The global economic slowdown has led to belts being tightened worldwide but with all the financial turbulence rocking the Euro-Zone expats living in the currency bloc’s hardest hit nations are really feeling the pressure.
Retirees and other expats who have to manage on a fixed income have been left struggling to make ends meet as the cost of living in popular destinations like Portugal, Spain and Cyprus has risen by as much as 15 per cent since 2011.
But rocketing fuel and food prices aren’t the only issue’s to contend with, the crisis is particularly worrying for those expats who have invested in European property.
Tumbling property values abroad have made it impossible for many expats wishing to return home to do so without making a significant loss on their investment. This has been a particular problem in struggling Spain where 70 per cent of property owners reported a drop in the value of their homes, some by as much as 25 per cent.
But it’s not doom and gloom for everyone. Some expats are capitalising on the current situation and snapping up bargain buys, with better off expats getting deals on high-end properties.
Other expats have been enjoying the fact that in certain areas the property market is bucking the trend and staying buoyant.
Despite the economically fortuitous discovery of offshore natural gas close to the island, in parts of Cyprus a drop in property value has affected over two thirds of homeowners, but near Paphos the Aphrodite Hills Resort housing prices are booming. The five-star, low density, 578-acre integrated golf resort has just launched 68 high-end apartments and villas in a complex known as Alexander Heights. Although traditional from the outside the new homes are jam-packed with top-spec gadgets and gizmos. The buildings also command impressive views across the Mediterranean – and an impressive price tag to match. The variously sized homes have been priced from 609,000 Euro’s to 2.8 million Euro’s and, although not due to be completed until August next year, eight have been sold. All of the purchases made so far have involved expat buyers.
George Elias, Aphrodite Hills sales manager, estimated that ‘A sterling purchase today of a 2.8 million Euro villa is cheaper by nearly £300,000 than it would have been 10 months ago.’
Significant savings like this might account for some of the expat sales, but when you consider the still sizable investment they’re making, expat interest in the Aphrodite complex demonstrates some level of confidence in the Cypriot economy.
Aphrodite Hills property sales weathered last year’s financial storms well and a spokesman for the Cypriot property giant was quoted as saying that to date ‘sales have outstripped 2011, which bodes well for an outstanding 2012.’
There are currently 750 home owners living in Aphrodite Hills, only 15 per cent of which are Cypriot. 60 per cent are British expats, 10 percent are Russian and the remaining 15 per cent of properties are owned by other nationalities, including German, South African and Middle Eastern. 20 per cent of the all home owners say they bought their Aphrodite Hill properties for investment purposes.
Theseus Village was an Aphrodite complex built before the Alexander Heights development; of the 117 properties which comprise it only 10 remain unsold.
The economic situations in Greece and Spain may be proving troublesome for Brit’s abroad, but signs are suggesting that Cyprus could still be a place for expat dreams to come true. The nation’s unemployment rate is only slightly higher than the UK, austerity measures have not had to be implemented and the latest World Bank rankings for 2011 put GDP per capita income for the Mediterranean enclave at 30,000 US Dollars – over 3,500 Dollars higher than Greece. To further support the economy the Cypriot government has also instated several temporary measures, such as reducing first property VAT from 17 per cent to 5 per cent and adjusting property transfer tax from 8 per cent to zero. It is generally expected that these measures will be extended into 2013 and they may prove very beneficial for foreign nationals looking to purchase new-build Cypriot properties.
So it seems that not only is Cyprus the sunniest place in the European Union, it’s also the place where property investment could prove positive for expats.