The property boom in Cyprus
by Michael M. Thomaides. Bsc CPM (Hons) Director, Thomaides Group Property World Issue 3
Cyprus is an island to watch. Located in the Eastern Mediterranean Sea, it has a population of 800,000, a warm pleasant climate, low cost of living and a skilled labour force. A safe place to live, raise a family and retire. Its legal system is based on that of Great Britain.
The Cypriot Economy has been opening up to foreign investment. Income tax has fallen from 20% to 10%. VAT stands at 15%. VAT on new property may soon be introduced which will cause price increases, a benefit to those who have already purchased here. The general trend is to follow the tried and tested model of Eire by having one of the lowest tax regimes in the EU.
World Economy and the European Unions' effect on the island. The Cypriot property market is small compared to others such as Spain. A young and vibrant market, it has seen increases of 10 -15% per annum over the past three years. It is also dynamic and reacts quickly to changes, but due to the lengthy building process demand for property is exceeding supply in many categories and regions of the Island.
Private investors and their effect on the market. Cypriots, British, Irish and other North Europeans have already seen the potential: Older and lower end priced properties have been swept off the market. As with any market, movement always starts at the bottom and works upwards to higher priced properties usually in line with rent increases. Rents will certainly go up with the increased influx of permanent and tourist traffic.
Corporate investors and their effect on the market. European companies are eyeing Cyprus' location as the far Eastern corner of the EU. Big towns such as Limassol, Larnaca & Nicosia will benefit, due to infrastructure, labour, schools etc. Cosmopolitan Limassol will be a preferred location, as many Europeans will opt for the seaside. The Cyprus Land Registry Office is an effective "Watch Dog" body which has been - and will continue to be - one of the major reasons why Cyprus property has been a successful and safe investment. Current property prices are reasonable and quality of properties extremely high. Cyprus has all the potential of becoming a secure business and pleasure destination, the european Switzerland of the Middle East.
