Cyprus Property and the Euro Effect

There’s a lot of chatter in the media at the moment about whether or not the property market in Cyprus is going to further boom following the adoption of the Euro or decline in terms of investor activity because prices have appreciated so rapidly and so substantially that affordability is becoming an issue.

Cyprus property and the Euro effect is certainly on everyone’s lips among those involved in the real estate industry both on the island and internationally, and there seems to be no firm consensus of opinion about which way the market will go in 2008…

Both Cyprus and Malta are now locked in tight to the Euro and the currency will become the nations’ national medium of exchange on the 1st of January 2008.  Naturally both Malta and Cyprus have been under scrutiny and are being compared closely as a result – but is it fair to compare the two?  Sure, they are both Mediterranean islands with exceptionally popular property markets, but really, Malta and Cyprus are very different in cultural flavour and appeal…

I think it’s fairer to examine Cyprus in a stand alone capacity.  Taking the Cyprus problem out of the equation let’s look at why property in Cyprus won’t potentially benefit in any way from the nation’s adoption of the Euro.  Well, for a start Cyprus is a medium haul destination.  It’s about 4.5 hours on a plane at best and that doesn’t make it easily accessible.  Add to this fact there are few budget operators over the skies of Cyprus and you can see that accessibility AND affordability of accessibility are both problems.  Many are predicting that Alphajet and Easyjet will step up and fly in to the rescue – but this is pure speculation – there is (at the time of writing) no evidence that either airline will come to Cyprus.

The other issue affecting the appeal of the property marketplace in Cyprus is the cost of land and real estate.  Prices have already skyrocketed in the past decade and this makes the nation one of the more expensive in the Mediterranean region…

But going against all of this is the very fact that property in Cyprus is so massively in demand.  Cyprus is an island for all seasons (or so they say – although if you ask me January and February are months to avoid!) - and it’s an island for all the family, it has an attractive tax regime especially for retirees who only have to pay 5% income tax on their pensions and no one can ever deny the tourism appeal of this nation which has seen tourism arrivals and receipts up substantially in 2007 on 2006’s figures and statistics.

So, as a property investor if you want a nation where there is guaranteed and lasting demand, Cyprus can offer you that.  And there are those who are saying that the Euro will have a positive effect on the nation’s real estate market as well because the use of the Euro will make pricing more transparent and therefore more competitive and bring down the cost of travel and holidaying in Cyprus. 

The adoption of the Euro will also permit a reduction in invoicing and pricing costs for businesses allowing them to behave more competitively and the Euro will also probably make Cyprus more attractive for foreign direct investment which could result in an increase in the appeal of the nation if money is ploughed into infrastructure and amenity related projects for example.

So – what about Cyprus property and the Euro effect?  Well, the door is open for discussion, that alone is certain.

Special Reports: Property News for Cyprus

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

Cyprus Property Buying Process
Property investors interested in the Republic of Cyprus face a relatively straightforward real estate purchase process but high purchase costs

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