather, local food and improved way of life makes Famagusta in Cyprus a great consideration for anyone looking to purchase property abroad.”

Popularity: 18% [?]

Cypriot minister of commerce, Antonis Paschalides, is putting a proposal to parliament that would grant Iranian investors permanent residency in the Cyprus, according to reports.

Mr. Antonis Paschalides has said that the government wants to assist the stay of Iranians who buy a property in Cyprus provided that the price of the house exceeds a certain amount and that the funds used for the purchase of the property come from abroad. The minister already has visited the Iranian capital of Tehran in early March, to sign a trade protection agreement.

According to www.opp.org.uk reports, Paschalides has proposed to grant Iranian investors permanent residency in Cyprus after buying mid- to high-end properties that means a minimum €350,000 should be spent on the property before considering offering a visa. The minister notes that an increasing number of Iranians are investing in property and business on the island and high numbers of Iranian tourists are expected to arrive in Cyprus this month to celebrate the Iranian Norooz, Iranian New Year.

Cia Sadreggini, MD of Larnaca-based firm Nikada Developers skeptically welcomed the news, as he thinks the minister will have trouble in getting it around EU immigration laws. He commented “A lot of Iranians are attracted to Dubai for visa purposes and they spend billions of Euros there every year so the relaxing of laws could be very important for Cyprus. If the Cypriot government allows them a visa in this way, it would be huge news for Cyprus.”

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The governor of the central bank of Cyprus, Athanasios Orphanides, has said that Interest rates may take a fall sooner than expected as the country tries to improve economic risks.

This drop may be a good thing as the house markets would improve after struggling with the continued increases of interest rates and therefore repayments.

Mr. Athanasios Orphanides said that it would be wise to look for alternative measures, which will enable our robust banking sector to contribute decisively in restraining further slowdown in financial activity, if necessary. He added that the central bank have already made reductions in specific commercial bank products and loan interest rates and he further said that he expect more significant reductions in loan interest rates in time.

Chairman of the newly-established Association for the Promotion of Property Development, Giorgos Mouskides stated that Interest rate cuts in Cyprus could serve to attract more overseas investors to the country. Mr. Mouskides said that demand for property pushes up in line with the more attractive housing loans granted by the banks and the government’s measures to boost the property sector, he added that this is attributable to the Cypriots’ mood to look for opportunities.

Finally, Mr. Mouskides stressed the need for a cut in taxes and reduction of capital gains tax that stands at 20% and transfer fees at 8%. There is also a need to speed up the procedures for issuing Title Deeds.

In related news, Cyprus plans to tap the international bond markets by issuing one billion euro bond by June in a bid to cover the refinance of the public debt 2.5 billion euros expiring in 2009, Finance Minister Charilaos Stavrakis said. The remaining debt would be raised via domestic bond auctions and short-term borrowing through European treasury bills. He however clearly said that the government is making strenuous efforts so that the public debt will be refinanced with the smallest possible cost for the taxpayer.

Popularity: 23% [?]

There is a plethora of property for sale in Cyprus, from modern villas and an apartment to old houses and buying a property in Cyprus is very similar to buying a property in the UK, if not easier!

Marilyn and Hamish Lowdon from Aberdeenshire has stated that All legal documents and paperwork are in English, most solicitors are bilingual both well versed in Turkish and English, and the legal system is based on UK. Given the right circumstances, foreign buyers can be the owner of a Cyprus property in just a day! The couple has bought their property near Paphos – which features a large balcony and shared communal area with a pool – for £172,000 in 2005, According to Sunday mail reports.

According to the publication, IT consultant James Allen, 31, is just one of the many Brits who have chosen to purchase property in the country. He paid for a deposit on a flat in Paphos in 2006. Mr. Allen now believes similar properties in the area are selling for around 30 per cent above what he paid.

He said that initially he was looking at a flat to buy and rent out in Scotland but he couldn’t find anything that would give him decent returns so he decided to look for properties abroad and selected Cyprus. Although his flat will not be finished until 2010, Mr. Allen has stayed in a completed part of the development.

However, in Northern Cyprus Non-nationals require a purchase permit from the government in order to buy property and such permits may take 4-12 months to come through.

Meanwhile, Cyprus has topped the list by Jet-to-Let magazine to determine the countries of most interest to property investors this year. Cyprus finished first for the second consecutive year, closely followed by France and Spain in second and third respectively. The government has launched first-time buyer scheme in Cyprus and a total of 200 million euros was set aside for the initiative. Cypriot finance minister Charilaos Stavrakis has approved the first 30 loans, which aim to help first time-buyers onto the country’s property ladder.

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