Almost fifty years ago, the amazing island in the Mediterranean Sea was divided into two parts – the Republic of Cyprus and the Turkish Republic of Northern Cyprus, which today is recognized only by Turkey. However, in recent years, interest in this region and real estate has increased markedly. This is due to several reasons: beautiful nature, the possibility of obtaining a residence permit, as well as the opportunity to provide children with a European education.
Despite the uncertain political status and the lack of full international recognition, which is a cause for concern for investors, the “non-recognition” of Northern Cyprus has its advantages.
Due to the lack of direct flights to the whole world, with the exception of Turkey, Northern Cyprus is a secluded place. There are no industrial enterprises in the TRNC, so the ecological situation here is excellent, at the same time, the economy and tourism are developing.
The authorities are as friendly as possible to foreigners: obtaining residence permits for them is a simple procedure that does not require complex formalities.
The population of TRNC has already exceeded 400 thousand people. Citizens of Germany, Great Britain, Hungary, Austria, Switzerland, as well as Kazakhstan, Ukraine and Russia move here.
In the last year, real estate here has been actively growing in price, similar to how it happens in Turkey, and the number of transactions is only increasing. This is due to pent-up demand following the COVID-19 pandemic restrictions, as well as the current geopolitical situation.
If in September 2022 in a popular location it was possible to purchase a studio in a new building with a completion date in two years for 50 thousand pounds, now the price for a similar object is from 100 thousand pounds. Within six months, prices have more than doubled. However, the absolute numbers are still small for resort real estate in the Mediterranean with European quality projects.
On the northern part of the island, several significant places attract the attention of tourists and investors.
The capital and business center is Lefkosa (also known as Nicosia). Due to the lack of proximity to the sea, the city is not very popular among Russian-speaking buyers. However, it has its advantages: a favorable geographical location – only 30-40 minutes by car to the main settlements, as well as the presence of the only Ercan airport in Northern Cyprus. This year, it is planned to open a new terminal here, designed for 10 million passengers a year.
The main demand from foreign buyers is divided into two directions.
The first direction is Girne (also known as Kyrenia) and its suburbs such as Lapta, Alsancak and Esentepe. Kyrenia itself has prestigious universities and schools, and Esentepe is often chosen by Europeans for permanent residence, because it is considered the local equivalent of Saint Tropez. Despite the current ban on the construction of houses higher than two floors and closer than 100 meters from the sea, there is still free land with picturesque coves available for further development.
The second direction is Iskele, a “Russian-speaking” suburb of Gazimagusa (or Famagusta). In 2021, Forbes magazine recognized Iskele Beach as the most promising place in the world for investment. Now funds from all over the world are flowing here, and numerous high-rise complexes with hotels and casinos are being built.
Serious concerns of foreign buyers of real estate in Northern Cyprus are caused by the uncertain legal status of objects. After the conflict in 1974 and the subsequent division of the territory, a significant part of the land belonged to the Greek Cypriots. The issue of the status of these lands was resolved by law through the payment of compensation.
As a result, there are several types of land ownership rights in the TRNC today.
- The Turkish title (pre-74 Turkish) is the right to own property that belonged to a Turkish Cypriot before the division of the republics in 1974.
- Exchange title (exchange) is the right to own real estate granted to a Turkish Cypriot in exchange for a plot in southern Cyprus, which was previously owned by him.
- TMD freehold is the unconditional right of the government of Northern Cyprus to own land.
- Leasehold is public land intended only for lease for up to 49 years with the possibility of renewal. Typically, such sites are used for the construction of facilities in the tourism sector. However, the construction of residential properties is only allowed on plots with Turkish or exchange title.
Currently, there are practically no lands belonging to the Greek Cypriots in the territory of the TRNC. Large developers do not carry out their projects on the remaining lands, as they do not receive a building permit from the cadastral chamber and the architectural bureau.
The acquisition of real estate in Northern Cyprus is possible both remotely and offline, and goes through several stages. To do this, the buyer only needs a passport.
When a suitable option is found, a deposit is made to fix the value of the property for a month. During this time, the buyer prepares the necessary amount for the down payment, and the developer prepares a contract of sale.
When signing a contract with the developer, about 30% of the cost is usually paid as a down payment. The remaining amount is paid according to an individual schedule until the completion of construction.
Then a lawyer (his participation in the transaction is obligatory) registers the contract in the Land Registry, and a stamp duty of 0.5% of the purchase amount is paid in the tax office. A registered contract is an official certificate of ownership of real estate.
As for the title, it makes sense to issue it if the buyer is interested in obtaining a residence permit (residence permit). Registration of a title is a process that takes a long time (up to ten months) and requires the collection of various documents, including a certificate of good conduct.
In Northern Cyprus, various methods of payment for an object are available: dollars, euros or pounds. In this case, the funds are transferred to the account of the developer. Options include a SWIFT transfer to Northern Cyprus from a bank account opened with a non-sanctioned bank in Russia, a transfer of funds from a bank account opened in another country (for example, Kazakhstan), or using cryptocurrency for payment. Many developers in North Cyprus have crypto wallets.
It is quite difficult for foreigners to get a loan in Northern Cyprus, as guarantors are required. Therefore, many prefer to take advantage of installment programs offered by developers. Typically, such programs are interest-free and have various options for terms. The initial payment is 30% of the property value.
The process of obtaining a residence permit begins after making the first installment payment under the installment plan. Residence permit status can be obtained for the whole family in two main ways.
The first method is based on the conclusion of a long-term real estate lease agreement (at least six months). This requires the submission of a registered rental agreement to the tax office, as well as a bank statement confirming that there are sufficient funds in the account for living in Northern Cyprus, calculated in the amount of $ 20,000 for each family member. When applying for a residence permit, it is required to have the specified amount on a bank account in Northern Cyprus. It is not required to provide evidence of the legality of the origin of funds.
The second method is based on the acquisition of real estate. The value of the object does not matter. However, applying for a residence permit is possible only after receiving a certificate of ownership, known as a title (head of head). To do this, you must contact the Ministry of Foreign Affairs and obtain permission from the Council of Ministers of the country. This is a mandatory procedure, and consideration of the application by the authorities can take up to ten months. Refusal to issue a title may be due to the presence of dangerous diseases, a criminal record or being under investigation.
A package of documents for obtaining a residence permit is submitted at the migration police department, and personal presence is required.
The residence permit status is issued for one year with the possibility of a subsequent extension for two years. After living in Northern Cyprus legally for five to seven years, one can apply for citizenship.
Investment strategies in real estate are either selling with a rise in prices or renting after commissioning.
On average, the yield from a long-term lease is about 8-10% per annum, and from a short-term lease – 10-14% per annum.
There is a guaranteed income program that offers a payment of 8% per annum for two to three years. Another option is to enter into an agreement with the management company on payments based on the amounts actually received, where the management company keeps 30% of the rental value for itself, and the owner receives the remaining 70% of the income in pounds.
The highest income can be obtained from the sale of investment apartments – up to 40% per annum.
