Northern Cyprus, real estate price
A combination of factors has led to the emergence of a hot real estate market in Northern Cyprus. The demand for local real estate has not been so high for many years. Why is this happening?
1. Covid 19
The impact of the coronavirus pandemic has dramatically increased the demand for real estate in Northern Cyprus outside of cities and large urban areas. Many people feel the need to leave the capitals and countries where travel restrictions are possible. Perhaps more importantly, people feel the need for a second home, where the pandemic is not so strong.
Many people have suspended their plans to buy a home due to the pandemic and now want to buy a property.
Northern Cyprus was lucky enough to avoid most of the consequences of the pandemic. The mortality rate is low, and the infection has not reached a critical level. In the country, mass home quarantine has been introduced only once, in the spring of 2020, and the government has stated that it has no plans for mass quarantine again.
By comparison, countries such as Greek Cyprus and Italy have faced huge restrictions on travel and business. While local health services are struggling to keep up with infection rates.
Warm weather, good geology, healthy diet and an active lifestyle are all characteristics of Northern Cyprus that make it an attractive place during a global pandemic. In my opinion, the active lifestyle of local residents (who spend a lot of time outdoors, get access to vitamin D) is the main factor in preventing higher mortality rates.
Why is this a good climate for buyers? High demand for real estate means that agents and developers are more inclined to negotiate, knowing that there is a flow of buyers who want to purchase real estate across the country. Meanwhile, developers are bringing more housing units to the market to meet demand, which means they have more choice than ever before.
2. Devaluation of the Turkish Lira
The devaluation of the national Turkish currency, the official currency of Northern Cyprus, has created new conditions in the local real estate market.
Firstly, since real estate in Northern Cyprus is valued in British pounds, the sale price when converted into Turkish lira becomes very attractive. In other words, selling in pounds has never been so attractive to local developers. This means that developers are particularly interested in selling right now, even at a discount.
Secondly, almost all developers take loans from local banks in foreign currency (pounds, euros). In the current conditions of devaluation, this makes the payment of this loan in Turkish lira extremely expensive. This is another incentive for developers to sell real estate for pounds as quickly as possible so that they can pay off their loans.
3. Rising real estate prices
Property prices in Northern Cyprus are growing 10% per year in key investment zones. In other areas, prices are extremely stable. This contrasts sharply with the fall in prices in other regions of the eurozone. The reason why real estate prices in Northern Cyprus remain so stable is that the property was built with private capital, and NOT at the expense of loans from the international banking system. Consequently, the real estate market of Northern Cyprus was isolated from the global banking collapse.
The most profitable resale strategy is the purchase of an object at the zero stage of construction, when the developer sells it at the lowest price. After completion of construction (as a rule, this period is 1.5-2 years after the start of construction), the object is resold at the market price of completed projects. The cost of real estate increases up to 30% with an increase in capital from unplanned to the final implementation of the project.
However, local property prices are rising especially rapidly after the pandemic. The growing demand among foreign buyers for calmer, healthier places has led to a surge in demand, especially in the areas of Kyrenia and Famagusta. According to forecasts, in 2022 there will be the strongest increase in house prices in many years.
4. Raising awareness about Northern Cyprus
Northern Cyprus has been a kind of secret place for many years. It is mostly known as a quiet place to relax with great beaches and low prices. But over the past 10 years, the rapidly developing tourism industry and strong infrastructure growth have attracted much more attention to the country.
This was partly due to the fact that investors and buyers of real estate in Europe ran out of available opportunities, and many began to look for less well-known places, such as Northern Cyprus. The country was named Forbes is an attractive place to invest, and a TV commercial about Northern Cyprus as an attractive tourist destination is currently being broadcast in England.
All these factors increase attention to the location, attract a greater flow of tourists and investors and, ultimately, contribute to an increase in real estate prices.
Personally, I regretted that I did not buy a property here earlier, when it was 30-40% cheaper. Do not repeat the same mistake — I believe that in 10 years prices may double.
