Why Cyprus - Why now?

Cyprus is such a beautiful island that you can’t help asking why the British haven’t taken to it before, but of course, they have.

After Spain, Cyprus is the second favourite destination for the Brits who not only love to holiday there, but love to retire there as well. It is the third largest island in the Mediterranean and with 340 days of sunshine a year, surprisingly, it has better weather than Spain.

The climate is particularly good, not just because of the incredibly mild winters (I have sunbathed in November), but because it is neither sticky nor humid. Even in January, daytime temperatures still reach 14 degrees centigrade and in summer you can expect the temperature to soar to well over 30 degrees. Spring and autumn are magical times with temperatures in the low twenties.

Not every one is a sun worshipper though and you only have to travel a short distance inland to find the cool breezes of the higher ground. The skiing in the mountains is also a major attraction and the season runs from January to March.

Cyprus is best known for being the mythical birthplace of Aphrodite, the Goddess of love and beauty. There is something for everyone here, whether you want beautiful sandy beaches, gloriously blue seas or prefer to go sightseeing in the hills and local towns.

Whilst the two main languages are Greek and Turkish, roughly half of the population speak English. Near the coast, and main tourist areas you will be hard pushed to find anyone who doesn’t speak fluent English.

Cyprus economy continues to grow.

The infrastructure and standard of living is very similar to the UK and economic activity is very strong. The economy generated around 4.4 billion in 2006 and this is expected to rise to 8.8 billion in 2016.

In 2006, 1.7 billion of this income came from tourism with around 2.6 million people visiting the island. 56 per cent of visitors come from the UK and tourist revenues were up by around 4 per cent this year. The hotel trade suffered though as more people chose to book their own flights and rent property rather than book a package holiday through a travel agent. Bad news for hotel owners but good news for property investors who saw prices rise by 15 per cent.

Many English people have retired to Cyprus but it is by no means “God’s waiting room”. On the contrary, a large proportion of the ex-patriots are young and fit and have moved to Cyprus simply to get a better life style than they can get in England. The schools and the hospitals are quite superb and put many English establishments to shame. The cost of living is low compared with England and eating out is a luxury that everyone can afford. Currently 60,000 Brits live in Cyprus.

Before I finish what is starting to sound like a holiday brochure, it is important to mention that crime is almost non-existent on the island.

Crime doesn't pay.

The police spend most of their time trying to catch you driving without a seatbelt, speeding, or using your mobile without a hands-free device. Whilst a crime free environment is taken for granted by the Cyprus people, any UK investor is well aware of the real cost of crime in terms of lost revenues and unnecessary expenditure. Crime costs money and there are plenty of investment areas around the world where both rents and capital gains are kept down by theft and vandalism. In some countries investment properties have become worthless as the drugs culture has taken over entire towns.

A low crime rate is just one more reason why people like to visit and live in Cyprus.

How Cyprus compares with other investment opportunities

Supply and demand

Supply and demand have always been fundamental to any investment strategy. In the property market the ideal scenario for maximum capital gain is under-supply and excess demand. In Cyprus there is a shortage of good building land and this is now having a major impact on prices.

Sensible planning will ensure Cyprus does not turn into the sort of concrete jungle we have seen sprout up in many other countries. In many parts of the world there is little in the way of planning or building restrictions, but this is not true in Cyprus where the percentage of land that can actually be built on is carefully controlled. Also in Cyprus the building height is normally restricted to only two stories which maintains the aesthetics and also reduces the chances of you ever losing your view. Each development is given a “percentage build” by the planning department that determines how much stays green and how much can be built on. If you wonder why some properties cost more than others there are some factors you should consider:
Location – still a major factor and falls into two categories;

Proximity to facilities.

Distance from the beach. If you can walk to the beach you can expect to pay a premium as good land plots are becoming harder to find on the island.

Build density. If the build density is restricted to, say 40%, the property price will be higher because the developer cannot spread the cost of land over as many properties as, say, a 70% build.

Views – a good sea view always adds to the purchase price.

Extras – does the price include air conditioning and white goods for the kitchen?

Other factors that affect price include build quality, swimming pools, and obviously the size of the property, both internal and external balconies and sun-terraces. Becareful with the measurements that you are given by the developer as some include balconies and even common areas in their sizes.

Developers are finding it extremely difficult to get building plots these days and when a plot does come along competition ensures it achieves the highest possible price. This is what investors need to hear if their investments are to achieve the best possible capital gains. It is harder to make money when there are developments exactly the same as yours springing up all over the place.

Minimal downside – maximum upside

The other major challenge facing property investors is being able to find an area that is sufficiently developed so as not to be a major risk, but at the same time offering the opportunity for a major uplift in capital value. The secret is to get in early, but not too early. You don’t want to wait ten years for the motorways, airports and drainage systems to be put in place. Your tenants want those things now, and so do you if you intend to use your investment property as a family holiday home as well.

This is where Cyprus scores so highly. The government is pouring millions of pounds into the area and many of the results are clear the moment you land. The motorway infrastructure and quality of the roads is superb. In all of my visits, whether I am travelling on the motorways or on the A-roads I have never experienced traffic delays or congestion. The hardest thing is to keep to the speed limits when the roads are so clear.

The International Airport at Larnaca is about to be improved and even as I write work has already started on a new airport that will be build right along side the existing one. The cost is a staggering 350 million and the project will be complete in just over one years time. Paphos airport on the west side of the island is also undergoing a huge expansion programme which is also due to complete in one years time.

Future growth statistics look good for investors.

The number of people moving to Cyprus is increasing year on year. At the moment 1.2 million people live on the island. This is the perfect “supply versus demand” scenario that investors love. Demand on the increase and a shortage on the supply side should reward investors handsomely for their efforts.

The Cyprus government is investing heavily in both the infrastructure and the aesthetics of the island. Where else would you find state of the art concrete step-barrier on motorway central reservations that have been planted with mile after mile of brightly coloured herbaceous borders?

If that is not enough the best is still to come.

In my favourite part of the island, the area around Paralimni, on the South East side corner, there are plans to build two new marinas and two new golf courses. I have been in property investment long enough to know that golf courses and marinas do as much for property prices as cheap flights.

The only difference is, golf courses and marinas attract people with money.”

This short extract is from a report called “1.000 hours due diligence on Cyprus” by Barry Tyler. If you are interested in reading the rest of this report then click below to learn more.

1.000 hours due diligence on Cyprus