by Senilk Real Estate
The soaring house prices in Northern Cyprus an indicative of economic variability of the real estate market in the region. The serene island of Cyprus, nestled in the crystal-clear waters of the Mediterranean, has always been a sought-after holiday destination. Recently it has witnessed a remarkable phenomenon – an unprecedented surge in house prices that has left both residents and investors intrigued. The soaring house prices across various towns in Northern Cyprus highlight the global hyperinflations people grapple with.
Northern Cyprus’s nationwide house prices rose by a whopping 18.5% in May 2023 from a year earlier, to an average of £704 per square meter, according to the recent report released. In just 8 months of 2023, foreign home purchases in Northern Cyprus rose by a huge 15.4% to 20,104 units as compared to 6,735 units in the same period a year ago, based on figures released by TurkStat. This was the highest sales to foreign property buyers ever recorded.
Factors that led to a substantial increase in house prices, were driven by the combination of increased demand from domestic foreign buyers, limited housing supply, and an influx of expatriates seeking a tranquil lifestyle.
With the exception of the years 2019 – 2021 due to the COVID-19 pandemic. Foreign buyers continue buying property, contributing to a substantial increase in tourism and investment. As the Turkish lira (TRY) falls sharply, visitors with foreign currencies have been attracted to Nothern Cyprus. Nicosia, Famagusta, and Kyrenia are now full of visitors, and other international holidaymakers.
Between 2021 and 2023, foreign purchases have more than doubled from 10,391 units to about 20,576 units. Russians, Arabic, British, Germans, and Scandinavians accounted for almost of the total foreign purchases during the stated period. The people from Turkey, the mainland who feel culturally close to the country have also contributed significantly to property purchases in the Turkish Republic of Northern Cyprus (TRNC).
Tens of thousands of foreigners have successfully acquired properties in the Turkish Republic of Northern Cyprus, most notably in the Kyrenia, Nicosia, and Famagusta regions, the major finance and tourist hubs of the island. The regulation easing requirements and foreign investment incentives introduced by the government for foreigners to acquire permanent residence via property investment, and the VAT exemption for foreigners as well as the volatility in the local currency lira against other international currencies helped spur sales.
In the capital city of Nicosia, the average house price rose by a significant 12.3% during the year, reaching an average of TRY 14,520 (1,324 GBP) per square meter (sq. m.). Adjusted for economic conditions, house prices increased by 6.8% year-on-year.
In Famagusta, a major coastal city, house prices experienced a more modest growth of 5.6% year-on-year, reaching an average of TRY 11,320 (1,033 GBP) per sq. m. After accounting for economic conditions, the inflation-adjusted house price growth was 3.2%.
A Quick Overview
Kyrenia: Known for its picturesque harbor and historic castle, Kyrenia has witnessed a substantial increase in house prices, driven by a combination of factors including increased demand from foreign buyers, limited housing supply, and an influx of expatriates seeking a tranquil lifestyle on the island. House prices in prime locations such as Lapta, Bellapais, Catalkoy, Alsancak, Karaoğlanoğlu, and other affluent places have risen notably. For example, Bellapais perched on a hillside overlooking the sea, offers a range of opulent villas that have seen their prices appreciate remarkably. A villa that might have been priced at around £500,000 just a few years ago now commands well over £700,000.
Kyrenia City Center, with its blend of urban vibrancy, has also witnessed an upward trajectory in prices. 1+1 Apartments that boasted price tags of approximately £150,000 in 2017 can now hardly be found under £220,000. The charm of walking along the harbor promenade and the convenience of city life have made this location immensely desirable. Luckily, Senilk Real Estate still has a 1+1 apartment for sale with a 113 m² total size in Kyrenia City Center and the price is just £140,000.
Famagusta: With its stunning beaches and ancient ruins, Famagusta has also seen a surge in house prices. The stunning beachfront properties that once commanded prices around £180,000 in 2020 are now being listed for £250,000 or more. This can be attributed to its potential for tourism development and the establishment of international universities, attracting both investors and students. The increased demand for housing has led to a surge in construction projects, transforming the skyline of this historic town.
Nicosia: The heart of Northern Cyprus, boasts a blend of historical significance and modern vitality. As the capital city, it has witnessed a resurgence in its real estate sector, fuelled by economic growth, urban renewal projects, and an influx of businesses and expatriates seeking opportunities. In 2018, these properties might have been priced at around £250,000; now, they command nearly £350,000 or more. The Old City’s restoration projects have further driven the demand for premium residences, contributing to the overall surge in house prices.
Guzelyurt: This agricultural town has not been immune to the housing boom. The availability of spacious plots of land and a slower pace of life in the citrus trees have attracted individuals seeking a rural escape while still being connected to urban centers and modern living. This resulted in massive competition for land and properties in the Guzelyurt area, which has driven up property prices, altering the town’s traditional affordability. What was once a budget-friendly property market with prices around £60,000 for a detached home in 2017, now sees prices averaging £220,000.
Rental yields in Northern Cyprus
The rental yields in major cities across Northern Cyprus are relatively consistent:
- In Nicosia, gross rental yields range from 3.45% to 8.95%.
- In Famagusta, rental yields range from 3.95% to 9.02%.
- Kyrenia produces rental yields between 4.10% to 8.45%.
- In Guzelyurt, gross rental yields are between 3.50% to 7.80%.
- Lefke’s rental yields range from 3.75% to 7.20%.
Northern Cyprus’ rental market presents an interesting landscape. Average gross yields for apartments and houses have shown steady increases, reflecting investor and property renter interest. While apartment rents experienced a 2% rise in 2022, villa rents grew by a more modest 0.4% during the same period. Notably, Nicosia, Famagusta, and Kyrenia generally offer higher rental yields compared to other cities.
The rental market has been buoyed by a combination of strong domestic demand and the return of foreign investors. Moreover, the transaction costs associated with property maintenance in Northern Cyprus are considered reasonable and manageable. These costs contribute to the overall financial feasibility of real estate transactions in the country.
Tourism’s Impact on Real Estate
Tourism plays a pivotal role in Northern Cyprus’ real estate market. In the first five months of 2022, tourist arrivals increased significantly, demonstrating a strong rebound from previous years. While not yet reaching pre-pandemic levels, this resurgence in tourism has contributed to the stability of the real estate market in general.
Conclusion
As Northern Cyprus experiences an upswing in economic activity such as increased foreign interest, urbanization, and economic growth, it also faces the critical challenge of energy sustainability. The real estate boom has brought both opportunities and challenges – the rising cost of food and the imperative to transition to sustainable energy sources.
While there has been a push towards renewable energy sources like solar power, the country remains heavily dependent on fossil fuels for power generation. The average household’s monthly electricity bill, which was approximately £70 in 2018, has increased to around £90 due to rising energy costs. Northern Cyprus navigates these complexities and it stands at the most important strategic location that will shape its future trajectory – be it as an investment or touristic hub.
Disclaimer: The information provided in this article is based on data available as of November 2022. Readers are encouraged to consult current and authoritative sources for the latest updates and trends in the Northern Cyprus real estate market.
