You are aware of the continuing talks that are taking place between the President of the Republic and Mr Talat and there is a certain guarded optimism by some quarters, that there might be a breakthrough for a way forward to the Cyprus political problem. The question is, how will the real estate market behave in such an eventuality. A most difficult question to answer and one which involves a lot of speculation. The possible solution will involve a lot of emotion, hence the real estate market behavior may not be rational. In order to examine the affects of a “way forward” very much will depend on the type of the solution and its conditions, as well as the time scale of its implementation.

Whatever the solution, we will expect a “freeze” of interest by locals in real estate investment and interest will emerge from a general search for opportunities (if any) in the areas to be returned and those retained under the Turkish Cypriot administration. Refugees and others will rush to reinvest in the father’s homeland (if they are allowed), whereas others who have grown up away from their original place of birth will be indifferent and most likely they will decide to sell. At the same time land supply will increase due to the “return” of the now occupied areas/buffer zone etc and this will include development areas (which were so classed at the time) keeping steady and even reducing land prices by comparison with the today’s Government controlled areas prices. On the other hand, the solution of the political problem will mean also that the T.Cypriots side will now be “allowed” to dispose land in their own administrative area in a legal way. So the restrictions and “the fear” of doing something illegal, will not apply in this case. Because property prices, as well as the cost of living is lower in the Turkish occupied areas, we expect, at the beginning, a rush for investment in the “north” causing property and other prices to move upwards, but over a period of 2-3 years, most likely property prices will reach an equilibrium on both sides. What is more certain than not, is that Famagusta will become THE town of Cyprus. Not only because of its success storey of the past, but because it is a town set right on one of the best beaches in the Mediterranean. Looking at the town historically in terms also of architecture, the town was the first to adopt the high rise buildings (1970’s) which it was very much criticized later (1980’s) and only now, after 40 years, the remaining Cyprus is following Famagusta’s example again, by adopting high rise buildings (see now Limassol with its 20 storey new beach buildings).

The shifting of the population will cause also “opportunities” to invest on both sides, as people would like to sell their unneeded property in order to acquire, improve, have property in the now “other side”. Similarly foreign interest in particular for the “north” will increase considerably eminating both from foreign investors, as well as from repatriated T/Cypriots and we expect heavy interest from Turkish business people.

Whatever the outcome of the real estate market, we will expect inflation to increase due to the millions of euros in compensation claims, sale of property etc, so on this count alone, prices of real estate over a mid term will trend to rise. The confidence will also increase in the Cypruswide economy and the “solving” of the problem, will attract added investors pushing the local market upwards.

Difficult to say dear readers on the developments of the Cyprus real estate in such an eventuality and one must not discount the problems however distant as they may appear now. For example the adjustment of prices might cause financiers to reconsider their security and people with loans now secured in terms of mortgage value, may become unsecured. Nevertheless and whatever the side affects are, we wish that a solution is found for the benefit of all Cyprus residents.

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