Where next to invest? We profile the world’s top property hotspots, detailing everything an investor needs to know.
Up 2.8% y-o-y (Cyprus, Q4 2016, Eurostat)
4.5% yield (Paphos, Numbeo)
Sales up 78% y-o-y (Cyprus, March 2017, Department of Lands and Surveys)
Where is it?
The third largest island in the Mediterranean, Cyprus sits off the coast of Turkey and acts as a gateway to the Eurozone for China, Russia and other non-EU countries. The country’s position between Asia and Europe, as well as its warm Mediterranean climate, have established it as a major destination for holidaymakers, those looking to move overseas and investors alike. Divided into two, with Turkey in the north and the Republic of Cyprus in the south, the southern half of the country has traditionally proven most popular among expats and retirees, while hotspots such as Paphos, on the south coast, have become highly sought-after among investors due to the potential for rental income.
Who lives there?
Historically, Greek and Turkish Cypriots have been the predominant national groups on the island, but there are sizeable groups of British expats, Romanians and Bulgarians, as well as Russians, Filipinos and other nationalities. In recent years, the number of Chinese buyers of Cypriot property has also increased, although not all of those are necessarily living on the island.
Cyprus was hit hard by the recession in 2008 and has taken a long time to recover. Now, though, there are signs of stability and turnaround, fuelling an improvement in sentiment among investors, sellers and industry experts. If there were a time to invest in Cypriot, anticipating a stronger recovery on the horizon, 2017 may well be it.
Underpinning that positive sentiment is the bottoming out of property values across the country. According to the Cyprus Central Bank, house prices climbed in the third quarter of 2016 for the first time since 2009, while official figures from Eurostat show that values rose by 2.8 per cent across 2016, below the EU average of 4.7 per cent but a marked reversal after a sustained period of price decreases.
According to data from RICS, Paphos led that house price growth with values up 1.77 per cent. Indeed, price growth is being driven by demand for property, both from domestic buyers and international investors, and Paphos remains one of the most popular targets for overseas buyers, thanks to its status as a tourist hotspot. In April 2017, tourist arrivals in Cyprus rose 26.9 per cent year-on-year, emphasising the island’s ongoing appeal to foreign visitors, the same appeal that also fuels holiday home purchases.
The latest figures from the Department for Land and Surveys shows that national property sales rose 16 per cent year-on-year in March 2017, with Paphos leading the way: the area saw transactions surge 53 per cent annually, ahead of Famagusta (21 per cent) and Limassol (18 per cent). Foreign sales jumped 78 per cent in Paphos year-on-year, ahead of Famagusta (33 per cent) and Limassol (8 per cent).
While the latter has become the most active sector of the Cypriot construction industry, fuelled by its new marina development, Paphos remains one of Cyprus’ crown jewels. In the years following the financial crisis, Chinese investors, a key driver of construction activity, specifically turned to Paphos, with the market jumping 40 per cent year-on-year in 2016.
Overall, according to the Cyprus Statistical Service, construction of Cypriot homes jumped 55 per cent last year, a promising indicator that the market continues to recover, helping to boost confidence among agents and buyers.
On TheMoveChannel.com, investor interest in Cypriot real estate has notably increased in the last six months. While the final months of 2016 saw interest fuelled by the end of a Capital Gains Tax and transfer fees incentive, one of the main reasons demand is rising in 2017 is the island’s Golden Visa scheme. It offers citizenship to non-EU buyers who spend at least €2 million, a figure designed to target wealthy buyers from China and other non-EU countries. On its own, that incentive is enough to spark interest from foreign investors. In addition to the island’s lifestyle appeal, recovering prices, rising construction and steadily improving sales, it is the icing on a cake that is gradually coming back into fashion.
One of the key groups of investors in Cypriot property are high-net-worth individuals from China, drawn by the country’s Golden Visa scheme. While they are the favourite of developers looking to sell their new projects, Russian buyers remain a historical force to be reckoned with, while British and American buyers seeking a sunny, Mediterranean holiday home can never be discounted altogether, particularly with the strength of the US dollar against the euro.
“Recovering prices, rising construction and steadily improving sales all serve as a reminder why Cyprus’ timeless lifestyle appeal is as strong as ever.”
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