ECONOMY

Property boom in northern Cyprus is based on shaky titles

KYRENIA – British buyers are fueling a property boom in sanctions-hit northern Cyprus, snapping up cheap homes in the sun and hoping for financial gains if the divided island is reunited under a UN peace plan. Critics say many of them could be taking an expensive risk, facing possible compensation claims from former owners on an island with a history of refugees and ethnic strife. And many residents fear the current rash of new construction will kill the leisurely charm of the Turkish-Cypriot enclave, burying its mountain-fringed Mediterranean coast under concrete. «Every tourist I’ve had come in here in the past week is either buying property, has already bought or has come to look for it,» said the manager of one restaurant popular with British visitors in the picturesque harbor town of Kyrenia. «The word that keeps coming up is ‘investment’.» Leaders of Cyprus’s ethnic Greek and Turkish communities are locked in peace talks under a tight UN-enforced timetable seeking a deal to reunify the island after 30 years of division. The Greek-Cypriot south is set to become a European Union member on May 1, but if a peace deal is approved by referendum on both sides on April 20, the whole island will join. Estate agents in the north say the boom is fueled by expectations that EU membership will push up prices, offering good returns for those who buy now and squeezing out latecomers. Troubled history Cyprus was split when Turkey invaded in 1974 in response to a Greek-Cypriot coup backed by the military then ruling Greece. Since then the Greek-Cypriot side has become a popular tourist spot rimmed by sprawling beach resorts. The self-declared Turkish-Cypriot statelet, recognized only by Turkey, attracts only a fraction of the tourists and remains largely undeveloped. International sanctions mean there are no direct flights except from Turkey. But those tourists who do come have spotted that property in the Turk-Cypriot north is remarkably cheap, and word has spread. «On average you can pay 80,000 pounds ($145,400) here for a three-bed house with a pool,» said Robert Godfrey of Stringer Estates in Kyrenia. «In the south it’s probably double that.» The vast majority of buyers are from Britain, which has old colonial links to Cyprus. Many Britons are sitting on big equity gains on existing homes, and have freed up cash to spend on a dream Mediterranean bolthole. «I’d say in the past year at least 20 to 30 new estate agents have opened in Kyrenia, and there’s enough business to go round,» said Kate Smith of the Ian Smith Estate Agency. Property rights anywhere in Cyprus, particularly the north, are extremely complex. Many tens of thousands of Cypriots from both sides fled their homes in the turmoil of 1974-75, and the property they abandoned is the subject of fierce argument. The UN peace plan sets out complicated rules to compensate former owners, or in some cases to restore their homes and land to them, creating potential pitfalls for the unwary purchaser. Buying Turkish-Cypriot property with pre-1974 title deeds is widely seen as safe – but there is little of this left to buy. Reputable agents warn buyers to steer well clear of areas that could be rezoned as Greek Cypriot under the federal UN plan, where pre-1974 owners could reclaim property directly. There is a big gray area: former Greek Cypriot-owned property with new deeds issued by the breakaway Turkish Cypriot state. The UN plan offers an intricate compensation scale for such property, depending on factors such as how much it has been improved and whether the new deed-holders were themselves refugees from the south. The Turkish-Cypriot government says the northern Cypriot deeds are entirely valid. Most estate agents say there is a risk that buyers may have to pay compensation, albeit fairly limited in most cases. But with strong objections to the UN plan’s property clauses from negotiators on both sides, uncertainty is rife. «People say the [Turkish-Cypriot] deeds are perfectly solid, but they aren’t,» said one long-time foreign resident. «The naivete of the Brits coming here is amazing – they just accept anything.» Environmental worries Many people also fear that the current explosion of new developments will wreck the unspoilt quality of northern Cyprus. So far the only high-rise buildings overlooking the coast belong to an eerie ghost town of derelict pre-1974 hotels in the eastern town of Famagusta, abandoned in a military zone. The Turkish-Cypriot authorities impose some building restrictions, such as height curbs on commercial property, and government adviser Tom Roche said they wanted to avoid the ugly overdevelopment seen in many other parts of the Mediterranean. «There is a determination that that should not happen, but clearly there will be pressures with international investors coming in,» Roche said. Others say the planning laws do not go far enough. «They’re just messing it up very, very fast,» said architect Brian Self. «The whole rural character is suddenly disappearing. The fear is that in 10 years it’ll be completely