In the 1980s, a majority of the 45,000 or so displaced Turkish Cypriots signed a piece of paper surrendering their property in the southern part of the island in exchange for an entitlement (called points). This entitlement was exchanged for something no one had the right to give them (Greek Cypriot property) and, for obvious reasons, it was not registered with the Republic of Cyprus Land Registry.

Nevertheless, it is difficult to argue with the first part of this transaction, namely a property owner exercising his or her rights with respect to his or her property. This provides an important opportunity for funding property compensation.

In the southern part of the island, there are 0.40 million donums (54,000 hectares) of private Turkish Cypriot property and 2.47 million donums (331,000 ha) of private Greek Cypriot property. In 2013, the Republic of Cyprus Land Registry valued Greek Cypriot private property in the south at €150 billion.

We can infer from this that the 0.4 million donums of Turkish Cypriot property has a potential long-term value of €24bn.
According to the IPD Pan-European Property Fund Index, the five-year annualised return on property funds in Europe was 6.6% for all funds and 3.8% for balanced funds.

Carefully developing €24bn-worth of Turkish Cypriot property in the south, with a yield of, say, 5% per year, could therefore generate annual income of €1.2bn.

Not all Turkish Cypriot property can be used this way, however. Some Turkish Cypriots will want to claim their property; some of it will be exchanged with Greek Cypriot property in the north; some of it has been turned into refugee housing or acquired for public purposes.

But let’s assume you can reserve 0.2 million donums of the most promising Turkish Cypriot property for development, place it in a property development trust with a mandate for long-term (not short-term) returns, and carefully develop it in order to raise money for compensation.

You might also offer equity stakes to those who have exchanged large pieces of land in the north. With a 5% annual return, this would generate €600 million per year—enough to pay out compensation in around 16 years without burdening the taxpayers.

There are many other ways to cut the compensation bill, which I have written about elsewhere, so you might do it in less than 16.

If this is politically acceptable, then the next thing that needs to happen is that international bankers get together with local players to flesh these ideas out and see if the trust fund can be boosted with state property, international guarantees and equity stakes from big players, like the European Bank for Reconstruction and Development (EBRD).

For fast results, this should be done by the private sector, with a dotted line to the negotiating teams to ensure that the solutions do not trample on what has already been agreed.

As pointed out to me by someone else, the two chambers of commerce would be the ideal umbrella for this initiative.