Cyprus property returns could be 100%

Tuesday, 22 November 2005 12:00 AM

A new international airport in southern Cyprus is one of a number of developments making the region more attractive for property investors.

The airport, with facilities to cater for 2.7 million passengers and due to be completed in 2008, is expected to result in a large increase in tourism to southern Cyprus, reports property investment firm Assetz.

This is expected to inject about £1 billion in foreign currency into the local economy and consequently drive up property prices.

"There is no doubt that tourism in southern Cyprus will increase dramatically when the new airport opens for business, presenting excellent opportunities for property investors who buy early," said Assetz managing director Stuart Law.

According to Assetz, prices are still considerably lower than France or Spain, with a three-bedroom detached villa with a private pool costing about £250,000 in Cyprus. For the same price, buyers would be able to get a large two-bedroom apartment in the south of France.

Assetz predicts growth of 15 per cent in capital terms next year, while high rental yields mean plenty of profit on rental income after mortgage costs. It says return on cash for canny investors with good mortgages in place could be as high as 100 per cent or more in 2006.

"Prices rose by 18 per cent in 2004 and are set to rocket further with entry to the Euro beckoning in 2007/8 and the expected increase in investment and tourism," Mr Law added.

"An average of 340 days of sunshine per year and a strong letting season from April to October inclusive ensures the rental market in Cyprus is year-round, producing gross rental yields of eight to 12 per cent."

Meanwhile, investors considering purchasing property in northern Cyprus are being urged to exercise caution and conduct thorough research into the ownership of the land it is built on.

The National Association of Estate Agents (NAEA) says those buying property originally belonging to Greek Cypriots, but now situated in the area of Cyprus under Turkish occupation could be violating the Greek owners' legal rights.

This could lead to the purchase of the property suffering financial loss.

"Having worked in Cyprus for more than 12 years, I have become increasingly concerned at the number of UK companies now wanting to sell property in the Turkish occupied zone," said the NAEA's Pauline Gallagher.

"Most of the developed land is still owned by Greek Cypriots, according to the courts, and this means Greek people still have the legal right to it and are entitled to take legal measures should anyone take advantage of their property."

Several cases have been filed before courts in the Republic of Cyprus and the European Court of Human Rights (ECHR). The ECHR has adjudicated on one case, finding in favour of the Greek Cypriot.

In another case, Ms Gallagher explained: "One British couple who bought property in occupied Cyprus were recently ordered by the Nicosia Court to pay compensation, demolish their home and return to its rightful owner. This is a situation that should never have arisen."

Ian Tonge, chairman of the NAEA's international committee added: "Any company or agent planning to sell or currently selling in northern Cyprus should ask themselves whether they are happy to market such properties, knowing they are exposing their buyers to such potential risks."

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