We've read the horror stories and seen reports of bewildered British citizens dragged through high profile court cases as a result of imprudently buying property in Northern Cyprus. The Turkish Republic of Northern Cyprus is not formally recognised as a state by any member of the international community except Turkey, so the dangers are clearly there, yet it is estimated that around 6,000 Brits are living in Northern Cyprus, with many more still flocking to buy property. Why are people still risking it?
"The property is cheap in the north of Cyprus," says Pauline Gallagher, director of property agents Halcyon. "It's that simple. But you really have to ask yourself why it's so cheap - and the answer is that you may not be paying for the land your property is on. If it belonged to a Greek Cypriot before the invasion in 1974, you could find yourself having to pay a compensation claim or losing the property."
Unification now seems more likely than ever, with the election last week of a pro-unification Turkish Cypriot President, Mehmet Ali Talat, but property rights will remain a major sticking point in any settlement agreement.
Though somewhat overshadowed by publicity surrounding its controversial northern neighbour, the Republic of Cyprus (southern Cyprus) still offers a strong property market with something for virtually every taste and wallet. Admittedly the days of snapping up a home for £50,000 are over, as are the years of 40 per cent annual price rises, yet more and more agents are beginning to sell property in southern Cyprus as the market flattens elsewhere in Europe.
"I like to describe it as a safe market," says Gallagher. "It's always going to be popular with Brits because of our links with the island as well as the wonderful climate and scenery. There is a strong domestic market too. You can expect steady growth and a good return on your investment. You do have to be selective, though. It won't pay to buy the cheapest property because your rental yield and capital appreciation will suffer."
Though it is widely acknowledged that the property price boom is over, agents in the Republic of Cyprus are confident that prices will retain a healthy eight to ten per cent annual growth and a good rental market will continue with a season lasting some eight months from April to November. Much of this growth is being staked on young people and families from all over Europe choosing Cyprus as a place to live and work - an option made available to them upon its accession to the EU on 1 May 2004. Tax breaks and a high quality of life are pulling in businesses and self-starters. Cyprus is no longer the preserve of the retiree and holiday maker.
Despite this shifting market, favoured destinations remain largely unchanged. Paphos and the stretch of coastline up to quiet and picturesque Peyia have always been a favourite with tourists and homebuyers alike. Paphos, with its bars, restaurants and lovely harbour, boomed first. The town has some of the highest property prices on the island - though of course returns match this. While a well-positioned two bedroom apartment with a communal pool might cost CYP80,000 (£93,400), it could achieve a rent of around CYP300 (£350) a week for much of the year. If all goes to plan, capital appreciation should run at around 15 per cent.
Confidence is high at Peter Stephenson Properties where all homes at their latest development, an eight-minute drive from Paphos, are being sold at around half their market value in return for allowing the developer to rent them out for six months annually for the first 10 years. The 74 one-, two- and three- bedroom townhouses will have a communal pool and roof gardens, prices start from CYP34,950 (£40,800).
Larnaca and Limassol are two other important areas for buyers. Larnaca is the cheaper of the two with two- bedroom apartments available from around £65,000 and small villas with pools from £100,000. The city is a Cypriot business town - albeit one with an attractive sea front and an international airport. Proposals to improve the marina and build a golf course could change the place significantly however and send property prices in certain districts through the roof, at least in the short term. Halcyon is selling one and two bedroom apartments at nearby small complexes. Royal Gardens, Regal Gardens and Helen of Troy boast communal pools, tennis courts and prices from CYP58,000 (£67,800).
Limassol, too, has a beachfront and a bustling town, though it's a little pricier than Larnaca. Antonis Loizou & Associates are offering a luxury two- bed apartment situated in a prestigious elevated beachfront location for CYP120,000 (£140,000). For those with a smaller budget, a second-floor studio apartment a little further back but within a short walk of the beach is yours for just CYP35,000 (£40,800).
Head to the villages just outside these major towns for a unique, historic stone house. You may have to pay a premium and rentals won't be so good, but capital appreciation should be in line with the rest of the island. In the village of Maroni, Halcyon is selling a converted 150-year-old Olive Mill for CYP185,000 (£215,800), with exposed beams and stone floors, three double bedrooms, a walled courtyard with swimming pool.
Why buy in the south?
Capital appreciation is estimated to be around 8 to 10 per cent in coming years - a healthy return on an investment.
Rental opportunities are good with the season extending from April to October
A wide selection of property is available offering very good value for money
It's a cheap and relatively risk free buying process
British links with the island can make life very easy for us on Cyprus. There is a familiar infrastructure - they even drive on the left.
Southern Cyprus enjoys a low cost of living, high quality of life
Easy access - lots of budget airlines do regular flights. Flight time is around three-and-a-half hours from the UK
Cyprus offers tempting tax incentives for foreigners. Income tax is low (charged at just 5 per cent on pensions) and there is no wealth, inheritance of gift tax. You will need to make sure you don't get charged in the UK however.
Four to view
A lovely three-bedroom traditional village house in Vouni - approximately 35km north west of Limassol. The house has been totally renovated, keeping many original features. CYP150,000 (£175,160).
Antonis Loizou & Associates (freephone 0800 0326203; www.aloizou.com.cy)
Just north-east of Paphos in Amargeti village, this traditional Cypriot one bedroom stone house is in need of renovation. The covered area is 40sq m and the plot size is 138 sq m. CYP47,000 (£54,900).
Halcyon Properties (01323 891639 or freephone 0800 389 1242; www.halcyon-properties.co.uk
A three-bedroom luxury villa with private pool at Aphrodite Hills near Paphos. The five-star development is set in over 578 acres surrounded by protected forest. Amenities include world-class golf, spa and tennis academy. CYP608,500 (£709,600)
Peter Stephenson Properties (00357 99 573545; www.peterstephenson.net)
In pretty Chlorakas, around five minutes from the beach, a large four-bedroom, three-bathroom villa is available. The property covers around 300sq m and has an extra large pool. CY390,000 (£454,900). Peter Stephenson Properties.
Aphrodite Hills (00357 25 828000; www.aphroditehills.com)
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