MANY overseas investors buy property in Cyprus believing that they will make substantial profits if they buy “off plan” and then sell on once the development is finished. (Off plan is where a property being bought is at the planning stage and has yet to be built).
In one marketing brochure, investors were told that they “only have to invest 30% of the selling price, then the property is put back on the market before the next 60% is due and the property is sold at retail price.” This scheme (or should I say scam) predicted that investors would realise a 78% return on their investment in 9-12 months.
Needless to say the investors, who bought more than 1,500 of these properties, soon found out that they’d been duped. The days of “buying and flipping” in Cyprus are long gone!
The long-term investment rating and prospects for Cyprus are also looking very shaky. On the 11th November, the influential Global Property Guide published its Country Investment Ratings for 69 locations around the world.
At the top of the list is Chisinau in Moldova with a “Spectacular” gross rental yield of 14.17% and a long term investment rating of 3 stars.
Languishing near the bottom of the list at position 65 out of 69 is Limassol in Cyprus with a “Very Poor” gross rental yield of 3.45% and a long term investment rating of 1 star.
The Global Property Guide long term investment rating is based on many factors:
- Gross rental yield
- Income tax
- Capital gains tax
- Round-trip transaction costs
- Potential landlord and tenant problems
- Long-term GDP growth
- Potential over-supply
- Affordability
- A view of long-term appeal to investors
