With property prices trebling since 2000 and entry to the euro beckoning, Cyprus is becoming a prime property hotspot, a new report claims.

Property prices in Cyprus rose by 18 per cent in 2004 and look set to increase by a further 50 per cent when the country joins the Euro in 2007, claim Assetz, a property investment company.

Encouraged by the accession of Cyprus to the EU last year, Assetz says that investors are flocking to the island in order to snap up buy-to-let properties which are likely to double in value over the next three years.

Joining the Euro will also instigate a drop in mortgage rates from 7.5 per cent to Eurozone rates of 3.5 per cent, creating a further surge in property prices, say Assetz.

Stuart Law, Managing Director of Assetz, comments: "High standards and low costs of living along with virtually non-existent crime rates makes Cyprus an attractive option for investors.

"Prices are still considerably lower than in France or Spain - a three-bedroom detached villa with a private pool would currently set you back around £250,000, which would probably only stretch to a two-bedroom apartment in France.

"Capital growth is expected to continue at a high level for the foreseeable future due to interest from buyers all over Europe and the undersupply of property."

The most popular destination for tourists and homebuyers is Paphos, say Assetz, which offers stunning sea views from its steep hills, a good infrastructure and most importantly, a year-round tourist industry.

More ‘up and coming’ areas include Polis and Larnaca, both of which enjoy lower prices than Paphos with high capital growth expected as tourists look further afield, towards traditional Cypriot villages.

Mandria Villas offers an excellent investment for anyone wanting to live in a traditional setting only 10 kilometres from Paphos, with prices starting at £172,253.

However, there are potential problems with investing in the Mediterranean island as well.

"There is a ‘sixty day rule’ for registering land purchases in Cyprus when buying off plan. It is essential for the buyer’s lawyer to register the purchase within sixty days in order to preserve the purchaser’s legal rights over the land on which the building will sit. If this is not done, the land remains the property of the developer until after the development is completed or beyond," says My Law.

"I would also warn investors to limit their property investments for the time being to Southern Cyprus.

"Since restrictions on movement and trade in the north were lifted when Cyprus joined the EU last year, many Greek Cypriots have returned to land they lost and are claiming restitution or negotiation with one particular high-profile court case in the papers just last week. For this reason I would not advocate buying in the North until these issues have been resolved."