All go in the land of euro

Added: (Mon Jan 07 2008)

Pressbox (Press Release) - New Year's Day may for many people be a day of hangovers and swiftly broken resolutions, but for the European Union it is often a momentous day. As the bells rang in 2007 across eastern Europe, Romanians and Bulgarians celebrated raising the club's membership to 27. This year it was two small islands in the Mediterranean who raised a glass, the last they would ever pay with in lire or pounds.

The entry of Malta and Cyprus to the eurozone will not hugely increase the number of people in the economic bloc - which now numbers 15 plus Andorra - but for investors in property this has been a long-awaited event.

Cyprus, which has enjoyed a boom in its Cyprus property market in recent years - not least among Britons as its ex-pat population has grown - finished 2007 in positive economic mood, with its equities performing well. The economic stability the euro is expected to provide may make the island even more attractive for investors, offering a financial base as solid as the promise of sunny weather.

It is highly likely that as a new eurozone member Cyprus will see some Cyprus property appreciation, according to Paul Collins, overseas property editor for BuyAssociation. He said: "A lot of the time it [adopting the euro] will cause a jump in the property prices, which is usually not temporary; the prices don't usually come back down again afterwards. It is a permanent rising of the prices. It usually happens as the change comes into effect."

In addition to this, he added, Cyprus will be able to exercise some influence on euro rate setting policy at the European Central Bank, as it now has a seat on the board, unlike in recent years where it had the Cypriot pound tied to a currency whose value it could not affect. As well as this, Mr Collins suggested the country as a whole might be able to use the economic and political stability gained to readdress the issue of northern Cyprus.

As the citizens of the two new eurozone members look curiously upon the unfamiliar coins and notes in their wallets, new services by easyJet to both have been launched, offering investors and holidaymakers alike more cheap access. Mr Collins said of investors: "When they look at buying a foreign property the things they look for are economic stability, climate and the ease to get there." Cyprus should now be able to offer them all.

Taking on the euro in Cyprus may be of concern to locals in one sense - that of the general issue of surreptitious price inflation as retailers use confusion over the comparative worth of the old and new currencies to put up prices. But, as the Times reported, this fear has been met by the compulsory display of price comparisons since September in Cypriot shops. The value of having the euro in the first place appears not to be in doubt.

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