Property in Cyprus a Bad Short Term Investment Decision

With the likes of Assetz and HolidayLettings positively promoting the property investment potential in Southern Cyprus - with the former predicting up to 10% average growth across the board in 2007 and the latter determined that property in Cyprus offers a quick return on investment - we’ve been forced to add our voice to the argument simply because we cannot agree with these predictions and honestly feel that property in Cyprus makes for a bad short term investment decision.

Houses prices in Southern Cyprus actually dropped in value during two of the most important buying quarters in 2006 with a surplus of supply and a deficit of demand negatively affecting the graphs that plot median house price gains.  Going in to 2007 and the Greek Cypriots have stepped up their vociferous campaign against a lasting and peaceful settlement with Northern Cyprus again and have upset the UN and the EU as a result, and when you add to this the emergence of so many other stunning summer holiday destinations offering cheap and shorter haul flights, cheaper property prices and growing tourism numbers it should be no surprise that property in Cyprus is not going to boom dramatically in 2007.

Those positively promoting property in Cyprus as an excellent investment choice cite among other things, the fact that Cyprus is planning to adopt the Euro in 2008 and that as a result borrowing will become cheaper as interest rates will fall – thus allowing more locals increased buying power and leading to a surge in demand for properties for sale from 2008 onwards.  Presumably the thinking is that if you buy ahead of this predicted surge in interest you can resell whatever you buy in 2007 in 2008 and reap the financial rewards accordingly.

But there are actually no solid foundations to base this assumption on.  Firstly an investor who buys today is buying in a marketplace where property prices are on a par with those in Spain and France which are both far shorter haul destinations for the Brits who make up the majority of an investor’s target audience whether he be buying to let or buying with the aim of reselling for capital gains in the short term.  Secondly, as stated house prices have been falling in Southern Cyprus as tourism numbers dwindle in the face of the nation’s stiff competition from emerging summer holiday destinations such as Turkey and Croatia. 

As tourism revenue has dropped so have house sales and Cyprus has done nothing so far to try and reverse this trend as far as we can see. 

Anyone who has holidayed in Southern Cyprus recently will realise just how expensive the most popular resorts have become, competition for business hasn’t led hoteliers and landlords to lower prices or raise standards for example, rather they all agree seasonal price increases collectively…so why will more tourists come and fuel the demand for short term rentals or even become tomorrow’s holiday home buyer?  And where is the logic in the statement from HolidayLettings that ‘tourism will increase as and when Turkey is forced to open ports and airports to direct Cypriot traffic’?  Because holidaymakers from Turkey naturally prefer to stay in the Turkish Republic of Northern Cyprus and as far as we know Turkey will never be a major transfer destination for tourism traffic finding its way from Northern Europe to Cyprus – surely that all flies direct or has an easier transfer route via Athens?.

Furthermore, the argument that the buying public in 2008 will actually be largely local citizens is incorrect – Cypriot families generally provide accommodation solutions for each other and homes are passed down through the generations and new family homes are constructed on land owned by other family members….there is a very different property marketplace that local Cypriots are a part of and they will not fuel a property boom in Cyprus following the nation’s adoption of the euro.

Those who are determined to invest in property in Cyprus need to be keenly aware that as a short term investment choice theirs is not great!  For long term yields and a slowly accruing return on investment in the form of capital appreciation then yes, property in Cyprus can be seen as a worthwhile choice – but only for those who are likely to get benefit from the property occasionally as well otherwise such an investment choice will be an incredibly expensive, difficult to manage asset.

Special Reports: Property News for Cyprus

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Property investment in Cyprus: A comprehensive look at the property investment and real estate market in Cyprus and its growth potential.

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Cyprus Property Investment Guide
The immediate potential for impressive capital growth and strong rental yields makes Cyprus an unrivalled investment property hotspot.