Marc Wall, right, and his developer, George Papacharidemou, discussing some details about the Walls' new home outside of Paphos, Cyprus. The American financier bought the unfinished house earlier this year for the equivalent of $1.4 million. (Alex Mita/AFP for the IHT)

For families, too, the allure of Cyprus

Retirees no longer the only ones seeking low taxes and non-stop sun

PAPHOS, Cyprus: Once the province of foreign retirees seeking sunshine and low taxes, Cyprus recently has become attractive to young families from abroad who are seeking a safe and friendly environment for their children.

Marc Wall, an American father of a 3-year- old son, just bought a seven-bedroom, 10-bathroom home just north of Paphos for the equivalent of $1.4 million. "Crime is low and I feel very safe with my child being outside here," he said. "No one will snatch him off the street.

"This is the kind of lifestyle we want," he said.

He said Cyprus was an easy place to live because most signs are in English and about 85 percent of the island's 780,000 residents speak at least some English.

An influx of families like Wall's has helped create a robust property market in Cyprus, with annual price increases of 6 percent to 8 percent in recent years. There were small declines in September and October, but real estate agents say they were only "blips" on the heels of a six-month surge that saw prices soar by 8.9 percent.

Prices in Cyprus are still low in comparison with many other resort areas. Litsa Chrysostomou, marketing manager at BuySell Real Estate in Cyprus, said the average house price now is about $195,000.

"Property prices are good here and standards are very high so that most people generally can get a large garden and at least a communal pool, plus a beautiful home," she said.

And there are financial attractions as well.

Sarah May-Brown, a spokeswoman for the international department of the Knight Frank estate agency in London, said that people buying a second home abroad are increasingly aware of the investment potential of various property markets.

"Although growth is slowing a bit in Cyprus, the potential for capital appreciation is still good," she said. "And Cyprus benefits from having an established tourism industry that continues to show growth."

Vacationers from Britain have long accounted for the lion's share of tourism in this former British colony. Approximately 1.3 million British tourists converge on Cyprus each year; Germans are a distant second with 350,000. And many of those Britons have bought vacation and retirement homes, resulting in a variety of social clubs for British expatriates alongside restaurants featuring fish and chips with mushy peas and afternoon teas.

When asked what he misses about London, Tony White, a new British resident of Cyprus, answered without hesitation, "Nothing."

White, 60, and his wife moved to Larnaca, on the eastern side of the island, in July. They sold their home in the Camden neighborhood of North London and bought a spacious three- bedroom apartment with two balconies - and access to what eventually will be a communal swimming pool - for the equivalent of $200,000.

"I came here on holiday five years ago and fell in love with Cyprus," he said. "It's cheaper than London and the crime rate here is virtually nil."

"I love the fact that nobody locks their doors in the evening and that you can leave your windows open in the car and no one will touch it," he said.

A retired bus driver, White also enjoys the benefits of Cyprus's tax laws. There is no inheritance tax on property and, perhaps even more important, pensions received from abroad are taxed at a flat rate of just 5 percent.

Mortgages are relatively easy to obtain, with banks able to offer loans of as much as 80 percent of the property price.

"Banks have the ability to offer mortgages in Swiss francs or euros, which is good, but any currency fluctuations can still be a problem for buyers," Chrysostomou said.

Like the Whites, most expatriates are drawn to neighborhoods in and around the bustling hubs of Larnaca and Paphos, both of which have international airports.

The area around Paphos, on the western side of the island, has become particularly popular because its airport is to expand by 2008 and a new marina with 1,000 moorings is to be built by 2010. Also, the island's three golf courses are all in the Paphos area, although the government has decided to grant licenses for at least seven more.

In comparison to Paphos, property prices in Larnaca tend to be an average of 15 percent cheaper.

Still, many expatriates in the last few years have chosen to buy properties outside these tourist areas. Chrysostomou said that Mandria, a pretty village close to sandy beaches and the legendary birthplace of Aphrodite, has become a hot spot for property seekers and is only 20 minutes from Paphos.

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