Buying overseas: An escape from the slump
Away from the big resorts, the small villages of southern and northern Cyprus are bucking Europe's slowdown. Laura Latham reports
Tuesday 15 April 2008
Ayia Napa has a lot to answer for. Like its neighbouring resorts of Paphos and Limassol, the Ibiza-style party capital may be a major draw for the 2.5 million tourists who visit Cyprus each year, but it doesn't exactly wave the flag for the quieter charms of the island. For away from the package-tour crowds, the villages, beaches, lush mountains and historic sites are a very different proposition for those seeking attractive, affordable homes. And there's a convincing case for investors, too.
It looks as though the island may buck the current trend for falling house prices. Capital appreciation was almost 20 per cent in 2007, one of the highest in Europe. According to the recent Royal Institute of Chartered Surveyors' annual report on the European housing market, Cyprus exhibited "a rare case of shrugging off the gloom".
This upward trend was attributed to the island's recent switch to the euro and an increase in the number of overseas buyers. In addition, the report showed little evidence of any immediate slowdown for the Cypriot economy, only warning that high demand might lead to overdevelopment in the big resorts.
Pauline Bonanni of Select Resorts says many buyers strive to own in busy coastal locations, but when asked if some areas could be considered overdeveloped, she says: "Some people think so but they are still very popular places in which to own property. And you don't have to live in the centre to enjoy what these towns have to offer. There are lots of nice villages and attractive properties in the surrounding locality."
Prices certainly have jumped on the south coast. Four years ago, £60,000 to £80,000 would have got you a decent two-bed apartment near the beach, now such property in popular resorts averages around £180,000 to £200,000, with villas costing from around £300,000. To find cheaper homes you'll need to move inland, where you can find one-bedroom new-builds for around £100,000.
There is, however, a quieter, more traditional side to Cyprus and for that you need to head towards the villages dotted around the wider countryside or in the Troodos Mountains. Here you'll find small, rustic properties in need of restoration, and attractive detached villas.
"Older and non-resort properties are generally found in rural areas towards the mountains, they are rarer in towns," says Litsa Chrysostomou of local specialist BuySell Cyprus. Chrysostomou says good locations to find such properties include the villages of Arsos and Kellaki in the Limassol district and Omodos in the Troodos Mountains.
For buyers who want to be near the city, Chrysostomou recommends the Pera Orinis district on the outskirts of the capital Nicosia. "Prices of older homes vary widely from £55,000 to over £270,000, depending on the size and condition of the property."
But if it's affordable coastal properties you're after, you may consider buying in the northern, Turkish part of the island. This area has been the subject of bitter political wrangling since the division of the island in 1974, when Greek Cypriots were forced from their homes.
But despite the political situation, Northern Cyprus has thrived. Capital appreciation is running at around 15 to 20 per cent per annum, infrastructure and facilities are generally good and it's seeing increased tourism.
In and around towns such as the historic harbour of Kyrenia or resort of Alsancak, new one- and two-bedroom apartments can be found from as little as £30,000, with family-size villas starting at between £60,000 and £100,000. Select Resorts is selling a development on the coast at Esentepe, in which three-bed villas start from £95,000.
Older homes can be found in the north but much Greek-owned property was appropriated by Turkish residents in 1974. Therefore, some homes may not be legally available for sale and you need to be sure that any purchase has watertight documentation proving ownership.
Should the island ever be reunified, the northern sector would undoubtedly take off in the same way as the south already has. And, with its current economic potential, Cyprus and its residents really could be sitting pretty.
*Non-resident EU citizens can own only one property in Cyprus but from 2009 the law is set to change to allow unrestricted purchases.
*In North Cyprus only buy property with title deeds dated before 1974 or those that have been given to the vendor as part of the land exchange scheme, in which title was transferred from the original owner.
*Buying through a developer with a solid track record is generally more secure than a private purchase in North Cyprus due to land ownership issues, but always get an independent lawyer to check titles before purchase.
*Retirees only pay 5 per cent tax on their pension income and there is no inheritance tax in Cyprus.
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