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Canny investors will be quick to get a slice of the action in Southern Cyprus, which is set to benefit from the creation of a new international airport, making the area an even hotter investment prospect. The airport, due for completion in 2008 and with the facilities to cater for 2.7 million passengers per annum, will attract an enormous increase in tourism to Southern Cyprus, catapulting the area to the top of the property investment stakes, says the property firm.
An injection of around CYP 1bn in foreign currency into the local economy is also expected within 10 years, pre-empting a significant rise in property prices. Prices in southern Cyprus are still considerably lower than France or Spain - a three-bedroom detached villa with a private pool would currently cost around CYP 250,000 in a quality location, which would probably only stretch to a large two-bedroom apartment in the South of France.
Deposit levels have fallen to an astonishingly low 10-15 per cent in some areas, subject to status, which is likely to be more the norm next year, and Swiss Franc mortgages are available with rates of just 3.25 per cent making borrowing more affordable even before the predicted 2007 entry to the Euro. "There is no doubt that tourism in Southern Cyprus will increase dramatically when the new airport opens for business, presenting excellent opportunities for property investors who buy early," said Stuart Law, managing director of Assetz.
"Prices rose by 18 per cent in 2004 and are set to rocket further with entry to the Euro beckoning in 2007/8 and the expected increase in investment and tourism. An average of 340 days of sunshine per year and a strong letting season from April to October inclusive ensures the rental market in Cyprus is year-round, producing gross rental yields of 8-12 per cent." The Paphos region has an unusually strong winter rental season due to the mild weather and English-friendly culture, resulting in more impressive returns on investment than most other foreign locations.
Assetz predicts growth in 2005 and 2006 of 15 per cent a year in capital terms but high rental yields for investors will still leave plenty of profit on the rental income after mortgage costs. Return on cash invested could be as high as 100 per cent or more in 2006 for canny investors with good mortgages in place.
Cyprus is also tipped to be one of the hotspots for SIPPs in 2006 due to the unusual recognition of the trust structure of pensions and the low tax rates on property gains and rents. | 
