Look Who's Coming To Cyprus Now
Real estate agents from the troubled Mediterranean country have identified potential buyers in China, looking for both cheap real estate, and EU residency. But buyer beware.
BEIJING - In the international exhibition area of the just-concluded Beijing Real Estate Trade Fair, agents from one country won the favor of a surprising number of Chinese investors: Cyprus. Out of over 70 foreign exhibitors, 18 of them were Cypriot real estate agents.
This is all thanks to the newly promulgated immigration policy of Cyprus. The purchase of a property with a minimum market value of 300,000 euros will entitle the investor to obtain a Permanent Residence permit (PR).
At the 2013 edition of the annual trade fair, Cypriots were busy waving advertising flyers, not only with bargain prices and favorable financing, but also “Facilitation Of The EU Visa," and "No More Immigration Prison Needed."
Zheng had never bought a property overseas before. She is one of the people who took a fancy of this promotion and signed up for a bungalow for 400,000 euros in Larnaca, one of Cyprus’ main cities. She paid 80% of the house price and also placed another 30,000 euro as a fixed deposit in a local bank for three years, as required. She chose a German bank, believing that it might be less risky than a Cypriot one.
Despite the fact that a satisfying solution has yet to be found for solving the Cyprus bank crisis, Zheng is confident that this is the best moment to buy houses there. "My major consideration is to obtain the residence permit which will then facilitate applications for visas for other EU countries."
Zhang Yu, a sales manager of a Beijing consulting firm for international investment, pointed out that the newly accelerated resident permit procedure will allow a qualified applicant to obtain approval within three months. Successful applicants will then have to visit Cyprus at least once every two years for the Permanent Residence visa not to be cancelled. During this time, the applicant must prove that he or she has a secured minimum annual income of 30,000 euros from sources other than employment in Cyprus.
Like Zheng who bought property after a visit to Cyprus, Chang is another person who is ready for the move. She is planning to send her daughter there for the "English-style education." What the salesman didn't tell her is that public schools in Cyprus teach in Greek. Only private schools will be offering teaching in English.
Other side of the coin
However, many worry about the risks of investing in Cyprus given its current economic situation. A Cypriot lawyer was trying his best to convince Chinese customers by stating that of the fixed 30,000 euro deposit, 10,000 euro will be guaranteed no matter what happens. Still, he failed to explain what will happen to the real estate.
Meanwhile, news filtered out that certain real estate developers owe the two major Cypriot banks large loans that they are incapable of paying off. So even a real estate license is not a guarantee of anything.
Cyprus needs to raise by itself 5.8 billion euro of relief funds. This requirement is written in the agreement reached by the tripartite committee and the President of Cyprus in dealing with the debt crisis. Meanwhile, over the past year, this beautiful Mediterranean republic has had the fastest growing year-on-year unemployment among EU countries.
In order to boost Cyprus’ economy, the new immigration regulations specify that non-EU nationals who intend to obtain the permit through purchasing of properties must not engage in any work or compete with the natives for employment in Cyprus. In addition, they must have a free and secured disposable annual income.
This is also confirmed by the Commercial Counselor’s Office in the Chinese Embassy to Cyprus. They are warning Chinese people who are interested in buying property or working in Cyprus not to believe certain unscrupulous intermediary Chinese agencies’ false propaganda. They point out that even if applicants have successfully obtained the country’s permanent residency, they are neither entitled to enjoy local welfare nor have the right to work.
In the view of Sun Yanhong, researcher at the Chinese Academy of Social Science, it is important to take into account both the housing prices and exchange rate when investing in overseas properties. “First is whether or not the price is at its lowest. Second, what the exchange rate is between the RMB and the euro. If the increase in the housing price can’t even keep up with the pace of the Chinese currency appreciation, then it will be a loss.”
As for Zheng Xiangdon, the Deputy Secretary General of the Organizing Committee of Beijing Real Estate Trade Fair, the most important of all is to “carefully assess the risks.”
“China's housing prices can only rise; other countries’ markets have ups and downs. If the purpose of the purchase is as an investment, the market factors are to be emphasized. And if the investment is aimed at immigration, then it is necessary to understand the country’s immigration policy.”