ONE hundred home sales in as many days on a tiny island in the Mediterranean? For sale signs being hurriedly translated into Chinese?
While the goddess of love and beauty, Aphrodite, might have bestowed those gifts on her birthplace, Cyprus, reports that the island has suddenly become a magnet for Chinese investment appear a little mythical.
According to the latest figures, real estate prices have tumbled by 7.6 per cent year on year, while the number of completed sales last month was down 15 per cent since 2011. That is an annual decline of 47 per cent and the biggest fall since foreign and domestic buying habits were first recorded back in 2000.
With such a cloudy outlook, who can blame some agents in Cyprus for perhaps embellishing the interest being shown by Chinese investors, following an acceleration of the terms some overseas buyers can gain residency permits.
Cyprus, which has long been considered as occupying the crossroads of Europe and the Middle East, and a trading post to Africa, revised its law in 2007 to allow non-European Union (EU) nationals who buy properties worth over €300,000 (HK$2.98 million) automatic and permanent, yet flexible, residency permits.
Now the policy has been accelerated and, with Spain and Malta tightening their residency rules, Cyprus is one of the few places in Europe where Chinese nationals – provided they invest €50,000 in a bank account for three years – can automatically get permits. Cyprus, which joined the EU in 2004, has long been a favourite for Russian investors, but there are signs that Asian investment is stepping up.
Property developer Cybarco, which is developing several luxury builds on the island and selling the portfolio with the respected global player Knight Frank, is behind the country’s first residential marina development in Limassol, which is offering docking for 650 yachts and apartments from €428,000. It is also working on a project along the unspoilt northwest coast of Cyprus, Akamas Bay Villas, which is already 70 per cent sold, many to buyers from China.
CEO Michalis Hadjipanayiotou says: “The Russians are not moving out, but the flow from China started recently. The Chinese are mainly interested in seaside locations; Limassol, in particular, remains the ideal city for purchasing permanent or holiday homes, but also for investing in commercial properties or office spaces.”
A bonus to investing in Cyprus is that Chinese nationals can get their children into universities with a lower number of credits, and that Chinese Cyprus permanent residence holders have unrestricted travel rights to Hong Kong and Macau.
The island, with its 330 days of sunshine a year, low crime rate and lowest European corporate tax rate of 10 per cent, certainly has much to offer, admits independent property adviser Nigel Howarth.
“It is certainly a lovely place to live. But reports of a mass influx of investment should be read cautiously. And at the lower end of the market there are thousands of holiday apartments that have not been completed and values have fallen, in some cases by up to 50 per cent.”
Howarth, who publishes reports and advisories on housing and economic news from the island, says that the geographic location of Cyprus is critical. “It is an important axis point for East meeting Europe, there is an excellent port and some lovely parts to the island, but you would have to be very naive to believe all the reports of a boom.”
There clearly is something going on in this tiny island. Although a multimillion dollar plan by a Chinese consortium, Far Eastern Phoenix, to develop the old Larnaca airport into a commercial showroom for Chinese products and a logistics centre has collapsed, there is a major charm offensive under way.
One of the most spectacular developments ever seen on the island has already attracted interest from China. Although the price is only an application, rumours abound that you will need over €20 million to buy the Santa Barbara Residence, being built by Cypriot developer Country Rose.
The director of the development is coy about interest, and the price, but says that a number of Chinese buyers have been in touch. Situated at East Beach, a short distance from Limassol, the residence may have five floors named after mythical gods, but is a showcase to all that a modern and discerning owner may desire. The residence has its own spa, complete with a snow cabin and steam geyser, a wine cellar carved into the rocks and a dining room that has wraparound views of the sea.
But, as Howarth warns, even the most astute investors should be careful. Estimates put the number of properties in Cyprus without title deeds at up to 130,000, staggering considering there are only 900,000 people living on the island, and that it is far from unusual for the unsuspecting to buy homes which are built on land which is not owned by the developer.