If you are looking to invest in a safe and strong property market then if you do your homework you cannot go wrong with an investment property in Cyprus. There are many things to consider when investing in property, such as capital growth, mortgage rates, rental capacity, affordability, climate, etc. This article looks at the reasons why I believe that South Cyprus is an excellent property investment opportunity. On the contrary, I think that Northern Cyprus is not a safe investment, but I will talk about that in a later article!
The weather
There are approximately 340 sunny days a year in Cyprus, where tourists and locals alike can enjoy soaking up the sun. When the weather in neighboring countries turns cold, Cyprus is still warm and sunny. If you are buying property and your primary goal is rental, then a year-round rental season is a huge advantage, especially with more and more tourists seeking winter sun.
The Law and Taxes
Cyprus is a very British island and has adopted many of the English common laws. The laws are not only very similar to those in the UK, but the locals also speak English very well, as this is their adopted second language. For this reason, there are a large number of British buyers, many of whom are buying property in Cyprus for retirement purposes. There is still a strong influx of second home buyers and investors, but the low taxes are a great incentive for permanent living and investment. In fact, inheritance tax in Cyprus is 0% and UK pensions are taxed at only 5%.
The European Union (EU)
When Cyprus became a member of the EU property investors became increasingly interested in the Cyprus property market. In addition, a new VAT rate of 20% was added to newly built properties for which a building permit was not granted before the law came into force. Previously VAT was 0%, so together these factors caused a large influx of investors.
As of January 1, 2008, Cyprus will also adopt the euro as its single currency. These changes in the Cyprus investment property market are sure to mean longer term security for your hard earned money.
Land Shortage for Developers
There is a shortage of land for developers to build on in Cyprus and there are strict planning laws on the height and density of new developments. In the medium term, the number of new builds will decline and the number of resales will increase, showing that entering the market early should deliver strong capital gains over 5 years.
Budget airlines
The first budget flights from the UK launched this year, signaling much stronger and expected growth for travelers. Again, this can only benefit the buy-to-let market if that is your primary objective for a Cyprus investment property.
Banks and Mortgages
It’s relatively easy to get a mortgage in Cyprus, and with mortgage rates in line with the EU, it’s become a great place to get your mortgage. Mortgage terms can be up to 90% of the LTV and payment terms can be up to 30 years.
Short term or long term?
I think the short-term “buy to sell” market has cooled down due to the number of developments currently on offer and the sheer volume of competing developers. In reality, this could lead to uncertain and unpredictable turbulence in the next year or two. On the other hand, this means that you can still score bargains if you do your homework before visiting Cyprus. For a medium to long term investment in a Cyprus property I really don’t think you can go wrong in South Cyprus. As a sun destination, there are very few markets as safe and attractive as this one.
As for the areas of Cyprus and the different types of property to invest in, I will cover this in a separate article.
