Cyprus Real Estate: The Hidden Treasure Of The Mediterranean

The history of the island of Cyprus dates back millennia…

However, for real estate investors, the history that is critical to understanding the current state of affairs on the island dates back to 1878 when the British empire took over the island under a lease from the Ottoman empire.

That lease set into motion Cyprus’ modern-day status as a divided island that is part of the EU.

In short, Cyprus became an independent nation in 1960 with a constitution meant to be guaranteed by Britain, Greece, and Turkey.

While the Brits were in control, the Greek and Turkish Cypriots played nicely, but after independence, that changed.

By 1974 the constitution was under attack, and the Turks intervened.

The island has been divided ever since.

For real estate investors, the divide opens up opportunity.

Today, I want to focus on the North of the island, where buying almost any property can secure excellent returns from cash flow, appreciation, or both.

Residency in Northern Cyprus is straightforward. Own a property here and you are eligible for residency once you have title to your property.

The north side of the island country represents 36% of the land area, but due to the geography of the island, has more than 50% of the coastline.

This affords Northern Cyprus several distinct coastal areas to look at: East of Kyrenia (Girne), West of Kyrenia, and the Iskele area (Long Beach and a designated resort area near Bafra).

Each of these four areas have different features, but all are attracting tourists in search of rental properties.

East Kyrenia

The path of progress from the town of Kyrenia is east along the coast. This side of the island has a mountain range running parallel to it that drops to the shore, opening up small contained beaches in coves.

The terrain allows for ocean views from most of the properties built here. Strict permitting rules in this part of Kyrenia limit building heights to three stories and forbid new construction within 100 meters of the coast, meaning you are guaranteed a coastline that won’t be overrun by high-rises.

Property along the coast east of Kyrenia is split into the ocean side of the main road and the non-ocean side of the main road. Short-term renters tend to prefer the ocean side for the beach access. Residents and long-term
renters prefer the non-ocean side due to lower prices.

As construction extends farther east, the shopping and services infrastructure is extending as well. Still, even at the far end of current development, you’re
only 45 minutes from Kyrenia, packed with U.S.-sized supermarkets, pharmacies, restaurants, and anything else you’d be looking for.

This area is where I’ve put a deposit on a studio rental that was priced at 54,900 British pounds. I got the last decent unit of that size, as it had been reserved while I was there and the buyer dropped out. This is a place where you need to be “in the market,” ready to take action.

Properties and short-term rentals on the north side of the island are priced in British pounds, although the functional currency in the north is the Turkish lira.

With the lira as the currency for day-to-day living and many products coming from Turkey, you can live very inexpensively in the north, which is why it’s attracting a fair amount of retirees from Europe.

Europeans come for vacations as well, but tourism from Turkey and Israel is strong. Some of the Israeli demand comes from an Israeli development group that has projects both in the area east of Kyrenia, as well as a
major tourism project in the Long Beach area of Iskele.

This developer, like many here, combines their real estate development with their own tourism company. The tourism company manages the short-term rentals and markets them to overseas tourists. That helps their projects’ occupancy rates, of course.

That’s something to look for when buying in the north… a developer with built-in rental management services. It’s also important to look for projects with strong services and amenities.

Long Beach, Iskele

The biggest developer in the Long Beach area has both. While visiting I could see the difference with other projects. A similar, but smaller project next door to the big Israeli resort was clearly just buildings being built… no services or amenities… not even a pool.

Next door, the project I recommended first three years ago before being able to visit the island, has multiple pools, a spa, gym, play parks, restaurants, and even a grocery store on-site.

The beach is the same distance for both properties, but the one without any amenities doesn’t rent as well. It also doesn’t have built-in rental management from the developer.

Bafra, Iskele

North of the Long Beach area is a development zone for resorts and casinos near the town of Bafra.

This area had been previously described to me by the real estate broker Dengiz, who we’ve been working with the last three years. But it wasn’t until driving in that it struck me that this area is very similar to Cancún, Mexico.

Cancún started out as a patch of sand on the Yucatán peninsula in the 1970s and has grown into a global tourist destination.

Not that this Bafra area is going to turn into Cancún overnight, nor is it likely to become as big as Cancún.

However, the key similarity right now is that just like Cancún being targeted by the Mexican government for development, Northern Cyprus has targeted and designated this area for resort tourism.

In the works are 14 resorts that will be built along the coast here. Five are already built and operating.

Where is the opportunity for an individual real estate investor?

It’s in the limited non-resort units being built. Demand will come from workers in the resort who want high-quality places to live as well as tourists who don’t necessarily want to stay in a big resort but do want access to the amenities.

West Kyrenia

The last area of interest in the north for me is the west side of Kyrenia. South of the mountain range is yet another long beach in a flat area on the west coast between the Kyrenian and Troodos Mountain Ranges.

This is an agricultural area of the island due to the fertile flat fields. However, the beach area has been mostly ignored to date.

One developer has started a project for medical services that will include apartments for short-term renters recovering from surgeries. Northern Cyprus has a strong and growing medical tourism industry.

The developer has partnered with medical providers to build a hospital and medical facility as part of the master planned project. They’ll also include age-in-place services like assisted living and long-term care.

In any of these four regions you can find properties still for under US$100,000. You can also find million-dollar-plus villas on the ocean that would cost multiples of that on the south side or anywhere else in the Mediterranean.

The bottom line is: You can get solid value for money, as my Irish friends would say.

Rental return projections for some new projects are pushing into double digits using pre-pandemic occupancy rates. With current occupancy rates still working their way back to the pre-pandemic numbers, you’re still looking at 6% minimum net yields for the most part.

Again, rental management is key, so look for developers that provide built-in rental management. Otherwise, you might struggle a bit with your rental.

The Northern Cyprus real estate market is one that I haven’t seen in a long time. You can buy almost anything and expect to make money, whether it’s through rental yields, appreciation, or both.

I say stick with something new with built-in rental management. It’s the safest way to get a strong rental yield unless you’re planning on moving there yourself.

Lief Simon
Editor, Offshore Living Letter