Northern Cyprus (Turkish Republic of Northern Cyprus or TRNC) is considered one of the most attractive countries for real estate investment. Over the past few years, there has been a continuous rise in prices: the cost of units in the primary market increases by 10% annually, and the secondary market also sees an increase of 5% or more. What makes Northern Cyprus popular is affordability, high quality of properties, and comfort of living. Another weighty factor is the low taxation rate on real estate. Northern Cyprus has even become known as a tax haven among investors. In this article, we will share what other advantages investing in real estate in the TRNC offers.
Content:
- Affordable real estate prices
- High rental business returns
- Low property tax
- Stable political situation
- Economic growth
- Free zone
- Education development
- Low crime rate
- No disclosure
- Low earthquake hazard area
- Conclusion
Affordable real estate prices
Compared to other sought-after Mediterranean destinations, real estate prices in the TRNC are low. This makes Northern Cyprus an attractive location for investors who want to buy property at a reasonable price and have a stable rental income. The average cost of a 1+1 apartment in 2022 was €70,000. Renting out such a property can get you €1,000 per month.
High rental business returns
The TRNC is popular with tourists, which means the region enjoys a high demand for rental property. Rental yields in Northern Cyprus are among the highest in Europe, making it an ideal location for investors.
What’s more, you can buy a property and make a profit even without having to look for tenants! If you buy an apartment or villa in an off-plan development and sell it once the project is completed, the property value by then will be 30% higher.
Low property tax
The annual property tax in Northern Cyprus is very low and based on the number of square metres. It can be paid in two instalments (in spring and autumn).
The tax is calculated in Turkish lira (TL). The amount per 1 m2 of living space up to 120 m2 is TL 1.85 (USD 0.095). In other words, the annual tax on a 100 m2 property will be 185 TL (USD 9.5).
The tax on property with an area of 120 m2 or more is calculated using a different formula: for 120 m2, the owner also pays TL 1.85, while everything above this is taxed at TL 2 (USD 0.1).
For example, the tax on a 150 m2 living space will amount to TL 282 (USD 14.5) per year: 120 m2 are calculated at a tax rate of TL 1.85, and the remaining 30 m2, at TL 2.
Stable political situation
Unlike other countries in the region, Northern Cyprus has a static political environment. The country became peaceful after the 1974 conflict, and this stability helped to develop the real estate market.
Economic growth
Northern Cyprus has a growing economy, which means that there are many opportunities for investors to make money. The government is investing heavily in the development of infrastructure, business, and tourism.
Free zone
The TRNC is not part of the EU, but this factor can be regarded as the country’s advantage. The value of real estate is pegged to the pound sterling, which is more stable than the euro in Spain, Greece, and southern Cyprus. The Greek banking system is generally considered extremely unstable among investors, which is a discouraging factor. Therefore, investing in real estate in the TRNC has two important advantages: stable property prices due to the peg to the pound sterling, and the low cost of living due to the favourable exchange rate of the Turkish lira.
Education development
The TRNC is known as a state that pays special attention to the development of education. There are internationally accredited educational institutions, schools, and universities, which are also recognized by the Turkish Council of Higher Education. This plays in favour of investing in real estate in this country. Northern Cyprus is increasing the number of educational institutions: there are currently 18 universities, and soon their number will rise to 26. This provides ample investment opportunities, and will also contribute to the further economic growth of the state.
Low crime rate
An analysis by the research company ValuePenguin has shown that Northern Cyprus is one of the safest places in the world. The country ranks fifth out of 106 countries analysed. Cyprus is also the number one safest place to live and travel in another ranking—among countries with a population under 5 million people.
No disclosure
Since the leading countries do not recognise the TRNC, this makes its banking sector "grey," isolated from international financial institutions. The banks of Northern Cyprus are practically not connected to SWIFT. In addition, any data disclosed to the Ministry of Finance, including the names of beneficial owners (of property or companies) and financial or other information remains strictly confidential.
Low earthquake hazard area
The most earthquake-prone area of Cyprus is the southern coast of the island. Tremors are felt here every year. Their number is relatively small and does not result in mass destruction or casualties, but the earthquake hazard in the region cannot be completely brushed off.
The northern part of the island is an area of low seismic activity. Moreover, the government has now approved strict building codes in line with international seismic standards.
Conclusion
Buying real estate in Northern Cyprus is a smart choice for investors looking to diversify their portfolio and create long-term returns. The region offers a number of advantages, including low property prices, high rental yields, tax incentives, a stable political environment, a low crime rate, tourism potential, beautiful sceneries, and a growing economy. There are several ways to invest in real estate in Northern Cyprus, including buying a property, investing in the housing stock or a crowdfunding platform, and investing in REITs (real estate investment trusts). It is important to collect complete information, work with reputable professional agencies, and comply with all legal and regulatory requirements. With careful planning and implementation, investing in real estate in Northern Cyprus can provide investors with excellent returns and a secure future.