Investing in NEW North Cyprus

Most people are aware that Cyprus is currently divided into the EU Greek Cypriot South and the non-EU Turkish Cypriot North (TRNC).  Until recently, the Eurozone South has been seen as the safer investment bet due to the North’s more uncertain political future.  Now, with the financial security of the Turkish mainland – and the stability of the Turkish Lira - contrasting sharply with the financial insecurity of Greece (and the recent downgrading by S&P of the Greek South’s financial rating), the investment spotlight has turned to the fast developing North.  Here, property prices are rising steadily, massive new investment into infrastructure, medical and educational facilities is transforming the country, and the security of the Turkish economy is having a very positive knock on effect for the Turkish North of the island, with tourism numbers and investment rising.  In addition, there have been several landmark legal and political developments, most notably the recognition in March 2010 by the European Court of Justice of the TRNC’s own compensation Property Commission (IPC) as “an effective legal and domestic remedy” for the compensation due to any former Greek Cypriot land owners.  As a result, most analysts now agree that the chances of any future investor themselves being held liable for compensation through another Orams’ style case, has been more or less completely eliminated.

 

North Cyprus is now attracting serious investors

With North Cyprus prices being the lowest in the Mediterranean, in the past, it was mainly a market for lower income lifestyle buyers who could not afford to buy elsewhere.  Now a new breed of informed investors are arriving, both to invest but also to reside.  “Our clientele is changing significantly at present” says James Swanson, a British IFA in the TRNC.  “With the advent of new schools plus leisure and medical facilities in the TRNC, it is certainly not just the average holidaymaker who is now investing in the country.  Many high level professionals whose businesses are offshore are now choosing to buy property and some even settle their families here.  With sensible forethought and investment planning, such investors can benefit enormously from the high interest rates, low 3% capital gains and potential zero tax arrangements on overseas earned and investment income”.  Turkish Lira bank accounts are also earning up to 9% interest.

 

Evergreen Developments – High-end luxury for serious investors

It is not only the IFAs who are experiencing this sea change in investor type.  So too has the Evergreen Developments Group, the most established international development company in the TRNC with a wide selection of internationally recognised, secure pre-74 Turkish Title deed properties.  Indeed, with North Cyprus situated as it is exactly half way between Western Europe and the Middle East with entry via both Larnaca and the TRNC’s own Ercan Airport (links to Istanbul), North Cyprus is now attracting investors from both sides of the Mediterranean.  Evergreen offers the widest range of apartment and villa properties in the country with 6 locations offering everything from 35,000 euro studios to 750,000 euro seven bedroom luxury beachfront residences.  “Over the last two years the quality of what we are offering has transformed.  We have now achieved new heights of high-end luxury and build quality in order to attract both overseas investors and lifestyle buyers, who now realise they can have have Dubai-standard accommodation at a fraction of the cost” – says Angela Rees, British Sales Manager for Evergreen.  Happily for Evergreen’s investors, a joint Turkish, US and British consortium has recently announced plans to build a multi-million dollar theme park on the West Coast Bay Area just near to Evergreen’s flagship beachfront development, Aphrodite Beachfront Village, which boasts being the only completed, pre-74 internationally-recognised title deed property in the TRNC which is literally on the beachfront – and which is offering guaranteed rental return to investors.

0% deposit London Bank Mortgages are now available in the TRNC

So why has the economy of North of Cyprus been insulated from the global recession?  Ironically it is the more old-fashioned, immature nature of the TRNC property market (where historically developers have built without bank loans and where bank mortgages for overseas investors were unavailable) which has kept prices low and which also produced the unforeseen result of protecting its immature property market from the ubiquitous foreclosure and price drop problems experienced elsewhere.  “We are fast becoming the recession-proof investment area of choice for those who are disillusioned with the more conventional European property regions such as Spain, where in some areas prices have fallen as much as 40% and where Price Waterhouse Coopers says prices could take a decade to recover,” says Angela Rees again.  “In contrast, our beachfront prices have risen by over 75% since 2006 and we are predicting steady growth”.  Evergreen has recently announced the arrival of 0% deposit 15 year London bank mortgages to UK residents on their pre-74 completed Turkish Title properties – a first for Northern Cyprus – and increasing interest from buy to let investors.

 

 

 

In an investment world where the levels of risk have to be calculated against potential gain, one thing is for sure: the level of risk in investing in the TRNC has fallen significantly over the last ten years.  Those who wait for the level to fall much further could lose a massive opportunity to gain.