Investment Potential of Real Estate in Northern Cyprus
More and more investors are looking for real estate that would bring maximum income with minimal spends. A fairly large part of foreigners are looking for real estate not only for living, but also for doing business. So, what is the investment potential of real estate in the Turkish Republic of Northern Cyprus?
The northern part of the island, located in the heart of the Mediterranean Sea, has long been closed to the outside world. Southern, Greek Cyprus has long sought fame as a popular destination for buying property, but now it has to give way to Turkish Cyprus.
The Turkish Republic of Northern Cyprus is an independent state. This is a region famous for endless sandy beaches, entertainment, international universities and affordable real estate prices. If earlier people came here only for vacation or retirement, now the region gained popularity among students, young families and specialists who work remotely.
Last year Forbes published a list of the best places to buy real estate by the sea (5 Best Beachfront Buys For 2021). The places were distributed as follows:
1. Iskele, Northern Cyprus
2. Santa Maria, Colombia
3. Fortaleza, Brazil
4. Mazatlan, Mexico
5. Ambergris Cay, Belize
From these data we can conclude that neither Belize with its coral reefs, nor Brazil with carnivals or Mexico, a favorite vacation spot for US citizens, could bypass Northern Cyprus.
Why invest in Northern Cyprus?
After the economic crisis of 2013, happened in Southern Cyprus, many investors began to withdraw capital from the country, sending it to other countries. Northern Cyprus has become the closest, and therefore the most sought-after place for buying property.
It is worth drawing a parallel between the TRNC and Spain 30 years ago. Spain, like Northern Cyprus, was isolated for many years, but investors who took the risk and invested in the country are now receiving high returns. Some compare the region to Dubai 30 years ago.
Northern Cyprus can be considered one of the last such places. 259 million euros received from the European Union contributed to the active inflow of foreign capital into the region. The infrastructure of the TRNC and the level of service have already won the trust of millions of tourists: for example, in 2019, 2.5 million tourists visited Northern Cyprus. This is an impressive figure for a region with a population of only 300,000 people. Ercan International Airport has launched direct flights to Europe operated by Corendon (the majority of flights are operated with transfers at Turkish airports).
Northern Cyprus has exactly the same visa regime as Turkey. Those who wish to visit Southern Cyprus afterwards, should receive a stamp on entry to the TRNC not in the passport, but in a special form (Giriş-Çıkış Formu). You can also cross the border in Nicosia on foot, crossing it from southern to northern territory - you only need a passport and to fill out an electronic registration form.
Economy of Northern Cyprus
The TRNC economy is growing at 9-10% per year. The largest contribution is made by the tourism and service sectors, which are slowly giving its place to real estate and education fields. Despite the fact that Northern Cyprus is now tied mainly to the Turkish economy, thanks to the support of the European Union and the United States, the region is surely being integrated into the world economy. The government of Northern Cyprus has adopted a program aimed at developing the tourism sector, which will also lead to the development of the real estate sector.
On the territory of the TRNC there are branches of local and international banks, and the Central Bank of the TRNC is considered the main one. Bank clients are citizens of Russia, Ukraine, Kazakhstan, the USA and Great Britain. Moreover, the banks of Northern Cyprus observe banking secrecy and do not share information about the accounts and cash flows of clients with other states.
Foreign investors can open a TRNC bank account remotely. Bank branches provide such a service to both individuals and legal entities with corporate clients being a priority. The government of Northern Cyprus is committed to providing the best business opportunities for those wishing to invest in the region's economy: banking secrecy includes the absense of identification of the origin of funds. Loyal business tax policy also contributes to the attractiveness of Northern Cyprus and the economic development of the region as a whole.
The TRNC is considered to be one of the few midshore territories with a low tax rate, no foreign exchange controls, and other benefits for residents and non-residents.
The main currency in circulation in Northern Cyprus is the Turkish lira, but both British pounds and traditional euros are in use.
Investment in real estate in Northern Cyprus
The Northern Cyprus real estate market is developing rapidly, annually offering housing for every taste and budget. The growth in the value of real estate and the economy as a whole, combined with prices more affordable than in Europe, is one of the main factors in the investment attractiveness of Turkish Cyprus. Renting out real estate is also common since growing tourist flow contributes to an additional increase in income, thereby reducing the asset amortization period of property objects. The usual payback term of real estate in Northern Cyprus takes an average of 8-10 years.
The most attractive and, consequently, profitable investment property is considered to be a project property. Developers offer convenient payment schedules with installments up to 60 months with only 30-40% down payment. There is nothing more pleasant than buying an apartment or a house in the project at the stage of excavation and selling the object after completion of construction with a profit of up to 50%. This option is suitable for those who prefer short term investments. Those who want to invest for a longer period can rent out a new property: the yield during the holiday season increases by an additional 5-10%.
In large cities - Kyrenia, Nicosia, Famagusta - secondary housing is more common. Due to the rather dense development, the central regions are experiencing a lack of land plots. In general only low-rise construction is allowed there. However, due to the proximity of all infrastructure, historical sights and the hospitality of the local population, real estate here does not lack demand. A large international university (GAU - American University of Kyrenia) is also located in Kyrenia, so property in Kyrenia can also be rented to students.
The suburbs (Kalograia, Esentepe, Alsancak, Trikomo, Long Beach) offer ultra-luxury residential complexes for those who are accustomed to hotels and top-class comfort. Such housing has its own audience, it is used for vacations and renting out monthly and seasonally.
Real estate prices in Northern Cyprus are much lower than in other Mediterranean countries. The mild marine climate, the absence of infectious diseases, zero crime and corruption are additional advantages of the region.
Another favour of the Turkish Republic of Northern Cyprus is the ease of obtaining a residence permit and citizenship. Compared to Greek Cyprus, which is a member of the European Union, the cost of real estate for obtaining a residence permit does not matter in the TRNC (the requirement in Spain is no less than 500,000 euros, in Southern Cyprus - from 300,000 euros). The residence permit is issued for a year and then renewed. After living in Northern Cyprus for 12 years, a foreigner can obtain citizenship.
Buying real estate in Northern Cyprus is an investment in a new standard of living and an opportunity to obtain a source of passive income. To maximize income, you should decide on the purpose of the purchase, pay attention to the characteristics of each area and contact a licensed real estate agency. Realtor Global offers only quality properties and services and strives for partnership and trust with clients.