China adds spice to flat Cyprus housing sector

PAPHOS, Cyprus (AFP) – The real estate sector on the  recession-hit Mediterranean holiday island of Cyprus, an EU member, is turning  to Chinese investors seeking easier access to Europe.

Hundreds of Chinese nationals have purchased second homes on the island  thanks to a Cypriot law revised last year granting permanent resident status to foreign buyers of homes costing at least 300,000 euros ($390,000).

“The Chinese are not interested in houses as such in Cyprus. They are  interested only in the permanent residency. They buy houses through visa  firms,” said leading real estate agent Antonis Loizou.

Tourists walk past a real estate promotion billboard in Chinese on the seafront promenade in the Cypriot resort of Paphos13

While Cyprus has been a European Union member since 2004, it does not  belong to the Schengen passport-free zone, meaning permanent residency does not  guarantee free travel across the bloc.

But “it is much easier to get a European visa” with Cyprus residency,  stressed Wuang Hong, herself a longtime resident and telecoms employee who says  she assists Chinese investors.

She says most Chinese investors are businessmen who buy on the coast,  especially in and around the western resort of Paphos.

“Some want to give a better future to their children – give them an  opportunity to live in a cleaner environment and go to good international  private schools, which are much more expensive in China,” she said.

But only few Chinese have so far opted to settle in Cyprus, where residency  does not grant a work permit, and none of them were willing to speak to AFP.

The investors, who are banking on a medium-term rise in house prices, have  had to come up with methods to skirt Chinese law which in theory limits foreign  currency exports to an annual $50,000 per person.

Apart from opening up Europe as a destination, Cyprus can provide a  political refuge, access to the Cypriot banking sector and a way to circumvent  China’s one-child policy.

But the players in Cyprus, where billboards have sprung up in Mandarin  advertising luxury homes, insist money-laundering is not a factor.

“All this money has to come through a bank. No one can come with a suitcase full of cash and buy a house. It is all checked out,” said Nick Antoniades, who  runs a service company for Chinese investors.

He said the buyer must show documentation to prove annual income of at  least 30,000 euros.

In Paphos, previously the preserve of British pensioners before the world  economic crisis kicked in, the carnival king in the countdown to Greek Orthodox  Easter will have Chinese facial traits, adding an Oriental flavour to the event.

“For us, it’s a question of survival,” explained Maximos Pantelides, a real  estate agent just back from China. “Prices have gone down by at least a third  in the past four years” and several agencies have gone out of business.

Other countries, including Spain, are also offering residency in return for  home buying, but Cyprus now has “the best immigration policy in Europe,”  according to Antoniades.

And the island could join the Schengen zone. But, cautions Loizou, Cyprus  could still, like Malta, toughen up the regulations once a certain quota of  foreign investors has been met.

“This policy is not forever,” he said.