How to profit from the growing economy of North Cyprus as a small to mid-level investor?

Cyprus attracts a lot of tourists with its natural charm year after year, and the demand is only growing. Owning a vacation rental property in Cyprus can offer several advantages, including:

High Rental Demand: there is a high demand by tourists for vacation rentals during peak seasons 6-8 months a year, which can generate a steady stream of rental income. There are many demand drivers in North Cyprus in 2023, but the leading one is and has always been the beach-sun-casinos travellers, where the summer stretches over 6 to 8 months during the months of April-May- June- July- August- September- October-November the cities are busy with many visitors from all around the world. For decades this demand was from European visitors dominated by the British and Germans however in recent years the demand from Scandinavian, Middle Eastern, Slavic and African countries has increased greatly.

In recent decades and years, travel for other purposes also picked up speed bringing in foreign currency to the country. North Cyprus has a small local population of 300-350K, it is also a very young country being only 40 years of age (established in 1983), and being an island guarded with water on all four corners it has some disadvantages in shipping product goods and agricultural and farmed produce overseas. As a result of this, the country did not advance in production like textiles, electronics, vehicles, and machinery to export although it still is a net exporter of food produce. Instead advanced in highly educated and experienced industries of expert services like Medical, Higher Education & Academia Industries coupled with and furthering the advancements in the Hospitality industry. This way despite having a high import-to-export ratio the country still has a strong economy and GDP for its size.

These advancements brought in international visitors demanding these quality services for cheaper. Eventually, North Cyprus had a stream of travellers here for medical assistance such as fertility treatments, cosmetic procedures, dental procedures, tests and check-ups… North Cyprus started getting international recognition for its Universities, bringing in the younger population from abroad for higher education.

Then at the height of the growth in these industries, work-from-home and hybrid work environments changed the game entirely when Covid-19 hit the world. Every industry that was deemed in the non-essential working category was awarded the status of working from home. Digital services like software-website-app developing, selling e-books, e-templates, digital art and design, online teaching and workshops, content creation for marketing, photography, virtual assistance, social media management, digital marketing, some admin jobs, and many more were now realized as ways for people to make money anywhere in the world. North Cyprus has an excellent climate, longer days with bright skies, cheaper cost of living and easy residency schemes became an excellent location to work from some time a year or full-time.

The tourism industry is a major driver of the Cypriot economy, accounting for a significant portion of the country’s GDP. As a result, the government has invested in infrastructure and amenities to support the industry, which can benefit vacation rental property owners. Further advancements and diversifications were made in the hospitality industry. Investments were encouraged and supported to build golf courses to welcome golf travellers, choosing North Cyprus for having a longer golf season due to better weather conditions than most of Europe.

Funding, encouraging programs & packages and tax breaks were placed to boost the luxury hotels and marinas built around the country. These provided a full range of entertainment from music to a blend of rich cuisines by the best chefs, celebratory events hosting, offering tailored services to special occasion travellers, offering a fully serviced dock for yachts to dock…

Some funding is allocated to renovating historical landmarks, bringing some back to life from a state of ruin. History lovers were quick to realise that North Cyprus is home to one of the oldest civilized lands in the World. More literary & graphic information, digital & real-size & miniature replicas of the findings were produced and made more accessible in multiple languages to share the riches of the land’s history with the interested.

Nature lovers have always been enjoying a hike on a sunny day in the mountains, exploring castles, swimming in the warm waters of the Mediterranean, visiting the wild donkeys of Karpasia and enjoying the wild and unspoiled beaches. More has been done to enrich the experience of nature now allowing visitors to participate in activities such as kite-surfing, scuba diving, and volunteering with wildlife groups such as SPOT to observe the wild sea turtles, and marine life. Municipalities are hosting more and more events and festivals sharing the local’s nature-embedded culture with a wider audience such as Lefka’s date festival, wild-plant safari festival by Tatlisu Municipality, Morphou’s Orange festival and ‘pick-your-own’ gardens opening around on the coastal towns.

The by-product of all of this was the surge in demand for everything; accommodation, food, transportation, clothing, sports facilities and more. So the demand to own, to rent (long-term 8-12 months), to visit (short-term daily rentals) hence the demand in real estate has been increasing.

Favourable Tax Policies, Low cash entry and flexible laws on investors: No minimum sum of investment is needed in North Cyprus to qualify for rental programs or residency programs. Entry-level investments are starting in the 10-20K GBP down payment range on the market (Q1 2023) but if you can find a cheaper investment you will not be disqualified from investing, unlike other parts of the Mediterranean and Europe.

Some countries in Europe limit the property licensing for short-term rentals (Portugal), some do not allow foreign-owned properties to be rented at all (Cyprus), and some would require a minimum of 200-300k Euros investments to even qualify to purchase which is not the case in North Cyprus.

Low running costs: Cyprus has a relatively low cost of living compared to other European countries, lessening the cost of running a rental property as the labor is cheaper, utilities are cheaper and the stock of inventory that is replenished at every check-in is cheaper.

A few more reason’s why tourists are choosing North Cyprus:

Location of Cyprus – The center of the World. Easily accessible with many one-stop transit flights.

Warm Climate (long high-season for tourism): warm and sunny climate for most of the year, making it a perfect destination for beach lovers.

Friendly People: The locals in North Cyprus are known for their warm and friendly hospitality, making visitors feel welcome and at home.

Low Crime & Peaceful Atmosphere: peaceful and tranquil destination, with a slower pace of life than many other Mediterranean destinations. Often is a target relocation destination for families and single ladies.

Being an Ex-British colony, English is a widely spoken language.

Low-cost living; allows the lifestyle of the Mediterranean for a fraction of the cost. Value for Money: North Cyprus offers excellent value for money, with affordable accommodation, dining, and entertainment options.

Beaches: some of the most beautiful and unspoiled beaches in the Mediterranean, such as the popular Escape Beach and the stunning Golden Beach.

Nightlife: The island offers a vibrant nightlife scene, with plenty of bars, restaurants, casinos, and nightclubs to suit all tastes and budgets.

Historical and Cultural Sites: The island is rich in history, and visitors can explore ancient ruins, castles, and museums, such as the ancient city of Salamis, St. Hilarion Castle, and the Cyprus Museum.

Local Cuisine: NCY offers a unique blend of Turkish and Mediterranean cuisine, with a focus on fresh seafood, grilled meats, and vegetarian dishes.

Nature and Outdoor Activities: NCY has stunning natural beauty, including the Besparmak Mountains, where visitors can go hiking, birdwatching, and cycling. The Karpaz Peninsula is also a popular destination for its untouched natural beauty for diving.

Festivals and Events: There are numerous festivals and events throughout the year, including the International Bellapais Music Festival, Recitals, the North Cyprus International Marathon, and the Kyrenia Jazz Festival.

Overseas Investor Guide for Foreign Investors

Hire a Professional Vacation Rental Manager to handle day-to-day operations. They will handle reservations, housekeeping, maintenance, guest services, and marketing, among other tasks.

Invest in Professional Photography and Marketing, high-quality photos of the property will attract more guests.

Provide High-Quality Amenities and Services: Ensure that the property has high-quality amenities and services such as free Wi-Fi, a fully equipped kitchen, linens, towels, and toiletries.

Monitor Performance and Make Adjustments: Use data and guest feedback to monitor the performance of the property and make adjustments as needed whether you are managing or you are purchasing services from a property management company. Analyze occupancy rates, revenue, guest reviews, and complaints to identify areas for improvement and make/ request changes accordingly.

Why as an overseas investor, you should not manage your property remotely?

-(Assuming) You do not know the local language

-You do not have a network of individuals; a handyman, a cleaning team, plumbing, an electrician, etc

-Time difference and guest communications

– Lack of information on the local market

-Challenges of assessing claims remotely

Tips for successful property management

 Step 1: Choosing the right property or ‘creating’ it

Create an Experience through the aspect of DESIGN and Personality; give the place a character of its own

EXPERIENCE! Vacation-rental business is hospitality, a service industry business, and should be treated as such.

There are hundreds of short-term vacation homes on the market everywhere and the numbers are growing every day. Your property has to stand out somehow. You can either spend a lot of money on buying a ‘unique’ property or create your own ways to differentiate. Simple themes and designs go a long way, and people book vacation homes for the experience.

Having a good team will make all the difference in a guest’s experience which in our day of technology leads to good reviews, higher rankings and organically moving up on the algorithm ladder.

‘Instagrammable’ – ALGORITHMS & Staying relevant

The worst business strategy I have seen on the market is when people invest in an excellent property –beach access, views- and then cost-cut on the interior design.

It sure is cool to have a pool with a firepit inside, or a shower overlooking the ocean, or a renovated castle but there are cheaper ways to differentiate yourself from the competitor, like an indoor swing, retro fridge, study nook, etc…

I love this picture below, the indoor swing is an excellent addition to this corner of the room, I can imagine people enjoying their vacation reading a book on that swing and sharing that experience with their loved ones and potentially followers. Even better if the swing faces the window if there is a view to be captured.

Make smart purchases when furnishing, you will need to buy the basics like a bed, a sofa, a coffee table and appliances. Use the colors, textures prints and patterns of your purchases to your advantage.

In design; the number one theme setter I think should be the location of your property. What does the town feel like? A tourist visiting your area is an indication that they are highly likely to be looking for what your town offers- Match the energy of your area with your interior.

In my experience, the type of visitors in NCY are looking for unique, local experiences from rentals and they care about the proximity to the beach.

Below is a good example of ‘how a good design in Cyprus can look like’. The mosaic tiles adds color, the heavy use of blue and white with some wooden accents in practical furnishing brings the Mediterranean into the home. An excellent way to use design to your advantage without the need for extra purchases. I would just not recommend living plants in short-term rentals as they will need too much care, and some guests will end up using them as ash-trays, sadly.

However, the design below is an example of a non-value add attempt on attracting guests. The cost of purchasing and installing the full-length statues will not reflect to higher occupancy rates and/or higher prices. I don’t see a big group of tourists willing to rent your place over another nice accommodation paying extra for the replica statues where they are in the country that has the real Greek and Roman statues they can visit during their trip.

To enhance the local experience, I always leave a pack of Turkish coffee, recommendations for activities in the area that only locals know like mushroom hunting in certain seasons, local cuisine cookbooks, travel books, history books, beach equipment, and consider partnering with local businesses to offer exclusive discounts to guests.

Step 2: Transparent Listing and Communication

Satisfied Guests-Good Reviews-Higher Rankings-Higher Occupancy

People are booking literal yurts, tents, caravans, treehouses, caves and barns (really). So manage expectations, there is a buyer for everything.

Optimize Your Online Listings: Ensure that your online listings are up-to-date, and accurate

Use high-quality photos that showcase the location and the property’s amenities. Provide detailed descriptions and highlight the property’s unique features and benefits.

Set realistic expectations and Communicate: Be very clear with pros and cons of your property. Disclose any potential for noise, parking-problems, let your guests know if your house is child, disabled or pet friendly.

Have a house manual for your guests.

Have nearby recommendations for food, groceries, entertainment, beaches, public transport

Have the important numbers easily accessible….

Set Clear Policies and Procedures: for check-in, check-out, cleaning, damage deposits, and cancellations. Communicate these policies to guests before they book, so they know what to expect and can plan accordingly.

Step 3: Keeping up the quality of service

Invest time in building a good team of cleaner, a handyman, an electrician… Maintain Property Condition: regular maintenance, repairs and cleaning are essential. Remember each guest will have a ‘first-impression’ of your property and it will reflect on the reviews. Having the best launch, to be followed with bad upkeep practices will not yield results, as hosting is a service industry and is not a passive income-generating investment. A team of professionals are needed for providing this service, so ensure you have them when evaluating investment options.

Stock on essentials: toilet paper, soap, shampoo, drinking water etc

Ensure smooth check-in: Invest in a smart-lock and provide wifi details as part of check-in procedure

Maintain Excellent Communication: Respond promptly to tenant concerns and provide regular updates on maintenance and repairs.

Stay Up to Date with Regulations: Keep up to date with vacation platforms, local, state, and federal regulations that govern property management.

Step 4: Diversify your target audience

Attract different tourist groups/ demographics: age, nationality, and purpose of travel

Accessibility features: add features for people with disabilities

Child friendly (18+ hotels missing out, make simple additions like a high-chair or a crib)

Pet friendly (most of the hotels are missing out on this segment)

Offer Personalized Service: to guests by responding promptly to inquiries and requests.

Provide a welcome basket or gift to make guests feel welcome.

Invest in a collection of useful local books, and maps

Step 5: Weed out the ‘headache’ tenant

Set a fair Price: do not give discounts to everyone who asks

Collect payment at the time of booking/reservation

Screen Tenants Carefully: Popular platforms like Airbnb has features that can help screen tenants

Deposit: Collect a fair deposit

Do not go over your capacity: do not sacrifice comfort of your guests for a few extra bucks, it leads to a bigger run-down on the property and decreases overall guest satisfaction.

Capacity – Legal sleeping spaces (ventilation)/ match sleeping space and dining, lounging space, dining sets, bathroom adequacy, etc. You can not add a pull-out sofa in your living room if you will not provide extra plates, mugs, chair for that extra person you will be charging. In some countries you can not sleep people in a room without windows, or adequate ventilation, pay attention to the comfort and safety of your guests first.

You can not turn a garage into a sleeping space by adding a hammock…

Step 6: Make room for ‘the cost of running a business’

Expect to run into occasional issues, and for things to break down – have a team that will act fast to resolve the issue and offer something complimentary as an apology to the guest.

Get durable, mid-priced and easily replaceable furniture that your deposit can cover – do not have your grandma’s valuable Persian rug in a busy short-term rental.

In my case, I have fallen victim to this and learned. I had a beautiful hand-carved wooden centerpiece in my rental and to my utter surprise one of my guests used it as a firewood.

Minor damages are part of doing this business, stains, broken mugs, chipped plates are not worth going after the deposit, make sure your guests have positive memories of their time in your place.

Keep an eye on the expenses but do not risk a bad review. It is okay not to make a profit on every reservation, some of them are there to build a steady flow of cash and reviews, leading to algorithm traffic to make way for longer and higher return bookings on short-term prices.

Step 7: Prioritize reviews

Satisfied Guests-Good Reviews-Higher Rankings-Higher Occupancy

Your reviews can be your only marketing spending.

A collection of good reviews and a high star score will get you on top of the algorithm. You will get more bookings without having to spend on advertising

A collection of good reviews will make you a superhost / premier host

Usually, popular platforms charge a commission range of 2-5% per booking from host-payout which is very low.

What else can you do?

•Solicit Reviews and Feedback: Encourage guests to leave reviews and feedback on your online listings and social media profiles. Respond promptly to any complaints or concerns and use feedback to improve your property and enhance the guest experience.

•Establish a Referral Program: Establish a referral program that rewards guests who refer their friends and family to your beachfront vacation rental. Offer discounts, gift cards, or other incentives to encourage repeat bookings and referrals.

•Offer Competitive Rates and Promotions/ Seasonal Pricing (6 months high-season in Cyprus): Research the market rates for similar beachfront vacation rentals and offer competitive rates. Offer promotions such as discounts for extended stays, early bookings, or last-minute bookings to attract more guests.

•Partner with Online Travel Agencies (OTAs) or local businesses: Partner with OTAs such as Airbnb, Vrbo, or Booking.com to increase your property’s visibility and reach a wider audience. Use their marketing tools to optimize your listings and increase your occupancy.

•Leverage Social Media: Use social media platforms such as Facebook and Instagram to showcase your property and promote your vacation rental. Share photos, videos, and testimonials from satisfied guests to build trust and credibility.

How I started with property management and hosting?

After graduating from university in the UK, I came back to Cyprus and started managing my family’s properties on long-term rentals. This was not a demanding task, fairly low involvement was required but it gave me a foot into the real estate business.

Later I started experimenting with short-term rentals with an Inn that was an old Ottoman Pasha House in the old town of Nicosia. Being a historic home in a historic town, all that was needed was highlighting the inherited value and beauty of the place in marketing. I learned the importance of unique literature and pictures in optimizing listings at this stage. No matter how attractive a place is, the tourists will not know unless it was communicated to them digitally.

And, later added a Luxury-private villa in Kyrenia to the vacation rentals I manage. Then the demand grew and I kept on expanding the portfolio I managed to 10+ doors within the same year taking advantage of being bilingual and digitally literate.

How I started investing in real estate?

Then I took on the project to fix and flip an old British-era home in the coastal town of Tatlisu, and started renting it on short-term rental platforms.

This turned out to be a side business, which hosted thousands of people, hundreds of stays, and 13 consecutive ‘superhost’ badges, many challenges and lessons learned over the years.

Nevertheless, the investment turned over in a few years and I invested in the adjacent lots of land, aiming to grow the capacity anywhere between 25-35 doors.

The occupancy is now somewhere near 90% and there is no room for growth in the occupancy anymore without growing the capacity considering the downtime accounted for upkeep.

Hosting has been a learning curve for me, and it still is. I wish anyone considering hosting or investing in a vacation rental the best of luck!

Written by Soylem Coli

– Realtor- Head of Regional Sales and Marketing Operations at Avertiss exclusive partners