What's next for North Cyprus

Beautiful, affordable, sunny... North Cyprus has it all for people looking to make a great investment somewhere special. So why hasn't the market fully taken off yet and is all that about to change?

By Camilla Kaas Stock

Established over twenty years ago, the Ian Smith Estate Agency was one of the first British estate agencies that came to the island. Director, Kate Ozikiz Smith, has worked in her father's company for almost eight years, and in that period she has seen big changes. She talks to Camilla Stock about what's next for North Cyprus.

-Most people thought that we would join the EU in 2004, especially when North Cyprus voted yes to the so-called Annan Plan and unification of the island. But the Greek side voted no, and it didn't happen. Eventually, there will have to be a solution to the situation. There was a big property boom here about three to four years ago, but this has slowed down a bit and we have also seen a drop in tourist numbers, which has a big effect on our business.

How does the market look today?

-There has been a lot of development here, but there aren't enough buyers at the moment. Apparently, it is the same on the Greek side of the island, too. Most of our buyers are British, so whatever happens in the British market reflects on us.

What sort of property do you sell most of?

-We deal mainly with re-sale properties. They always seem to be very popular. It is probably because a lot of people find it hard to imagine a property just from the plans, and it isn't that easy to stand on a building plot and visualize how the area around is going to look.
When it comes to new-builds we have been quite lucky here and haven't experienced many scandals like in Spain. But around 2004 everybody suddenly wanted to be property developers
and this, of course, has caused some problems. Therefore we are quite selective when choosing which developers to work with. We always make sure they have high building standards and that everything is in order with title deeds and property boundaries. My father has been in the business for 20 years and has built up a good reputation and I want to make sure I carry that on.

Who is buying properties in North Cyprus?

-In the past it was mainly retired people, 50 years plus. But this has changed lately and we are now seeing a younger group of people coming over with their families, looking for a safer, more relaxed way of life than in the UK. There are also a lot of investors coming here, in particular a lot of Israelis.
Your money goes a long way here, so people come to buy a holiday home in the sun, plus people are hoping to get an income from a market with lots of potential.

How is the rental market?

-The holiday rental market was very good three years ago, but as I mentioned earlier, the tourist numbers have dropped. Prices of flights have gone up and there are now many properties on the market. But when it comes to long-term rentals things are very different. If you want to rent out your house or apartment for six months to a year, you will have no problems. It is very cheap to rent holiday homes here. You can get a villa with three bedrooms and a pool for £400 per week! In Spain or France you will have to pay double that. This will all change when we eventually get direct flights.

What are the types of title deeds on properties in North Cyprus?

-There are mainly two types: freehold and leasehold. First, I will briefly touch on leasehold properties. These you mostly find in Karaman village, where a lot of the buildings lay in ruins after the trouble in 1974 [when north and south were divided]. These properties were given to foreigners to restore, to begin with on a 25-year lease, but later automatically renewed to a 49-year lease. All at no cost to the owner, of course. Karaman has become a very pretty and popular village, with a lot of Americans, Brits, French and Belgians now living there.

The rest comes under freehold properties, which comprises two groups. First there is TRNC Freehold, also called Esdeger or Exchange Land. This is the land you find most of in North Cyprus. Basically, it is land that was given to Turkish Cypriots in exchange for land that they lost on the south side when the island was divided. Now there is also something called TRNC TMD Land, it is all very complicated so I won't go into too many details. Basically it is land that was given to mainland Turks to boost the population and also to families of those who died in the troubles.

The second group is the Pre-74 title deeds and these are the only internationally recognized deeds. The rest are only recognized by Turkey. This is land that was owned by a Turkish Cypriot or a foreigner before 1974. There isn't much available, as most of the Turkish Cypriots lived on the south side of the island. Paphos and Larnaca were big Turkish communities.

Now the TRNC government has come out with a new law to stop discriminating between the different title deeds, so you will no longer be able to know what sort of deeds you are buying.

Why have they chosen to do this?

-This is their way of saying that all deeds are equal and the government stands as a guarantor, which means you will no longer have to pay a premium for pre-74 land. Previously, a lawyer would be able to confirm the deeds at the land registry, but not anymore.

What guarantees are there if someone makes a claim against the land you have bought?

-If someone makes a claim this will go to the property board. There have been several cases where Greek Cypriots have been paid compensation. I want to point out that this compensation is paid by the government, not the individual. I only know of one case where the land was given back, but the plot had not been built on yet and was still officially owned by the government.

In 2004, a British couple David and Linda Orams, were taken to court by a Greek Cypriot from the south of the island, who laid claim to their house by ‘pre-74 rights'. A Greek Cypriot Court found in favor of the man and ordered the house to be demolished and also ordered the couple to pay damages. It all became big news when Cherie Blair QC, human rights lawyer and wife of Tony Blair, the former prime minister of Britain, took their case and won in High Court in London. The Greek Cypriot has appealed to the EU and it will take years before the final outcome is known.

What effect, if any, has the Orams case had on the market?

-We've had only one person pull out of a sale, awaiting the outcome of the High Court ruling. As soon as they won the case in the UK, everybody was ok. Now it is an ongoing concern again, but it is not so much in focus any more. When people do their research and they understand the whole land issue, they realise there is no need to worry.

Where are the most popular areas to buy and what do you predict for the future?

-Anywhere in the Kyrenia area is popular. Esentepe is sought-after because of the beautiful golf course they have there and now there is also a marina being built a bit further out. Bellapais is also very popular because of the stunning abbey. But really, people flock to anywhere in the Kyrenia area, like Lapta or Alsancak, which are close to amenities and nice beaches.

The Karpas peninsula is also definitely up and coming. They are building six international hotels there at the moment and have now started building residential homes. Kayalar is another place which may appeal to people who are looking for something more remote. It lies about 25 minutes drive west, and is very rugged and scenic. There is also a lot of development in the Bogaz and Famagusta area where the Israelis are investing heavily.

Are estate agents now regulated?

-Yes, this came into effect at the beginning of January 08, and should bring the number of estate agents down from around 300 to about a 100. This new law will help get rid of some of the less reputable companies that have popped up here in the last few years. Now there will be somewhere for people to go if any problems should occur, there will be some insurance and, if an estate agent acts in a dishonest way, they will be struck off.

What's your advice to someone who is interested in buying a property in North Cyprus?

-Ask around before you buy anything. Find out who people have bought from and which lawyer they used. There are some good lawyers, but not everybody has the client's interests at heart. So do your research, especially on the developer, and make sure all the papers are in place.

How do you feel after the February elections in the south?

-Personally I feel there are a lot of obstacles to overcome, but if talks start up again, that is a step in the right direction.