According to the latest data from the Statistical Service Cystat, The revised data show that GDP in the first three months of the year rose in real terms by 0.1% over the previous quarter, having declined by 0.3% in the fourth quarter of 2009. However, the early flash estimate published in May estimated the GDP to have declined by 0.2% over the previous quarter in the Q1 and by 0.8% in the Q4.

According to the revised figures real GDP decline compared with the previous year was milder as a result of these revisions. Cystat reported that there was positive growth in banking activities and certain other services sectors, as well as improved relative performance in tourism, distributive trade and industry.

In good news for property investors in Cyprus, the island’s Central Bank said that Cypriot economy is expected to contract by 0.5 percent in 2010 but rebound in 2011 with growth of 1.3 percent. The Central Bank in its semi-annual report said its latest forecasts were in line with an expected drop-off in domestic demand and a slowdown in construction and tourism this year. Its previous forecast, issued in Dec. 2009, had Cyprus registering growth of 0.3 percent this year and 1.8 percent in 2011.

Speaking after a meeting with political party representatives and social partners, as well as government officers, to discuss the European Commission document on the future of the Lisbon Strategy, Minister of Finance Charilaos Stavrakis said that the challenge now is to maintain this “‘potential advantage” and the Ministry of Finance would be doing everything it deemed right to solve structural problems that have been to the detriment of society for many years.

He recalled that the potential rate of growth in Cyprus was historically around 4% and, due to the global crisis and the recession, it has dropped to 3-3.5%. He pointed out that ”the respective rate of the European economy is 2% and has now dropped to 1-1.5%.”

The Minister noted that the government has already presented a comprehensive package of proposals, which could solve the structural problems of the Cypriot economy, increase the growth rate and reduce unemployment, adding that some of the measures need more processing and approval by the House of Representatives.

Meanwhile, a recent study conducted by investment website Homes Overseas indicated that Cyprus is still a popular destination for those considering overseas property investments. The island offers bargain getaways that will help travelers escape the bad news of the current economic climate.

According to the Times, The country offers Mediterranean food and weather, advantageous tax laws, English language radio stations and the combination of being under five hours away by plane and a minimum temperature of 15 degrees Celsius, even in winter, makes the destination ideal for a holiday home for Brits.

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.

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.

According to shelteroffshore.com, expatriates are now enjoying a number of financial breaks since moving to Cyprus. The tax burden on the Mediterranean island would be far lower than in the UK, as expats will be charged less on their pension income. The website added that 40 per cent of their pension income would be paid to the state in the UK, whereas in Cyprus it is charged just five per cent. The cost of living in Cyprus is also up to 20 per cent cheaper than it is in the UK and other European countries.

According to Gulf Weekly, These diverse range of attractions in Cyprus is helping to attract many foreign expatriates. The Mediterranean island is said to offer many tempting attributes including warm climate, culture, history and architecture.

Commenting on its investment potential, the publication added that house prices are going up by between 15 and 20 per cent every year, which means that property owners stand to make a profit if they sell up in future. The property market in Cyprus offers excellent value with quality developments.

Meanwhile, The Financial Mirror has reported that Cyprus commerce, industry and tourism minister Antonis Paschalides has said the island is ready to welcome more Britons to its shores.

Jonathon P Salsbury, manager of contracting and developing company Cybarco, said that Property in Cyprus still offer a favorable environment for investors because it is not entirely dependent on international and British buyers. Overseas investors from places such as from Russian, Kazakhstan and the Gulf are moving in, meaning that sales are continuing well in Cyprus.

He also added that Cyprus has healthy domestic market and Cypriots themselves buy second homes in considerable numbers so Cypriot market is not entirely dependent on international buyers. Many property experts believe the housing market could bounce back and see upward growth any time and in fact the market remains strong, despite the current financial climate.

The Financial Times has reported that the Cypriot government has formulated plans to construct four new marinas at the island’s most popular resorts which are expected to provide luxury and high quality service and it is expected that the new marinas will increase visits from European skippers.

Recently Principal International has said that it is possible for investors to see returns on property purchases due to annual capital growth and readily available credit facilities in Cyprus.

Finance Minister Charilaos Stavrak Speaking to Reuters said that its economy will grow by about four per cent this year and a slight drop during the second quarter of 2008 was a seasonal oddness, partly because the tourism season had not got underway. He added that the tourism sector peaks in July and August, which means the slight fall earlier in the year should be reversed.

According to Forbes which cited the official government figures, the country’s gross domestic product in 2007 was 4.4 per cent up on the previous year. This has prompted officials in Cyprus to forecast a similar rate of economic growth during 2008. The Economic Intelligence Unit (EIU) has predicted that the island’s gross domestic product (GDP) should go up by 3.7 per cent this year.

Lucas Papademos, vice president of the European Central Bank has praised Cyprus economy and said that it has developed into a highly stable country and added that the island had set an example for other countries that wanted to pursue similar economic reforms.

The holiday industry generates more than a tenth of the island’s gross domestic product. Cyprus popularity as a holiday destination is directly helping to boost its housing market. Property values in the Mediterranean island increased by more than three per cent during the first quarter of the year. This means that it could be an ideal market for people who wish to invest in a foreign property.

Cyprus gross domestic product was valued at £12.5 billion in 2007, and is expected to reach £13.2 billion in 2008. Total revenue last year increased by 19.8 per cent, while spending grew by 8.4 per cent.

Government officials say taxes from their upbeat real estate market brought the cash to state coffers last year. Finance minister has said in an interview that the 3.3 per cent surplus is the result of buoyant economic activity. He also added that Economic growth in Cyprus is set to reach 4.2 per cent this year. Cyprus’s economy is moving at a faster rate than that of all the EU member states on average.

PricewaterhouseCoopers (PwC) said the Cyprus is likely to see strong economic growth of at least four per cent this year, reports the Cyprus Mail. PwC also said that the strong economic growth this year is mainly due to booming tourism sector.

Overseas property investors are watching the economic developments in Cyprus closely, as the market is becoming more popular among real estate buyers. Currency specialist firm HiFX noted that Cyprus appeal as an investment market is spreading across the world.

Cyprus’s economy is 71.3 percent free and this makes it the world’s 22nd freest economy. Inflation rate is fairly low and averages 2.5 percent between 2004 and 2006. Fiscal deficit is below 1.5% in 2006 and continuously reducing. Cyprus has a steady macroeconomic environment and Non-EU investors can invest directly or indirectly in most sectors. Accession to the EU has further reduced barriers to investment.

The reduced interest rates is proving very popular with overseas investors who have already seen rates fall to 4.25% and they are prepared that rates could drop as low as the European Central Bank‘s base rate of 2.%.

The fabulous weather, booming tourism and British nature of the island appeal to many affluent buyers. English is spoken widely in Cyprus which makes its appeal international and not just confined to the UK. Nearly 340 rain-free days per year, longest tourist seasons in Europe, increasing ex-pat community and highly beneficial tax regime entices overseas property investors to look for Cyprus.

This has prompted officials in Cyprus to estimate a similar rate of economic growth during 2008.This would mean that Cyprus’s economy is on the rise much faster than that of all the EU member states taken on average.

The Index of Economic Freedom by the Heritage Foundation has also pointed out that Cyprus has one of the freest economies in the world. This is really encouraging news for the overseas investors because the countries with the most economic freedom also have higher rates of long-term economic growth.

Paphos has seen consistent growth and house prices in Paphos areas steadily getting higher. This place is perfect for luxury home buyers as they can find spectacular luxury apartments, duplexes, villas and townhouses. 11 kilometers to the north of Paphos is Coral Bay which is one of the best natural beaches in the area. This is a well-recognized resort with many luxury villas. Recently Limassol is also becoming popular with overseas property purchasers and becoming a property investment hotspot.