After EU accession, Cyprus is no longer just another tourist destination offering sandy beaches and fun. It’s becoming the home, work place, business destination, retirement place for more than half a billion people coming from all over Europe.
Furthermore, the government introduced a 15 % VAT on property purchases in accordance with the “acquis communautaire”. All these lead to one and only conclusion - property prices are only going one way and that is up!
Until now, a foreigner was allowed to buy as much property as she/he wants, but was only allowed to transfer one house or one plot of land up to 4,000 sq.m to her / his own name. But now most restrictions to foreigner buyers are lifted which will lead to an increase in demand by 50-100% and generate an increase in both sale and rental prices. Louis Constantinou, with his more than 30 years experience in the real estate industry, believes that property prices could rise by more than 50 %.
“Until now, there was a rush to buy before EU accession and VAT introduction. But freedom of movement after EU, will further increase demand for real estate. Once restrictions are lifted we will have a new wave of buyers coming here to live, work, invest or retire. That’s millions of people coming to a small island with limited land resources!” added Louis.
Jacob Clein, another real estate expert, agrees with Louis’ assessment. “Prices will only go up. Cyprus is becoming a top destination for retirement, investment, working and living. EU citizens prefer Cyprus to other countries because they find it safer and friendlier. There is a big interest on new properties. The relatively low taxation and low cost of living in Cyprus has also an added appeal for potential buyers, offering a full, but comparatively inexpensive lifestyle. ” he added.
All these will for sure increase demand for properties in Cyprus. But what else could push up the prices even more?
VAT on land is definitely another factor. Cyprus has a transitional period until 2008 before imposing VAT on land and when this applies property prices are expected to go up by at least 5% only because of that.
Joining the Eurozone (adapt the Euro as a currency) is also another factor that will contribute towards an increase of demand since interest rates will fall. This will have a dual effect. On one hand mortgages will be cheaper and buy to let investments will have much better returns than today. On the other hand depositing money in the banks will stop being a good investment and people with a lot of cash will be looking for property investments in order to get a better return on their money.
So what does all these mean? Prices will increase gradually, at least by 50 % by 2008. The future remains to be seen but what we know for sure is that now the prices of real estate in Cyprus are going up fast and will continue going up even faster for sometime to come. So if you are considering to buy a property my advice would be to first do your own research and then find a reliable consultant to assist you in minimizing any risks of a price stabilization.
Always, keep in mind that the best investment are properties on or near the beach. Demand for these properties is very high, yielding both high resale values and high rental returns.
For more news on Cyprus Property please visit http://www.cyprus-online.com/buy-sell/cyprus-news.html
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