Bullish attitude is scarce among property investors. Globally, we seem to be in a period of sluggish growth and low returns, so is anywhere a good buy? In this new series, we dig around in those locations that still have a bit of buzz about them and try to find out whether they deserve it.
It’s the birthplace of Aphrodite. According to legend, she was born in the sea foam off the south coast of Cyprus (aphros means foam in Greek) and was carried to shore in a giant shell to Petra tou Romiou. Today, the beach she landed on is less than an hour’s drive from RAF Akrotiri, a British air base, and about a 30-minute drive in the other direction to Paphos, which, for decades, has been popular with Brits looking to retire in the sun.
But the overseas property market has changed in recent years, according to local agents, thanks largely to the drop in value of sterling against the euro. “In resorts such as the Aphrodite Hills, UK buyers used to account for up to 60 per cent in the heydays of 2008,” says Alexandros Moulas, an associate director at Savills, the estate agency group. “Last year it had none.”
However, agents aren’t worried — in fact, they’re thrilled. They say buyers from other parts of the world have been lured to Cyprus by a series of government-backed incentives brought in after the 2013 financial bailout. Capital gains tax and stamp duty were cut until the end of last year, and VAT on new dwellings has been reduced from 19 per cent to 5 per cent, a subsidy that is still available.
Sales have escalated wildly. Between 2015 and 2016, transaction numbers in Cyprus were up 33 per cent, according to Savills. In the first half of 2017, they were up 8 per cent on the same period last year. But not all come for the tax incentives.
“The majority [of buyers] now come from Russia and the CIS counties [the Commonwealth of Independent States, also known as the Russian Commonwealth]; from the Middle East and Asia,” says Moulas. “These three markets have replaced the traditional markets in Cyprus, because all of them qualify for the citizenship and golden visa programmes.”
Under the schemes, non-EU buyers are eligible for a Cypriot passport if they purchase property worth more than €2m; for the visa, they need to invest in property to the tune of €300,000.
And these buyers — who seem to congregate in Limassol, on the south coast of the island — can have deep pockets indeed. Typically, new-build properties in the city go for between €8,000 and €9,000 per square metre. But at luxury developments on the seafront, such as One Limassol, a new 83-unit tower under construction by Pafilia, apartment prices start at €11,500 per square metre and rise to €24,000 per square metre.
According to Savills, One Limassol is currently about 70 per cent sold, with the majority going to new “citizenship” buyers from 13 different nationalities.
“We have seen inquiries from Russia, China, India, the UK and the Middle East, among other destinations,” says Michalis Zavos, joint director of Limassol Del Mar, a new housing development in the city. “Currently, our buyers are 27 per cent from Russia, 25 per cent from the Middle East, 15 per cent from China and 10 per cent domestic,” he says.
Outside Limassol, prices are generally much lower, says Moulas, with one spot — Larnaca — looking particularly affordable. “Larnaca is the most under-developed market in Cyprus,” he says. “It’s 10 minutes from the airport and close to Nicosia [the capital], so can be supported by the domestic market.” Prices for good stock there currently average around €3,500 per square metre, he says.
In the lead-up to Cyprus’s reunification talks — the island has been ethnically split between Greek and Turkish Cypriots since the 1970s — many property investors hoped a resolution would boost visitor numbers and property prices. Those hopes were dashed in July, when talks collapsed amid angry scenes. Figures from the tourism board had been showing back-to-back record-breaking years in 2015, 2016 and another was expected in 2017. Might this cause a lull and scupper returns?
“We don’t see it as an impact,” says Moulas. “It would have had a positive impact if it had gone through, but it is just the same as it has been for years and years.”
Photographs: Iakovos Hatzistavrou/AFP/Getty Images; Getty Images/iStockphoto
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