Cyprus: Well into the pre-Euro season...

Cyprus has always been much more than just a holiday island with a high seasonal pattern. The "Island of Aphrodite" traditionally receives visitors, property buyers and investors throughout the year.

2007 is another special year for Cyprus. On the 1st of January 2008 the Euro will become its official currency and as from the 10th of July 2007 the rate of the Cyprus Pound against the Euro has been fixed. This means that from now on prices will appear in Euros as well as in Cyprus Pounds. In theory this is just an accounting transaction. In practice however, such a transaction is often enough to create expectations of price rises. Based on what has happened in other countries that have already adopted the Euro, local analysts explain prices will be adjusted to the nearest "round" figure, usually upwards.

Sometimes the impact of an expectation is stronger than the impact of the actual fact and in a rush to purchase before prices actually do start to rise, prices may be pushed up!

According to analysts, there is already an increased demand for property in Cyprus and this is likely to become more intense as we get closer to the end of 2007.  Remember that Cyprus is a geographically small island with only a limited amount of space.

In addition, the forthcoming introduction of VAT on land on 1st January 2009, is likely to stimulate further an already popular market. But this is more likely to affect prices during 2008 as buyers attempt to complete their purchases before the end of the year.

Chris Calogirou - MBA