Property prices in Cyprus rose by 18% in 2004 and look set to increase by a further 50% when the country joins the European Union in 2007, reports Assetz, a group of property investment companies offering selected UK and overseas property.

Encouraged by the accession of Cyprus to the EU last year, investors are flocking to the island in order to snap up buy-to-let properties that are likely to double in value over the next three years. Joining the Euro will also instigate a drop in mortgage rates from 7.5% to Eurozone rates of 3.5%, creating a further surge in property prices.

Stuart Law, managing director of Assetz, comments: "High standards and low costs of living along with virtually non-existent crime rates makes Cyprus an attractive option for UK investors."

"Prices are still considerably lower than in France or Spain - a three-bedroom detached villa with a private pool would currently set you back around £250,000, which would probably only stretch to a two-bedroom apartment in France. Capital growth is expected to continue at a high level for the foreseeable future due to interest from buyers all over Europe and the under supply of property."

With 340 days of sunshine per year, the long summers are an obvious attraction for buy-to-let investors as they minimise the out of season void periods, resulting in more impressive returns on investment than other foreign markets – as high as 12% - 18%. The availability of rental guarantee schemes offers property owners the option of a hassle-free investment.

British nationals living in Cyprus account for 1.5% of the total population, with British retirees benefiting from being able to draw their pension without paying UK withholding tax, at a flat rate of 5%.

Hotspots

The most popular destination for tourists and homebuyers is Paphos, which offers stunning sea views from its steep hills, a good infrastructure and most importantly, a year-round tourist industry.

More ‘up and coming’ areas include Polis and Larnaca, both of which enjoy lower prices than Paphos with high capital growth expected as tourists look further afield, towards traditional Cypriot villages. Mandria Villas (see picture above) offers an excellent investment for anyone wanting to live in a traditional setting only 10 kilometres from Paphos, with prices starting at £172,253.

Expert Advice

Although the process of buying property in Cyprus is fairly straightforward, Stuart Law advises purchasers one potential pitfall: "There is a ‘sixty day rule’ for registering land purchases in Cyprus when buying off plan. It is essential for the buyer’s lawyer to register the purchase within sixty days in order to preserve the purchaser’s legal rights over the land on which the building will sit. If this is not done, the land remains the property of the developer until after the development is completed."

"I would also warn investors to limit their property investments for the time being to the Southern Cyprus. Since restrictions on movement and trade in the north were lifted when Cyprus joined the EU last year, many Greek Cypriots have returned to land they lost and are claiming restitution or negotiation. For this reason I would not advocate buying in the north until these issues have been resolved."

For further information on Assetz or any aspect of property investment, visit http://www.assetz.co.uk or call 0161 456 4000.