umeca74 wrote:I am considering buying a "seaside" bungalow in Cyprus for investment. It is in a relatively newly built seaside complex and the return on investment is close to 10%, all very well for the time being. But holiday lets are a different beast than letting in say a city centre. Tourists expect something flash and shiny. The property that looks good today and returns 10% will look dated in 10 years time, and as a result the rent will go down and it will be hard to sell it even. So it looks like the useful life of such an investment is much shorter than a regular buy to let. At least that's my worry
nikos
Γειά σας, Niko!
The property market in Cyprus is very slow for re-sales. It can take years to shift a property (the full-time residential one I bought was on the market for over two years at ever-reducing asking-prices and I've seen stuff sat on the shelves for much longer). There has been a recent resurgence of speculative building but there is a long history of punters being fleeced by developers of new-builds and, of course, by selling agents as the latter are the same the world over (but registered agents collect 5%-6% of selling price from vendor - and I believe fees paid to unregistered agents aren't an allowable cost for CGT purposes). Yeah, you're right - why would anyone buy your tired holiday unit when there are bright new flashy ones springing up all the time? Another point is just how good will site management be? Taking chunky fees when everything's new and looking good is all well and good but having to do something to actually earn those fees when the inevitable slide in the appeal of the development starts to kick in is of little appeal - so you continue to pay and struggle to understand why things don't get done.
The conveyancing "system" is actually very different from what you might expect and it's all too easy to make assumptions based on UK knowledge and experience which will come back and bite your bum. There are a vast number of tooth-marked bums among foreign "investors" in Cyprus property.
Mortgages are also a minefield. One would normally want debt on a property to be in the same currency as the income so as to eliminate exposure to exchange rate risk but getting a Euro-denominated mortgage in Cyprus is problematic now that the remaining lenders are getting a tad more responsible about their lending due to Non-Performing Loans accounting for an eye-watering 44% of total loans (many of those NPLs being strategic defaulters and the largest of those being developers). Swiss Franc loans were 'popular' (with those selling them) but this is now (Switzerland having broken the link between it's currency and the Euro) recognised as a mis-selling scandal but one which remains unaddressed - perhaps because it was mostly foreigners who got burned. If you re-mortgage in the UK to help finance the purchase then that'd be OK (as far as the Forex is concerned) if you were letting only to UK punters who pay in sterling.
Did you know that you can buy a property and believe you've "completed" (not actually a concept in Cypriot conveyancing as you might understand it) but subsequently discover that the developer has a mortgage on the whole site so Title Deeds can't be issued to you? There has been talk (and just a very little action) on allowing the "buyers" of these properties to finally get hold of their Title Deeds. Buying without Title Deeds is a very bad idea but very common and UK buyers just don't realise that they're buying an encumbered property - as I say, the conveyancing system is very different.
I really don't see that 10% return is achievable - but I can guess who told you that. Bear in mind that the all-inclusive hotel package is currently seen as having growth potential for the island's tourism industry so independent travellers may, if forecasts are anywhere near correct, be thin on the ground and have a vast number of units seeking their business. Note, too, that Russia is becoming a growing source of tourists with visitors from UK (the largest group) dropping since the GBP/EUR exchange rate moved post-referendum and with resultant domestic financial woes starting to bite in UK.
I'd recommend getting a feel for things at:
http://www.news.cyprus-property-buyers.com/and see how others are coping with getting their Title Deeds and other problems at:
http://www.cyprus-property-buyers.com/forum/while handy guides and links (esp. to the High Commission's very short list of trustworthy, English-speaking lawyers) can be found at:
http://www.cyprus-property-buyers.com/r ... nloads.htmPerhaps you're looking at the coast area up from Pafos (popular with Brits) or at the area further North near Polis/Latchi which is relatively remote from PFO airport with road links not being wonderful though (over-)development continues apace. Of course, if you're looking at the occupied area of Northern Cyprus (TRNC) then all bets are off and you should heed FCO advice and study the cautionary tale of the Orams case:
https://en.wikipedia.org/wiki/Apostolides_v_OramsI used to operate Furnished Holiday Lettings businesses in the UK (in South Devon) and briefly looked at Cyprus for FHL (with, ahem, just possibly some personal usage) but ran away as the hard-nosed evaluation of rewards were insufficient for the risks involved - too many unquantifiable unknowns of both the known and the unknown varieties.
Having said all that - and recognising that it all sounds very negative - I bought. However, I researched the "system" in great detail before I emigrated and spent nine months 'on the ground' before finally proceeding with a property that I also subjected to detailed research before-hand.
Let's be careful out there....
Cheers!