While some investors are concerned about Spain and other look to exotic and uncharted territory, those looking to invest in property on the island of Cyprus continue to do so in a booming market.
This year is certainly on course to be another property boom year. Cypriot newspaper the Financial Mirror has stated that 2007 is on course to see 20 per cent property value appreciation. Part of the trend is due to a rush to beat the imposition of a new 15 per cent VAT land tax on January 1st 2008, but the tend is a longer term one and some might observe that the imposition of a land tax indicates government recognition of this, suggesting it believes it can pick up some useful revenue without doing undue damage to the market.
Already, the paper notes, the government is making good money out of the property boom, with capital gains tax receipts amounting to the equivalent of $173 million in the first five months of 2007, compared with $62 in the same period in 2006 (Cyprus adopts the Euro in the new year).
However, the paper states, Solomon Kourouklides, Chairman of the Cyprus Real Estate Agents Association believes the increase is also due to high amounts of property buying from overseas investors in coastal areas.
Some might suggest that there is a negative element for native Cypriots, in which locals are priced out of the market by overseas speculators. What in fact is happening, according to an article in the Cyprus Mail at the weekend, is that the sector is helping the economy at a time when other aspects that involve foreigners - such as tourism - are in decline. Moreover, it points out, mortgage demand is rising and it is the capital Nicosia, not coastal towns such as Limassol and Paphos, which are seeing the greatest demand of all.
As the paper puts it: "This is good news, making the market less susceptible to the whims of foreign buyers, who can abandon Cyprus as easily as they came. It also means that local buyers - including first-time buyers - are finding a way to lock into the property ladder, securing a stake in a sector of the economy that is expected to see continued steady growth." In short, investors can certainly feel no guilt about buying into the market, or fear being resented for doing so.
Instead, the paper adds, the amendments that actually need to be made to ensure the market stays healthy are things like faster issuing of title deeds and better redress for builders if work is not up to standard.
Notwithstanding those concerns - not unique to any one country - Cyprus remains a country with further growth potential. Part of that lies in the continuing attraction of the country for its climate, history and culture, while the forthcoming adoption of the Euro could provide the greatest boost, by providing the kind of stability that will encourage investment and establishing the country in the eyes of Europe as part of the social, political and economic mainstream.
Source: Assetz
