Updated Details of E.U. Membership

It is expected that once Cyprus becomes a member of the (May 2004) and with the inevitable removal of restrictions, it will cause a large influx of demand, causing local property values to increase.
At the moment, Cyprus has comparatively low property values in comparison with Spain/Portugal and therefore, there is plenty of room at the moment for Capital Appreciation and Profits in Cyprus Property Investment.

Where should one be directing its interest at the moment? In general lines we will say investment in:
a) Land near/on the beach
b) Land suitable for building plot division
c) Development of holiday homes for locals and foreigners
d) Investment in golf projects and commercial marinas where demand for both is very high

In addition to the Cyprus property market, foreign investors can use the island as a springboard for property investment in the nearby eastern countries. Lebanon is now experiencing a property boom with an active demand from the Arab world (the recent troubles apart), whereas countries such as Syria will present serious property investment opportunities in the near future. Of course this will depend on the political situation of the region which looks now as being a long term possibility.

What will change by joining the E.U.?

• Existing regulations restrict foreign buyers to one house and the acquisition of land having a maximum site area of 4014 sq.m. The regulations do not allow investment (other than house letting for periods of more than 30 days) and it excludes company residential purchases, no work permit granted for foreign people etc. As such the age groups who buy now, comprise of mainly older people seeking basically a retirement home, or short holidays.
• By joining the E.U. (after May 2004) most of the above restrictions will be lifted, which will mean that:
  • A foreigner can buy as much as he likes/can afford
  • Investors will be attracted, either individuals or companies
  • People who want to work/carry out business can do so
  • This will increase the demand by at least 100%, having a positive result on the property market.
• By joining the E.U. so will another 9 countries join with 70 million people with no <<sun and sea>> other than Malta. Cyprus will get its share of that new market also, although the lion share is expected to go to Spain and the more popular European countries. Still 70 million new people is approximately a 30% increase of the existing E.U. citizens.
• When Cyprus joins the E.U., as an immediate step, foreigners will be able to buy two housing units and corporations can also acquire a house for its director's etc. After a period of 5 years (May 2009) acquisitions of property will be completely free. Also by joining the E.U., E.U. citizens will be immediately allowed to work, set up local companies etc.
• Our own opinion is, that by joining the E.U., beach areas are expected to increase initially by approximately 50%, then (2-3 years after) by approximately 100%. Inland popular areas will increase initially by approximately 20% - 50%. Already there are signs of this fast increase happening in Paphos, where house prices have increased by 50% over the last 2 years, whereas beach property at the Limassol and the Famagusta regions have increased by 30%, with Larnaca (beach) increasing by approximately 35% plus.
• At present, returns (i.e. rents) on real estate, as a generality, show a level of 5% - 8% p.a., but considering the steady capital appreciation (for prudent acquisitions) of 5% - 10% p.a., it creates a total return of approximately 10% - 18% p.a. Oddly enough, Cyprus has never experienced a downturn of it's real estate and as such, this upward movement of values is expected to continue and at worst remain stable for a period. As such, investments in real estate have a limited/no risk (but for prudent purchases). For the reasons described, the Cyprus real estate market is highly recommended.