Cyprus - Property & Tourism

Property Market

EU accession had a very positive influence on the development of the Cypriot property market. Pre-accession property prices grew by 10-15% on average and in the post accession period they grew 25-30% (or at an averaged rate of 15-20% over the last five years). The property market is forecast to remain strong in the next few years due to Cyprus’ adoption of the Euro in 2008, the strength of the economy, falling interest rates and a continued demand from retirees and second home buyers.

Cyprus is benefiting from a “substitution effect” with Spain and other more mature property markets. Property prices are no longer cheap, but are still around 30% cheaper than prices in Spain, Southern France and Italy. Cyprus’ main advantage is that it attracts all types of buyers – investors, retirees and families of many different nationalities. Due to the island’s strict planning and building regulations, the supply of properties remain limited. This protects the property market from over-supply which is a risk in some other markets. The Cyprus property market is also benefiting from the uncertainty surrounding the UK market and has benefited from the substitution effect of UK investors seeking growth and income in a market at a different stage of the property cycle.

UK investors in particular are attracted to Cyprus because they understand the robust English-based legal and banking systems as well as English being widely spoken. It is almost a “home from home”, with Marks and Spencer, Debenhams, Next and many others providing services to the large retirement and second home communities.

Tourism

Cyprus has established itself as a well-known tourist destination. Every year about 2.4 million tourists visit this country - which is three times the island’s total population! The British account for over 56% of visitors, while the majority of other arrivals come from Germany, Greece, Sweden, Russia and Norway. Tourism is an important source of income for Cyprus and plays a significant role in the country’s economy. In 2005 tourism revenues were CYP 1,005.7 million (£1212.5 million), accounting for 13% of GDP.

The government is implementing new plans to further increase the number of visitors. Cyprus already has a highly developed infrastructure but new projects are on the way. The two international airports at Larnaca and Paphos are being expanded at a cost of €500m to increase the capacity to over 7.5 million passengers a year. The projects will be completed by 2009. In addition the Cyprus government has drawn up proposals to create new golf courses throughout Cyprus , with the aim of attracting a better class of tourists and to put an end to the chronic problem of seasonality.