North Cyprus Real Estate - a good investment property
or a welcoming place in the sun?
North Cyprus - not just a bargain basement but also good for a reasonably-priced
villa with swimming pool too!
North Cyprus Property by:
Leslie Hardy
North Cyprus Property has become a popular investment for many EU
investors in recent years, with the majority of buyers being British.
Cyprus was effectively divided in two after 1974, when Turkey invaded
the island and secured North Cyprus as a safe haven for Turkish Cypriots
who were being persecuted by the majority Greek Cypriots.
The opportunity of the Annan Plan in 2004 for reunification of the
island provided a powerful stimulus for the North Cyprus residential
property industry and tourism. Despite the fact that a large majority of
Turkish Cypriots voted in favour of reunification, the Greek Cypriots in
the South voted against the Annan Plan. The negative vote of the Greeks
was heavily influenced by the government, media and church in the South.
Within months of the rejection of the Annan Plan by the Greek Cypriots,
South Cyprus joined the EU. This provided a further boost to property
development in North Cyprus as many thought that it was incongruous for
the south of the island to become an EU member while the north did not.
The scale of this euphoria was significant. Land prices in 2002 were
often in the region of £2,000 a donum or 1,338 sq metres. During 2004,
average land prices in the north rose to around £30,000 a donum and have
continued to rise to near £40,000.
There has also been a flood of new Estate Agents and property developers
entering the North Cyprus market, many of them British.
However, the increase in land prices and the growth of activity in the
sector has not been reflected in prices of property. A three bedroom
villa with a pool on 700 sq metres of land will sell for around £88,000.
Sales prices have only modestly increased since 2004.
The underlying economics are worth exploring. Current build costs are
some £400 per sq metre, so a 130 sq metre villa will cost around
£52,000. If a pool at £13,000 is added, then the total is £65,000. The
cost of a 700 sq metre plot also should be added at £20,000, making a
total of £85,000. The main Estate Agents in North Cyprus charge 5%
commission, and when taxes are taken into account, there is very little
profit, if any, for a builder or property developer.
These calculations explain the crisis in North Cyprus property
development. There are scandals in which property developers disappear
from the island, leaving unfinished properties in their wake, such as
Gary Robb of Aga Developments Ltd. Several large construction companies
and Estate Agents are also in financial difficulties, including North
Cyprus Properties Ltd.
The exuberant optimism of 2004 has all but evaporated, and relations
between the two communities have reverted to the negativity and
bitterness of earlier decades. In order for Cyprus to be reunited, both
sides need to support this vision, and within a framework of mutual
compromise. Many consider that the Annan Plan was, and remains, a fair
basis for reunification. Unfortunately, the Greeks have consistently
rejected the main tenets of the Annan Plan without articulating any
coherent counter proposals.
From an investor’s viewpoint, the current situation may be considered a
propitious time for property purchase, as prices remain flat. Certainly
a 3 bedroom villa with a pool at £88,000 is half the price of a similar
property in South Cyprus, while the price in Spain could well exceed
£200,000.
However, the future of the market remains clouded with uncertainty.
Firstly, the Greek Cypriots have consistently claimed that some 85% of
the land in North Cyprus belongs to dispossessed refugees who fled to
the South in 1974. Several Greek Cypriots have lodged cases with the
European Court of Human Rights. There are apparently some 1,500 cases
pending and these have now been referred to the North Cyprus Properties
Commission, which is a North Cyprus institution, backed by Turkey. The
Property Commission is a new agency and needs to demonstrate a
capability to deal with such cases in a fair and effective manner.
Secondly, Turkey has made an application for EU membership. As Turkey is
a secular muslim state, several EU members have expressed reservations.
In order to facilitate the application, Turkey needs to open her ports
and markets to other EU member states, including the Greek Republic of
Cyprus. Turkey has refused to do this unless it is coupled with a
relaxation of the isolationist measures experienced by North Cyprus.
The fact that South Cyprus is an EU member has led to an alleged
dispossessed Greek making a claim in the UK against a British couple who
have allegedly built a house on his land in the North. This is the Orams
case. This case was heard in London during July 2006, and a ruling was
made on 6 September 2006. The ruling was in favour of Mr & Mrs Orams and
confirmed their right to purchase property in North Cyprus, regardless
of whether the land had previously been owned by a Greek Cypriot. This
is a landmark case and should provide a stimulus to the North Cyprus
property market.
So it may take sometime for an investment of £90,000 to increase in
value to over £200,000. In the meantime, an owner of a North Cyprus
property can enjoy the unhurried and laid back lifestyle of the north
and experience the friendship and warmth of the Turkish Cypriots.
About the author
Leslie Hardy is the UK Chairman of Wellington Estates Ltd, a north
Cyprus property development company. Further information and articles
can be found at
www.wellestates.com
North Cyprus Property
Source:
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