«The demand for new buildings is growing and there is no more land for construction». The expert on the situation in the real estate market of Northern Cyprus
Every investor dreams of and enjoying the sea all year round. And if you take into account the beautiful weather, favourable tax regime and low real estate prices, Northern Cyprus is almost a paradise for investors. However if you are looking to buy a property on the island you need to have a good understanding of the trends in the local real estate market. Sales director of Luxe Home Cyprus real estate agency Maria Kurshun highlighted a few key points that every customer should know before buying a property.
«People of all nationalities can buy real estate here»
— Maria, can you tell us about the situation in the real estate market of Northern Cyprus?
— This year has literally become a breakthrough in the real estate market of Northern Cyprus. Recently, and there are a range of reasons for this. As an example, relatively low prices for seaside properties, a flexible taxation system and absolute security (which is very important nowadays). It is also worth mentioning that the construction industry in Northern Cyprus is developing gradually, which means that the quality of residential complexes is improving as well. There are more and more interesting and unusual flats with modern layouts and an increasing number of turnkey offers. Demand is also stimulated by the fact that vacant land for new buildings will soon run out and it is already difficult to find land to build a new residential complex.
That is why, my first and most important thesis is that the demand for real estate in Northern Cyprus is increasing while the supply is decreasing.
The geography of demand has also changed: if previously the number of Russians and Europeans was almost the same, now Russians, Ukrainians and Belarusians have taken the lead among our clients. This is quite understandable considering the situation in the world (due to the sanctions, Russians and Belarusians are unable to buy property in most European countries). Northern Cyprus, in this case, is one of the few options where people of all nationalities can buy real esate. Of course, there are difficulties in transferring money because many Russian banks have been cut off from SWIFT, but there are still a few banks that work successfully with international transactions. Today, the whole transfer process has stabilised and takes about a week (sometimes the money comes even in 3 days).
Cryptocurrency shouldn’t be forgotten either. Here, sellers are very willing to accept this form of payment. A huge number of companies in Northern Cyprus are cashing in cryptocurrencies and it is not a problem to withdraw money from a property sale.
— What about the fact that Northern Cyprus still hasn’t been recognised by most countries? Isn’t it risky to buy property in that case?
— Yes, about 50 years ago, Cyprus was divided into two parts; the northern part (Turkish) and the southern part (Greek). Today the Turkish part of the island is a home for around 300,000 people and has its own president and government. More than 1 million tourists come here every year.
In my opinion, Northern Cyprus is still considered a hidden gem in the Mediterranean, so property prices here haven’t reached the level of the rest of Europe yet. The advantage of buying property now, while prices are so attractive, is that once the country is recognised, your investment will experience a rapid rise and property prices will go up at an exponential rate. In comparison, accommodation in the South of the island is being sold at 3-4 times higher prices.
However, you must understand that the legal regulations in the Northern part of Cyprus are different from those in Turkey or Europe. Therefore, I recommend finding a legal representative who can protect your interests, even if you are in another country at the time. Such a legal representative can be an employee of Luxe Home Agency or a certified lawyer.
I think we need to explain more about what a legal representative means here. It is a person who represents your interests and has the right of signing the documents if you are not in the country. In this situation, as a rule, the realtor starts with finding an appropriate option. Once the property has been found, you will need to do a full research: its history, full information about the developer, official enquiries to the city authorities. If the house is bought on a mortgage, the representative will submit a mortgage status enquiry. If you are getting a mortgage from a construction company, then he should submit an ownership enquiry and an application to the Council of Ministers to get a permit for purchasing the property.
When all the documents are ready, the property purchase agreement must be drawn up and signed. The contract of sale must be filed in the title deed within 21 days. And you must pay a fee for a stamp duty, which is 0.5%. After registering the agreement in the title deed, the property can’t be sold, transferred or put into pledge to third parties. When the property is registered, the keys are handed over (remember to check the current status of the electricity, water and municipality bills). Provided all bills are paid, the sale price is sent to the buyer.
Considering all the procedures mentioned, I will state the second very important thesis: the buyer should find a legal representative whom they can trust unconditionally.
«It is still possible to find a one-bedroom flat on the primary market for €40-45,000»
— What are the current prices in the real estate market of Northern Cyprus?
— Prices for real estate in Northern Cyprus have been rising steadily for 8-9 years. However, in the last few years this growth could be described as booming. It is clear that the prices in the secondary market are higher than those in the primary market. At the moment it is possible to buy a small studio flat of about 30 sqm for €50,000 ( a while ago it cost €35,000 maximum). If we talk about a one-bedroom flat, in a good city district it will cost around €60-65,000; a two-bedroom flat with a living room will cost around €70-80,000. All these prices relate to flats with no renovation — just a shell and core. If you are looking for a fully furnished and ready to move in apartment, you can easily add at least €10-15,000 to these prices.
On the primary market, you can find a one-bedroom flat for €40-45,000. But the number of such offers is decreasing day by day. Villas under construction can be bought for between €80,000 and €100,000 but you have to realise that this price is only offered at the very beginning of construction. The later it goes, the higher the price. But the good news is that often builders offer instalment plans, and the first payment usually doesn’t exceed 30%.
Taking into account the growing demand for real estate, be ready for competition among buyers. More and more often we face a situation where the flat «goes» to the one who transferred the money to the builder’s account first.
To sum it up, here are my third and fourth theses: If you want to buy a nice flat in Northern Cyprus, you have to spend about €100.000. If you want a cheaper option, look for new buildings under construction, but be ready for the competition amongst buyers.