Euro Fuels Cyprus Property Boom

Increased interest in Cypriot property listed on TheMoveChannel.com has pushed the holiday hotspot up 3 places to break into the Top of the Props Top 5! Here we investigate just why there is so much interest in Cypriot property at present...

With its unique blend of climate, culture and clubbing, Cyprus is one of the most popular tourist destinations in the Mediterranean. From the stillness of Ruins of Salamis to the commotion of the Ayia Napa night clubs, the Mediterranean’s 3rd largest island throngs with visitors every year, drawn to its many varied attractions.

With Euro membership just around the corner and property prices rising month-on-month this year, foreign interest in Cypriot property is showing no signs of cooling, as reflected in the movements in this month’s Top of the Props chart. An increase in the number of enquiries about Cypriot properties listed on TheMoveChannel.com over the last month has given Cyprus a leg up 3 places to break into the exclusive Top the Props Top 5.

The Top of the Props chart reflects the share of overall monthly enquiries to TheMoveChannel.com each country receives.

Airline investment to bump up tourist numbers

With its wealth of heritage sites, perfect climate, blue flag beaches and buzzing nightlife, Cyprus attracts over 2.4 m tourists annually. This crucial industry brings in more than £1.3 billion a year, contributing around 15% of the island’s GDP.

The issue of air travel is critical for further tourist development in Cyprus. Panos Englezos, Chairman of the Cyprus Tourism Organisation (CTO), recently stated that new budget airline routes have resulted in a “significant increase of arrivals from Greece, Russia and Scandinavia.” Mr Englezos has affirmed his commitment to increasing the number of budget carriers operating routes to the island.

In June, Cypriot President Tassos Papadopoulos promised to back the further expansion of the country’s tourism industry. Speaking at the opening ceremony of the Hoteliers’ Pancyprian General Assembly in Nicosia, he said, “The government, evaluating correctly the decisive significance of tourism to the economic development of the island and the people’s welfare, maintains in its priority, interests and aims, the continued upgrading of this key sector.” The upgrading of Larnaca and Paphos airports is due to be completed by the end of 2009.

Euro announcement sparks investor interest

With English widely spoken, a legal system based on English law, a stable economy and low mortgage rates, Cyprus is a popular place for Britons to own homes abroad. According to the Cypriot Land Registry, 12,000 of us have already made the move and now own homes on island.

George Lacey of Lacey & Co. commented: "As prices have risen in Spain and other Mediterranean areas, Cyprus has become increasingly popular, especially with British buyers. Prices in Cyprus are still very reasonable in comparison to Spain and Portugal, with countryside restoration properties available from around £50.000. If you throw in the ideal climate, the fact that English is widely spoken and the country's excellent health care system, Cyprus is an ideal place for Brits to buy abroad."

Cyprus is in the middle of a housing boom at present. According to Financial Mirror calculations, the BuySell Home Price Index has risen on average by 9.3% year-on-year so far this year, compared with 5.9% for the whole of 2006, suggesting Cypriot house price growth is actually accelerating. Factors cited to explain this trend include July’s EU announcement that Cyprus will adopt the Euro in January 2008, a decrease in local interest rates, a lack of Cypriot housing supply and a rush by investors to beat the imposition of 15% VAT on land purchases from 1 January 2008.

Mark Bodega, Marketing Director at currency specialist HiFX, commented: “Since it was announced that Cyprus would adopt the Euro in January 08, we’ve seen interest in Cyprus almost double. Our figures show, that whilst the numbers of Brits buying holiday homes in Cyprus has remained relatively static, this increase is largely due to an increase in investors. It seems that whilst the Cypriot Pound has effectively been fixed against the Euro for the past two years or more, this recent announcement confirms the island’s economic maturity and the promise of a share in the spoils of the recently improved EU-wide growth story.”

However, Simon Tweddle of PropertySecrets.net urged caution, saying “I think over the next year or two we will see prices continue to rise at around 20% per annum, though investors must be careful that they only buy into quality developments and avoid areas that are in danger of becoming oversold, to protect their rental and resale strategy. Overall the long term prospects for property prices are healthy in Cyprus and the country makes an excellent location for second home buyers.”

Other risers and fallers in this month’s Top of the Props chart

This month’s highest climber was Sweden, rising 22 places to reach 13th place. Other high risers included Slovakia and Hungary (up 10 places to 20th and 19th place respectively), Panama (up 9 to 18th) and Egypt (up 8 to 10th).

Countries which fared less well this month included New Zealand (falling 20 places to 33rd), South Africa (down 12 to 29th) and Czech Republic (down 10 to 24th).