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 (S$488,504).
"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.
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 US$50,000 (S$62,319) 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 Mr 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.