Conflict Resolution

Cyprus Resolution Opportunity Brings Surging Investment in Rental Property

Matt Gammie asked:

Why invest in North Cyprus property? What distinguishes the property market there against more traditional locations for people to make investments in rental property, places like, for example, the well established tourist hot-spots of South France and the Costa del Sol?

The answer is simple – North Cyprus is Europe’s most lucrative, emerging property market for those who get their timing right and act quickly.

Property prices are, for the moment at least, nowhere near those in the South of the island and even lower than those in other countries with similar appeal to tourists and second home owners. The sole reason for this is the separation between the Turkish Cypriot north side of the island and the Greek Cypriot south side of the island which has existed since 1974.

The partition has prevented certain aspects of growth in the North, most importantly the ability of North Cyprus to trade directly with the EU (all freight has to go via Turkey first, and only since 2004 has the Green Line Mechanism – which allows North Cyprus to export goods to the south – been in place). The fact that there are no direct flights to the North – again, all flights have to touch down in Turkey – has meant that up until the opening up of the border in the last few years the tourist trade in the North has been underdeveloped compared to that in the south. However, since tourists can now fly to the south and simply cross over into the North the tourist trade has started to grow, as have relevant property prices.

Indeed, the effect that allowing tourists to cross into the North has had on property prices gives some taste as to the boom that will follow full reunification. The increase in values which ran parallel to the failed Annan plan of 2004 sets a precedent for what is happening now – prices are rising rapidly in line with the revived reunification talks.

There are multiple reasons for being optimistic about this current round of talks, and that optimism is already being translated into economic action in the North Cyprus property market, with single investors and property developers placing their money in North Cyprus, either in properties or land development.

The International Crises Group (ICG), one of, if not the, most well respected NGO Think Tanks in the world, conveyed the overwhelming spirit – both international and domestic to the island – in their June report called “Reunifying Cyprus: The Best Chance Yet.”

In addition, the organisation’s latest 12 page monthly report, CrisesWatch September, Cyprus is now listed as a Conflict Resolution Opportunity, a striking step forward which represents the shift in will that followed Christofias’ election victory in February.

North Cyprus shares the idyllic climate and embracing culture that has made the South such a popular destination for tourists as well as for investment in rental property. With the warmest sea temperatures in the Mediterranean, and unspoiled countryside that arguably outstrips that in the South, reunification will bring with it a huge increase in tourism, and for this reason developers and individual investors alike are giving the progressive attitudes of both leaders their full blessing.

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