Buying Property on the Eastern Mediterranean Islands
Buying property on one of the islands that lie to the east of the Mediterranean can be a hugely attractive proposition for numerous reasons - namely good investment returns and a buoyant holiday-home market. Add price tags that won't stretch the budget to unmanageable limits, a climate with almost year round sunshine and, in some cases, good tax incentives and you have a region worth taking a second look at.
A glance at the map will reveal a seemingly endless number of islands in this stretch of sea, but it is Cyprus, and the Greek islands of Crete, Rhodes, Paros and Santorini that are attracting the majority of property buyers. Their markets are in the main established, but there are still a great many properties for sale that have the potential for good capital growth and rental returns. Peloponnese, technically an island just off mainland Greece, the Greek Saronic Islands of Hydra, Spetse, Poros and Aegina, along with those off Croatia and Turkey are worth keeping a watch on too. Their emerging markets, while offering a smaller choice of homes at the present time, and some of those at a premium, offer good potential.
The largest of the islands in the eastern Mediterranean is Cyprus. The south of the island has well established property markets, with Paphos property, Limassol property and Larnaca property to suit all tastes. Homes in a town centre location, on the coast, in a village or on a golf complex are all available. Prices tend to range from around CY£70,000 (£84,000) for a one-bedroom apartment through to around, on average, CY£120,000 (£141,000) for a townhouse and CY£180,000 (£212,000) and above for a villa with a private pool.
Property growth figures in Cyprus currently stand at around 12 per cent, but this is expected to rise sharply as Cyprus enters the euro monetary system planned for January 2008. Buying property in Cyprus is straightforward and based on the British legal system, with fees and taxes set by the government. Expect to pay around £1,500 to £2,000 for legal representation, plus transfer fees of around two per cent of the purchase price and 0.15 per cent stamp duty.
"We have seen a very buoyant market in the coastal towns over the past couple of years, which we believe is largely down to Cyprus's entry to the European Union, and the fact that real estate prices compare favourable with countries like Spain," says Charalambos Styliano of BuySell. "Buyers are seeing good growth on their capital and the opportunity for rental income, and we expect this to improve further as we adopt the euro."
The island's capital, Nicosia, is the surprise, though. For Brits looking specifically for an investment property, there's a large proportion of new and resale Nicosia property starting from around CY£50,000 (£60,000) that are located close to the city's expanding university where accommodation is at a premium or areas where government, embassy or International companies' premises are located.
Renos Constantinou, BuySell's commercial executive says: "We find that British buyers tend to buy coastal property, but Nicosia actually offers many good opportunities for buyers looking for investment properties, and restrictions on the number of properties a foreigner can buy has eased since Cyprus became an EU member. Rentals of around CY£300 for a small apartment can be easily achieved around the university campus or near the embassies' premises."
Cyprus is a divided island and, to the north, which is under Turkish occupation, an emerging property market is taking place. Buying property in Northern Cyprus must be done with care, but providing the property is proved to have belonged to a Turkish or foreign owner, and not a Greek Cypriot, and has confirmed Turkish title, then acquiring a home shouldn't carry any more risk than with any other emerging market.
"British buyers are still nervous about buying property in northern Cyprus because of the stories of people losing their homes, but my experience has proved that there is no risk providing you buy sensibly," says Helen Cooper of Blue Sky Property. Helen purchased her Turkish title home in a village near Kyrenia nearly three years ago and has seen a 40 per cent growth on her capital, with holiday rental potential of around £400 per week or £700 per month long term. The experience prompted her to start her own business, working with a developer who gives a money back guarantee for anyone looking for Kyrenia property but decides to withdraw from the purchase or to sell.
"People are attracted to Cyprus because of the property prices, the capital growth potential and the relaxing lifestyle, but there are real property bargains to be found in north Cyprus, and we offer the guarantee to help reassure people that it is a safe place to buy," adds Helen. The buying process in the north is relatively straightforward and should always be carried out by an English-speaking lawyer. Fees will be around £1,200 for the drawing up of a contract, title checks and completion. Blue Sky Property currently has a number of properties available, including villas at Karaoglanoglu, near Kyrenia, at around £99,500 and detached homes at Ozankoy with a price tag of around £155,000.
The Greek islands, themselves, have attracted holidaying visitors for decades, but it is only in the past couple of years that many have turned their thoughts to real estate. The islands are an emerging market, with Crete, Paros and Santorini leading the way, closely followed by others such as Hydra, Spetse and Aegina. "We have seen the demand for Crete property, property for sale in Paros and property for sale in Santorini soar," says James Dearsley of Atlas International, which only recently entered this market. "In fact, the demand is better than we expected. The Greek Islands have taken off better than anywhere else in our experience."
Choice of island depends on personal needs and requirements and, of course, budget. For example, Crete has a year-round economy, if a little slower in the winter months, and has the infrastructure to support a permanent move. A typical brand new one-bedroom villa will cost around £140,000 rising to around £240,000 for a similar three-bedroom home. Smaller islands like Paros and Santorini have a more rural economy and, as such, property is much cheaper. Atlas International, for example, has a one-bedroom apartment in Paros for £91,000 or £104,000 for two bedrooms at its Liana development. All three islands are experiencing capital growth of around 12 to 13 per cent, with good potential for rental income of around £300 to £400 per week holiday lets.
Elsewhere, Rhodes, in the southeastern end of the Aegean Sea, is seeing a growing trend towards new property development. One such project is a collection of two- and three-bedroom homes at a new Cybarco complex at Pano Lahania, which are selling from around £100,000. Capital growth is expected to rise as the development progresses. Built to a high standard with a pool, and featuring traditional Rhodian architecture, the homes are designed for day-to-day living, holiday lets and investment.
Further north, the islands off Croatia are seeing basic property available from as little as £20,000, but because demand is currently ahead of supply, well-presented homes in a good location are attracting a premium, thus making a superficially enhanced market. Amar Sodhi, of Avatar International, says, "The Croatian islands market is one to watch, and while there are cheaper properties about, most are higher in price because of the exclusiveness and the fact that demand is outstripping supply at the current time."
If living on a small island appeals but the thought of being some distance from the mainland is a concern, why not take a look at the Peloponnese. Once connected to mainland Greece but now technically an island, the Peloponnese offers a good climate and lifestyle with a low cost of living. Properties on Peloponnese range from traditional stone Mani houses to new build apartments and villas, at prices starting from around £80,000.
O'Connor Properties currently has a traditional Mani house at Messinian, Peloponnese, with a price tag of £95,500, and a three-bedroom, two-bathroom stone villa which was once the olive press of the village at around £205,000. Both are close to local amenities. Mary O'Connor, of O'Connor Properties, says: "As more and more people discover and appreciate the subtle beauty of the Peloponnese, a purchase of property at present low prices can be an excellent investment."
First published in May 2007.
Some information contained within this article may have changed since it was first published. Homes Overseas strongly advises you to seek current legal and financial advise from a qualified professional.