INVESTMENT
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A BRIEF ECONOMIC OVERVIEW
North Cyprus is a promising market both for local and foreign investors and has a record of consistent growth. The consistent and steady rate of growth has in the recent years become even faster. Today, it is considred to be one of the best returning markets in the Mediterrenean. This is a result of various factors including continuous and fast growth of tourism and education sector, foreign and local real estate investments and foreign holiday home buyers.
The GDP per capita is $15,000 (as of 2017) and the economy grew by 3.6% within the last year. North Cyprus economy offers a promising, stable and safe investment climate with its steadily growing economy, increasing volume of tourism, higher education sector and foreign investors.
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HOLIDAY HOME BUYERS
North Cyprus has been a popular destination for European holiday homebuyers with the vast majority being British in the last decade not only because of its sunshine, beaches and unspoiled landcape but also because of the fact that the whole island is considered as European Union land but only the acquis communautaire (EU LAW) is suspended until a solution is found to the prolonged politic Cyprus issue with our Greek Cypriot neighbours.
Once the Cyprus issue is resolved whole island will be a full member of the European Union which will result in rapid increase in real estate and all other investments.
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TOURISM
The number of tourists visiting North Cyprus has also been steadily increasing in the last decade. The rate of increase from 2014 to 2015 was 8.9% which equals to 2.6 million tourists in numbers. Current total bed capacity of the hotels is around 20.000 and it is projected to reach 40.000 in medium term as a result of the new hotel investments.
It is important to note that majority of the new hotel investments are 5 star luxury hotels with all kinds of amenities inluding casinos.
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EDUCATION SECTOR
Higher education sector currently occupies the largest volume in the North Cyprus economy with 16 universities and almost over 95.000 students (as of 2016). Further 5 more universities are under construction and 11 more permissions have been granted by the government for additional university investments.
The number of students increased by 375% in the last 13 years from 24.000 to 90.000. Projections state that this number will be 150.000 in 8 years. It is estimated that each individual student’s annual contribution to the local economy is approximately 17.000USD in total.
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PUBLIC INVESTMENTS
Being a small country with a small local population of 300.000, governments over the last decade have noticed the importance of foreign investment for a stronger economy and further development. Therefore, a strong emphasis on public investment is currently put on.
These include water supply project from Turkey which is connected through pipes under the sea, new airport which is due to open in 2018 with 5 million passenger capacity, continuous highway construction projects and various other infrastructure projects. Additionally, feasiblity studies of carrying electricity under the sea from Turkey is currently under progress.
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INVESTMENT OPPORTUNITIES
Investment opportunities in North Cyprus range from buying a holiday home in which its value will increase from year to year while you enjoy the island, residential and commercial buy to let to larger investments including construction projects, land banking to hotels or marinas. Each individual investment model has different yield ratio and require to be looked in depth for making sure that your savings and capital is invested in the right way to meet your expectations.
Buy to let residential investment is becoming popular both amongst local and foreign investors mainly due to the rapid increase in the number of universtiy students. Increasing demand for additional housing resulted in increased rental values. Today annual rental yield is approximately 9% (approx. 11 years net, not gross) which is higher than almost all of the European cities. It is important to note that even though the local currency is Turkish Lira, all the sales and lettings agreements are made in British Pounds. This is an unwritten rule in North Cyprus real estate market which eliminates the currency risk for the investor. Investors not only pay in foreign currency but also are paid in foreign currency. Last but not least, rental contracts are mainly made for one year and the rent is paid to the landlord in advance.
In addition to residential buy to let, developing and managing university dorms is another option for larger scale investments. Feasibility and rental yield of such an investment depends on the scale and the management but in most cases the return on investment is approximately 8 years.
Increasing number of students and tourists has led to an additional need for retail, food and beverage and services sector which in recent years increased commercial develop and sell or develop and rent investments as well.