Cyprus is an excellent property investment bet long term
Add comment June 30th, 2008
3 years ago my friend (and Accountant) Dipen and I were talking about investment and in particular property, as a vehicle for achieving financial independence. He told me that there was a big opportunity in Cyprus and had been given the advice by a close friend of his that he did his articles with who was now working with PricewaterhouseCoopers in Cyprus. PWC was and is advising the government on its strategic plan for commerce and tourism which aims to attract the top end of business and the leisure market. So I thought he should be in the know!
The area of particular interest was Larnaca in South East Cyprus (in the South of the Island). I knew nothing of Cyprus. As far as I was concerned it was a place where ageing Brits went to have their English Breakfasts abroad! Having recently hit 40 with two kids’ school fees to pay I decided it was an opportunity I needed to investigate further and off I went on my own journey of due diligence.
Before I visited the Island I did some of my own research into the geography of the Island, the politics and the economic situation. One area stood out as an opportunity and that was Larnaca. So much excitement surrounded the place and there were some really big plans. I decided to visit Larnaca and have a look around. I was on a plane within a couple of weeks and 3 days later I returned having bought into the story!
What excited me so much? Well quite a lot really!
Cyprus joined the EU in 2004 and as part of the Maastricht Treaty’s aims of “balanced economic growth†there was a lot of inward investment to develop Cyprus’ economic infrastructure. When I first visited the Island there was a real feeling of optimism and a “can do†mentality which was so refreshing. It is still the same today -I get a buzz from this every time I visit the Island. It’s a real antidote to the pessimism that exists in the UK at present.
On January 1st 2008 the Euro was introduced. It’s now the lowest tax regime within Europe and many organisations are moving their head offices there. The Sunday Times recently voted Cyprus as the No1 retirement location in the World for as whole host of reasons to do with climate and lifestyle, but it is also to do with only a 5% tax rate on pensions
The two largest projects in the planning around Larnaca are the Port and the Airport.
Work on the airport is well underway. Its due for completion in November 2009 and on each visit its possible to see the progress made. When finished it will be an impressive development fuelling a booming tourist trade and securing the business links with the Middle and Far East as well as the rest of Europe. The airport will be able to handle the biggest planes and will mean that Cyprus will be the entrance to the EU from the east.
It will be able to handle 7.5m (it only handles 2.5m now) passengers per year rising to 9 million in 2013. It will also employ c.6000 people. All these tourists, business travellers and airport workers will need to shop and live somewhere!
If you are concerned about the tourist trade’s reliance on carbon producing aeroplanes then a more environmentally friendly (and upmarket!) tourist pursuit is Cruising. Larnaca’s development of its deep sea port is designed to attract the very biggest cruise liners with the huge spending power that this brings with it both from the operators and the tourists.
The transformation of the Larnaca port is the largest development project undertaken in Cyprus with an estimated cost of 2 billion Euros. The port’s transformation will turn Larnaca into the Eastern Mediterranean’s leading cruise centre. The transformation incorporates a large marina project with five-star hotels, 2000 apartments, leisure and retail developments and a promenade to central Larnaca and nearby beaches. Some of these developments will be located ‘under water’ which is a concept initially introduced in Dubai (Palm Island).
The project will place Larnaca on the international cruise map and it will also turn the city into a world-class destination for cruise tourists. It has been estimated that 100,000 tourists will reach Cyprus through the new port every year. The impact this will have on the local economy is enormous. Every visit from a medium sized cruise liner (medium sized is c2000 passengers) will generate £100,000 of revenue!
Cruising is on the increase and there is considerable investment in new cruise liners. Over the next 3 years 34 mega vessels (4000 passengers) will be delivered – 50% of them to European operators where Mediterranean destinations are by far the most popular.
The expansion of the Larnaca International Airport is expected to facilitate in attracting cruise business to the new port. The new port will also have a marina that will harbour many of the boats of the wealthy residents that are attracted to Larnaca.
And another thing! Being a golfer I was also absolutely amazed that on the whole of the Island there are only 4 Golf courses; with 310 days of sun a year what a waste! Again after investigation I found out there are 4 new courses to be built one of which will be the only PGA approved course. This will be built at Tersefanou just 4 kms from the airport.
New roads, hotels, a nature reserve are all part of the Larnaca master plan which excites me (and many others from around the globe). If you haven’t looked at Cyprus yet or you’ve only been to Paphos, take a look at Larnaca.
I’m more than happy with my investments there and indeed am taking ownership of another property in July 2008. There is plenty of growth left in Larnaca, the place will be transformed over the next 3 to 5 years when the secondary market will really start to thrive.
I’ll keep you posted on how the delivery of my latest property goes and what other snippets of information I pick up.
Carl