If you are looking to invest in a secure and strong property market, then if you do your homework you can’t really go wrong with a Cyprus investment property. There are many things to consider when investing in property, such as capital growth, mortgage rates, rent-ability, accessibility, the weather, and so on. This article discusses the reasons why I think Southern Cyprus is an excellent property investment opportunity. On the contrary, I think Northern Cyprus is not a safe investment, but I’ll discuss this one in a later article!
There are approximately 340 days of sunshine a year in Cyprus, where the tourists and the locals can enjoy basking in the sun. When the weather in the neighboring countries is getting cold, Cyprus is still warm and sunny. If you buy a property and your main aim is rental, then an all-year-round rental season is a huge bonus, especially with more and more holiday makers looking for winter sun.
The Law and Taxes
Cyprus is a very British island and has adopted many of the English common laws. Not only are the laws very similar to the UK, but the locals also speak very good English as this is their adopted second language. For this reason, there is a large amount of British buyers, many of whom buy a 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, the 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. On top of this, a new VAT rate was of 20% was added to new build property where planning permission was not granted before the law came into affect. Previously VAT was 0%, so together these factors caused a large influx of investors.
As of the 1st January 2008 Cyprus will also adopt the Euro single currency. These changes to the Cyprus investment property market will surely mean longer term security for your hard earned money.
A Shortage of Land 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 amount of new builds will decrease and the amount of re-sales will increase, proving that getting into the market early should show some strong capital gains in 5+ years.
The first budget flights from the UK were launched this year, indicating a much stronger and predict growth for travellers. Again, this can only benefit the buy-to-let market if that is your main goal for a Cyprus investment property.
Banks and Mortgages
It is relatively simple to get a mortgage in Cyprus, and with mortgage rates falling inline with the EU it has become a great place to arrange your mortgage. Mortgage terms can be up to 90% of the LTV and repayment 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 shear volume of developers in competition. This could actually bring on uncertain and unpredictable turbulence in the next year or two. On the other hand, this means you can still pick-up bargains if you do your homework before visiting Cyprus. For a medium to long term investment in Cyprus property, I really don’t think you can go wrong within Southern 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 a separate article.