Cypriots who own land in non-military areas on British bases can sell or develop their property under an important agreement between Cyprus and the UK.
British bases are lifting restrictions on development in non-military areas, allowing business and tourism to grow for decades, and local authorities expect an avalanche of applications.
The agreement comes into force on Monday. This will, in effect, open up bases for commercial deals that could change the development maps in coastal areas like Limassol, creating housing and investment opportunities for middle-income Cypriots and expats looking for a home by the sea.
Speaking to state radio CyBC, Pantelis Georgiou, mayor of the village of Ypsonas in Limassol, said the residents of the bases had been waiting eight years for the agreement to come into force. He said residents will be given a chance to breathe, especially those who have mortgaged their property but cannot put it to good use to repay their loans.
“The agreement will lead to significant development of the territories inside the Sovereign Bases,” Georgiou said.
The mayor of Ypsonas said it’s no secret that developers and other investors have been buying land since the agreement was announced in 2014.
“There is no reason to hide. We know this is happening. Some developers are buying at a price lower than what they will be after Monday, with plans to build or sell at a higher price,” Georgiou said.
He said that Ypsonas municipality could be the area that would benefit the most from the agreement with the bases.
“Since 25% of Ypsonas is under British bases, the implementation of this agreement will greatly help the development of the region and the local community. More than eight square kilometers fall on British bases. About three km³ is allocated for residential, commercial or sports projects. Now local residents will be able to build or develop plots.”
The mayor of Ypsonas noted that thanks to the agreement, foreign investors can also invest in property on British bases.
“Procedures and requirements will be the same as for any other territory under the control of the Republic of Cyprus.”
Experienced real estate agent Antonis Loizou said the agreement between Cyprus and the UK will create a new real estate pocket offering investment opportunities.
“The agreement could create investment opportunities for developers while lowering home prices and providing more choices for middle-income families,” Loizou said.
Although these properties are not considered large enough to cause a major change in the real estate sector, they do drive down prices and rents in nearby areas.
“Areas that previously had near-zero value will now have a relatively high price, such as the coastal areas in the Famagusta region, such as Ormidia,” the real estate expert said. This may negatively affect prices in other tourist areas of the region.
“An investor looking to build a hotel may have been eyeing the area around Ayia Napa before. Now these plots will compete with new properties that will appear on the market after the conclusion of the agreement. This will lead to lower prices in some areas,” Luazou said.
“Many properties will be vacated along the coastline, especially in the Dhekelia base area, such as in Ormidia, a village in the Famagusta region. Asked who would be interested in the new property, Loizou said interest would come mainly from local developers looking to build housing for middle-income Cypriots. These properties, if turned into residential projects, could attract the interest of expats, especially from the UK, who are looking for a home by the sea.”
Base properties can also attract interest from investment funds or real estate investment funds looking to buy low and sell higher later when prices start to rise.
“These large tracts of land could be suitable for projects such as hospitals and private clinics, which are in short supply in these areas.”
Alekos Vilanos, real estate consultant at Vilanos Real Estate Agents, said he sees new real estate opportunities for developers.
“While this direction will certainly not attract large project developers such as towers, it may attract the attention of housing developers,” Vilanos said. He argues that this property will not attract developers looking to build luxury properties for foreign buyers.
“This means that the owners of these properties will not be able to get the same high offers as neighboring areas. For example, real estate in Akrotiri will not cost as much as in neighboring Zakaki, where a casino is being built. This will mean that middle-class Cypriots with little money in their pockets will have a wider choice of options at lower prices when buying a house.”
Vilanos said this, in turn, could put pressure on house prices and rents in the wider Limassol area.
One of the most important changes to business rules concerns the eligibility criteria for starting a new business.
Under the new system, a business owner will no longer need to demonstrate local or military needs in order to open a business with SBA. Instead, business owners will be able to obtain a business license under the new SBA legislation that will take effect once the NMD is launched.
The ability to regulate a particular business sector through legislation, environmental considerations, a new planning system, and some military considerations will be the main factors that the SBAA will consider when considering a business license application.
However, some businesses will still not be able to obtain a license when launching an NMD until the SBAA submits an appropriate structure, which will be done as quickly as possible in the coming years.
The current business licensing process will remain largely unchanged until the infrastructure is up and running.