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Why you should invest in Northern Cyprus?
Northern Cyprus is a beautiful and tranquil island that remains unspoilt, comparatively undeveloped and is an ideal location for property investment. Whether you're looking for a holiday home, somewhere you can buy-to-let, or a place to retire in the sun. The southern part of the island of Cyprus has been attracting overseas buyers over the last decade, but the advantages of investing in the North have only recently become apparent.
Lower cost
The property market in Northern Cyprus is a dynamic and exciting market and is quickly becoming one of the fastest growing markets with the best return in the Mediterranean.
Buyers are not only being attracted by the stunning and quite simply unrivalled location, but also by the wealth and choice of property available to them.
The rise of the property market in Northern Cyprus is set to continue for many years to come and the wise will invest now before they are priced out of the market.
Current land prices in Northern Cyprus are approximately 25% and resale villa prices approximately 30-40% of those in the south of the island. Southern Cyprus property prices are, in turn, considerably cheaper (30-40%) than other major Mediterranean countries with similar climates such as Spain and Portugal. Whereas a detached 3-bedroom villa overlooking the Mediterranean on the Spanish coast might set you back Euros 180,000 or more, a similar villa in Northern Cyprus is available for under Euros 100,00.
Climate
Cyprus has a Mediterranean climate, with long dry summers from mid-May to mid-October and with mild winters from December to February, averaging 340 days sunshine a year.
Transport
Northern Cyprus has a modern airport at Ercan. The border crossings from the South have recently opened and people are now also flying into Larnaca airport and coming across to the North. The TRNC is trying to attract more tourism and so they have made the border crossing easier for people coming through.
Economy
The economic trend in the Turkish Republic of Northern Cyprus has been demonstrating a gradual but continuous growth and improvement since 1977. In spite of the high rate of inflation, economic, political difficulties and many deprivations, the realisation of 4.4% annual average rate of growth should be assessed as a significant achievement.
The cost of living here is one of the lowest of any country bordering the Mediterranean Sea. Prices of supplies and organic produce are substantially less than in the UK, and are often of comparable or better quality.
The Cyprus property market is one of the fastest growing markets in Europe. Investors are attracted by the potential growth in terms of returns on investment of property in Cyprus compared to other countries in Europe and the UK. Property prices in Northern Cyprus represent fantastic value for money; with equivalent properties in Spain, France and the Algarve being up to three times the price. It is therefore not a shock to learn that both foreign and local investors are eager to buy in the newly flourishing property market, with expectations of high returns. In addition, the process for buying property in Northern Cyprus is uncomplicated with a comprehensive legal system allowing foreign purchasers to buy property hassle free, these factors considered, combined with the stunning location means that the opportunity for making money is continually increasing
Tourism
Tourism will continue to be a basic priority sector and one of the main factors of economic development in the TRNC. In parallel to the economic development programme adopted by the TRNC, the tourism sector has been singled out as the most important sector for the improvement of the economy. The government is determined to provide all the necessary incentives for the prospective investors in the tourism sector.
In addition, there are sensible and forward planning strategies at government level, the legislation in place will ensure that the unspoilt natural beauty is preserved. There is no construction permitted along the coastline, within the mountain ranges and ravines as well as greenbelt protected areas. Construction is also limited to 20% of the total land area with a restriction of two storeys. The attraction to Northern Cyprus will never change and it will maintain its charm and character unlike other over developed countries in Europe.
Future
- World wide diplomatic sanctions are set to be lifted and trade travel embargoes removed.
- The EU has pledged Euros 259 million in aid for Northern Cyprus, to fund improving the country's infrastructure, enabling greater foreign investment, and preparing the country for the forecast growth in tourism.
- A new airport (Ercan) opened in May 2004 which will enable planes to fly directly to Northern Cyprus for the first time since 1974 once the travel embargo is lifted. This will conservatively lift the annual tourist numbers from 433,000 to 2 million people per year over the next five years. This is still below the current level of 2.3 million people visiting Southern Cyprus per year.
- According to UN estimates, Northern Cyprus needs to build a further 30,000 villas within the next three years. The current rate is 700-1000 per year, showing a large opportunity to meet demand.
Other Investment Incentives
Foreign investment is actively encouraged, and those willing to invest in N Cyprus can be sure of a positive Government attitude including:
- Leasing of land for extended periods at favourable rates.
- Import duty exemptions for goods concerning the project.
- Government contribution to charter risk.
- Contribution to brochure/advertisement expenditure up to 75%.
- Exemption from income tax and corporation tax for a period of ten years in the case of investment in tourist accommodation units.
- For public companies which have shareholders in excess of 50, tax exemption can be extended.
- Annual interest and principal instalments of foreign loans enjoy a transfer guarantee.
- Tourism establishments or hotels may deduct each year 20% of their annual foreign exchange gross earnings from taxable income.
- Free transfer of proceeds in case of liquidity of investments.
- Repatriation of profits without restriction or limitations.
- Employment of foreign personnel who are not available locally.
- Transfer of net income earned by foreign personnel is free.
- Exemption of constriction license fee.
- Also deductible when calculating annual taxable profit are all travel expenses related to promotion and marketing, plus all kinds of advertisement, promotion and marketing expenses.
REGISTERING A COMPANY IN NORTHERN CYPRUS
With reference to the registration of a company, the legal form widely used for business undertakings in the TRNC, both by foreign investors and by local businessmen, is the private limited company. The provisions concerning the limited company are set out in the Company's Law, Cap 113, which is almost identical with the UK's Company Act of 1948.
Permission is obtained from the Council of Ministers for foreign ownership of TRNC registered companies, usually within two or three months of application. The foreign ownership can be up to 49%, with the main share holder(s) being of TRNC citizenship owning at least 51%. A business permit is also required, which may be obtained from the Immigration Office.
The TRNC is encouraging a policy of attracting foreigners to come and live and work in N Cyprus - in particular, to invest in businesses, especially within the tourism sector. This, of course, opens up a multitude of trades and businesses, from travel agencies, transport companies (whether land, sea or air), hotels, bars, restaurants, holiday villages, tourist related services such as water sports, recreational land sports such as tennis, golf, horse riding etc.
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