For the thousands of British holidaymakers who fly there each year, Cyprus is the ultimate Mediterranean holiday island. It welcomed around 32,000 British tourists to its shores last month alone to say nothing of those keen to buy property in Cyprus. Talk to anyone who's visited the isle and they'll rave about the friendly, warm people, the climate, the relaxed atmosphere  and all the things that make Cyprus the third most popular destination for Brits buying property abroad after Spain and France. Ask them about the 'Cyprus issue', as politicians refer to it,  and you'll get a blank stare: it has such little impact on the Cyprus most of us know and enjoy. Ethnic tensions between Turkish Cypriots in the north of the island and Greek Cypriots in the South have led to some casualties in the tumultuous history of Cyprus, and caused damaging political isolation, but, in reality, there is little affect on the tourism or property markets. The United Nations buffer zone, which runs from Kokkina in the west to Paralimni in the east, cuts a swathe through the capital, Nicosia, and is the 'Green Line' that separates north from south. Now, after 46 years of independence from British rule, Cyprus, and southern Cyprus in particular, is really coming into its own economically, politically and in terms of living standards. The south of Cyprus has become a fully fledged EU member state, reaping all the financial benefits that entails, and unemployment is at  4.3 per cent, comparing favourably to the current rate of five per cent in the UK.
 
The shift from a largely agricultural economy to the service and tourism industries has added increased impetus to the conciliation efforts. Seventy two per cent of Southern Cyprus' income is derived from tourism, and this, combined with Turkey's efforts to join the EU, means it might have to finally rescind its recognition of Northern Cyprus as an independent state. This bodes well for investment opportunities and further property development on the island. The knock-on effect of EU membership has also sent property prices in south Cyprus rocketing, according to some estimates by as much as 20 per cent a year since it joined. This still leaves property prices in Cyprus, on average, cheaper than Spain or France. Your £250,000 in both these countries is a lot less likely to buy the four-bedroom villa with private pool in a popular location you can expect in Cyprus.

Explaining why Cyprus presents unique potential for British property buyers Pauline Gallagher, a property expert from Halcyon Properties says, "With property prices steadily increasing together with the strong possibility that this will increase further when the country changes its currency, there really has never been a better time to buy in Cyprus". The government is also attempting to encourage business from foreign investors onto the island. Nicos Rolandis, Cyprus' former Minister of Commerce, Industry and Tourism, points out the advances his country has made. "In recent years Cyprus's strategic location, together with the excellent political and economic relations with our neighbours, a sophisticated banking system and a favourable economic and business environment, make Cyprus an ideal centre for businesses."

Chic as Chips
Like most holiday destinations in the Med, Cyprus is trying to shake off the budget holiday label. It's a recognition of the fact that tourism itself is changing – the package tours and tourist mega-complexes are gradually losing their popularity amongst British tourists who don't just want to see Cyprus from behind a coach window with a chirpy tour guide telling them they can buy T-shirts and souveneirs from the gift shop. The new schemes the Cypriot government has devised are aimed at promoting the island's natural beauty and historical importance. 'Residential tourism' and 'agrotourism' are the eco-tourist approaches they're backing as the way to change the tacky 'cheap as chips' image it was steadily gaining during the 1990s. But the British presence in Southern Cyprus is obvious. According to the Cypriot land registry 12,000 Brits, or 1.5 per cent of the population, own property in the southern half of the island. This is equivalent to the number of Brits living in the whole of France, though Cyprus is an island smaller than the size of Greater London.

Gallagher, who lives in Cyprus, sees this as a positive thing. "There is a large contingency of expats on the island who like the fact that it is very 'British' in its make-up. We drive on the left, it is a safe community, the roads and the medical care is good and, of course, we have an average of 320 days of sunshine a year!"

Cyprus Tourist Organisation (CTO) officer Athena Theodorou reiterates the need to give Cyprus a facelift to bring in the big spenders. "In Larnaca, we discussed withdrawing low quality tourist beds and making an effort to attract investors to new tourist accommodation establishments. "We also need to improve and promote the environment of Larnaca, especially the beach road of Mazotos-Zygi and also the refineries area." There's even talk of 'religious tourism', cashing in on the island's rich Greek Orthodox and Christian significance. But perhaps one of the biggest and most important developments has been the revamp of Larnaca airport to help it cope with the expected demand this summer. Overseas marketing manager for Antonis Loizou & Associates, Peter Christofi, is confident this will make all the difference to the property market. "We have seen a marked increase in the number of tourists visiting Cyprus in recent years... one of the few negatives we received back from clients was regarding the congestion at Larnaca airport." He continues, "The upgrading of infrastructures at both Larnaca and Pafos Airports has been necessary until the planned expansion in 2008. We now envisage increased interest in both tourism and property sales."

As well as the lure of awesome landscapes and rich mythology, Cyprus has another secret weapon in its arsenal to plant itself firmly on the radar of overseas investors and property seekers: golf. The Secret Valley golf resort is being built by property developers Aristo in Pafos, across the gorge from the Aphrodite Hills in a 2,500-acre nature reserve. Potentially, there's talk of 3,000 villas and apartments being built over the next seven to ten years on the land adjacent. The number of golf courses on the island will rise from three to 14 thanks to a new government-led 'golf policy' in a bid to poach Spain's lucrative golfing market revenues it has garnered from golfing resorts in places around the Costa Brava and other areas. The business executives and wealthy clientele such places attract is exactly the type of tourist Cyprus is currently wooing, and whether they are golfers or not, the fact that a fairway next to your property adds approximately 30–40 per cent to a property's value is definitely an investment hole in one. A good indicator of Cyprus heading into the upmarket league is its appearance in the Financial Times' House & Home supplement, which is standard reading for highly paid bankers, lawyers, accountants and other executives across Europe.

Safe as houses
The property market and prices in Cyprus took a slight downturn of 1.5 per cent at the end of 2004 after the government introduced a 15 per cent Value Added Tax (VAT) but since then it is still on the increase overall throughout the country. For example, three years ago the average price of property was 90,000 euros. Today, it's in the region of 150,000 euros.
 
Over the last five years more and more property has come onto the market in Cyprus, and prices have remained stable. This also gives property buyers much more choice in the villas and apartments available. One of the advantages of buying property in southern Cyprus is the fact that it's a fairly uncomplicated affair. The system has experience of dealing with British homebuyers, there are already numerous English-speaking estate agents on the island and the legal processes are usually relatively straightforward. There's less chance of finding out you've just bought the deeds to a home that come with unpleasant added extras, like illegal buildings or furious relatives of the last owners trying to stake their claim on the house. The process of buying property is different to the north of the island, so anyone buying in either region should be aware that the same rules might not apply. There can also be some issues when asking the Greek Cypriot authorities to recognise land owned in the north, although this may change in the future.

In general the biggest problem those purchasing property in the south of Cyprus will come across is the sizeable backlog at the land registry office that can lead to delays in obtaining title deeds, which in turn can have an impact on getting out a loan on a resale property without the necessary deeds.

The prices and type of property on the market in Cyprus can vary from one to two-bedroom apartments for around £590,000, to the other end of the scale where detached villas with land can set you back anywhere between £25,000 – £350,000. But with the other new EU members in Eastern Europe offering even cheaper prices than Southern Cyprus, can it really compete as a property investment opportunity anymore?

John Reilly, UK sales manager for Buy Abroad, says, "With so much talk of emerging markets and dramatic increase in prices to be achieved I would urge caution to those looking to invest in Eastern European countries as they have untested markets and often fall far short on good solid infrastructures. "South Cyprus is a safe bet and with significant increases to property each year is still probably one of the best areas in the Mediterranean to invest in." Whether this is the case or not, the fact remains that homes in the sun will be a draw all the time the UK has winters cold enough to induce frostbite and the only chance of a private pool most Brits can look forward to is a leak in the roof during spring.

Aphrodite's Choice
The areas of Cyprus that property hunters are choosing to live in are also changing. Pafos has been top of the pile for almost 20 years, and remains an area with a large British community, but now people are trickling into smaller villages like Polis, to the north of Pafos, and coastal towns outside of Limassol and Larnaca. These often have homes in the cheaper price bracket, are still a short journey from international airports and have a stronger Greek Cypriot atmosphere.

And while resorts are popular with those looking for holiday or retirement property, long-term settlers are increasingly turning to self-build projects. When discussing self-build in any country, Britain included, there are always going to be issues that prevent a smooth ride if left unchecked. Despite the Greek Cypriot population having good rates of spoken English, conversing about the finer points of construction and design with builders and architects may bring to light some interesting ways to mime 'bay windows', so it can sometimes pay to hire a bilingual lawyer or liaison.

The property planning laws in Cyprus are notoriously strict, and now the move to promote a more natural environment will create an even more hardline approach to self-builds. As it stands, only 10 per cent of a plot is allowed to be built on, and designs are limited to a selection of colours and more traditional styles. Property development is happening at a swift, if carefully controlled, pace, especially along the coastline: Pafos, Limassol, Larnaca and Protaras are the most popular towns, though prices are still very affordable. Antonis Loizou & Associates, for example, have a four-bedroom property with sea views on sale for £537,792 (about CYP£447,000).

The village of Peyia is becoming very popular with British property buyers, and local price hikes reflect that: they can range anywhere from £150,000 to £500,000. Up-and-coming areas with competitive property prices are popping up all over the island. Mandria, near Pafos, for example, is still cheap enough to buy a three-bedroom house for a lot less than in surrounding areas. In Larnaca, the Kiti area is also offering good returns on property investments. Anyone looking to invest in the coastal regions of Cyprus should keep in mind the potential income from a buy-to-rent property, which can generate as much as £10,000 to £15,000 a year. For inland areas, the villages in the Troodhos mountains are tipped as a future hotspot, due to the cooler climate during the peak of summer and relaxed lifestyle on offer. Talk of property investment and financial growth is easy to do from your armchair in the UK, but once you've arrived in Cyprus it's difficult to stop your heart ruling your head and falling completely in love with the island. It is the birthplace of Aphrodite, the goddess of love, after all, so even the most hard-headed homebuyer will struggle to resist Cyprus's charms.

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For further information about Cyprus property:
Halcyon Properties
Antonis Loizou & Associates
Buy Abroad

Article first published in February 2006