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20 | Focus on Property
started between the two parties, who also has a significant portion of administrative costs around US$400m annually to assist develop-
agreed to work towards a reunification plan. funded by Turkey, which gives it a diplomatic ment in the country (TRNC State Planning
On 14th April 2009, the Turkish Cypriot leader, recognition. On this basis, the TRNC uses the Organisation, February 2008). Partly due to the
Mehmet Ali Talat, stated he expected the talks New Turkish Lira as its currency, linking its fact that the financial industry in Northern
to be finished, and a referendum for the coun- economic situation to the high performing Cyprus has no link to Western banks, the finan-
tries to be held, by early 2010 (SETimes, April Turkish economy. The stability of the Turkish cial downturn has had little effect on the bank-
2009). Lira has made a large contribution to the ing sector in the country. Therefore despite its
Property investors are aware of the undoubt- growth rate of the country, which reached reputation as one of the more risk-seeking
edly massive growth in property values when 15.4% year-on-year in the past five years emerging markets, Northern Cyprus should in
reunification is achieved. But what can (European Studies Centre, 2008). fact offer financial stability.
investors benefit from in the meantime? How is Under an agreement signed in July 2006, Infrastructure in the island is also improv-
the economy in the TRNC, and how will that Turkey is to provide Northern Cyprus with ing. As part of the process of integrating the
affect property? As tourism grows, and many
people are recognising the value in property in
the region, many analysts say that it may be too
long to wait for reunification.
The economy
The Turkish Cypriot economy has seen star-
tling economic growth over the past decade,
boosted by loosening trade restrictions and a
growing stature on the tourist trail.
Between 2002 and 2007, gross national prod-
uct per capita more than tripled (TRNC State
Planning Organisation, February 2008) and the
country progressed from possessing just 40%
of the per capita GDP in the Republic of
Cyprus (CIA, World Factbook, 2009) to 76% of
the southern region in this time (World Bank,
2009).
The economy is a relatively small market,
and is dominated by the service sector, which
contributes 69.1% to GDP; industry and light
manufacturing contributes 22% and agricul-
ture 9% (CIA, World Factbook, 2009). The
country operates on a free market basis, and
September 2009 Investment International www.investmentinternational.com
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