Letter from Kyrenia: Sun-soaked islands in the Mediterranean are a popular destination for tourists at this time of year and many are looking at the possibility of buying their own properties in the region for use as either holiday homes or as investments.

Here in Northern Cyprus it is no different, particularly since a referendum last year on EU membership and the so-called Annan plan which, if accepted both by Greek Cypriots in the south and Turkish Cypriots in the north, would have resulted in a comprehensive settlement of long-running difficulties between the sides. Those go back to the early 1960s when, after the British handed over the colony to its Greek and Turkish peoples, a power-sharing arrangement was put in place. However, it didn't last long.

Turkish Cypriots claim the Greeks wanted to take over and, in a struggle which lasted several years, civilians on both sides were killed.

The anniversary of the Turkish intervention is commemorated in the northern part of the island at this time every year. They call July 20th "Independence Day" and use it to host parades involving thousands of marching soldiers, displaying their military capacity.

There has been peace on the island since the mid-1970s and its northern part voted for the Annan plan last year, but Greek Cypriots in the south rejected it. As a result, there are thousands of Turkish soldiers still stationed on the north of the island.

There is also a UN presence but the border between the sides is open. People can travel freely between north and south across the "Green Line".

Despite the presence of this military might on the island, its troubled history and uncertain future - the north has its own president, prime minister and government and calls itself the Turkish Republic of Northern Cyprus (TRNC), but it is not recognized as an independent state by countries other than Turkey and Azerbaijan - foreigners are not deterred from investing in property here.

Not even the case of British couple Linda and David Orams who bought a villa a few miles west of Kyrenia in the north, which a Greek Cypriot claimed in court has been built on land he owned before he had to flee to the south, is putting them off. Nicosia District Court ordered the Orams to demolish the villa and return the land.

The case could end up before the European Court of Justice.

Belfast man Alan Morton isn't deterred. He was in Kyrenia looking at buying a holiday home cum investment property with friends.

Kyrenia is a beautiful coastal location, with temperatures at this time of year in the high 30s and 40s, and he says a three-bed penthouse apartment with sea and mountain views could be bought for(€123,000) £85,000.

"Somewhere I saw today was bought by a guy 18 months ago for £60,000 and it is valued at £200,000 today. North Cyprus must be one of the most lucrative investment opportunities anywhere in the Mediterranean at the moment.

"I would certainly not advise people, if they are in any way concerned that a property has an original Greek title deed to buy it, but if it has pre-1974 Turkish title, or indeed exchange title deed [ exchanged for a property in the south], there is no need to fear I feel.

Kudret Akay, political adviser to the deputy prime minister and minister for foreign affairs Serdar Denktas, says Turkish Cypriots could also lay claim to land and property in the south. In fact, a Turkish Cypriot owned the land on which Larnaca airport was built.

But Mr Denktas does not see such cases being decided individually in the courts. "The property issue can only be resolved as part of a comprehensive solution to the Cyprus problem. A lot of the boom in property came after the referendum because the Annan plan provided references within which the property issue could be resolved.

"This is why so many purchases have taken place. Six thousand new units have been sold since, about half of them to foreigners," he added.

The Greek Cypriot government is doing all it can to discourage such inward investment, northerners say.

In recent weeks it has placed advertisements in Israeli newspapers, for example, warning people to beware of the Orams case and that this could happen to them too if they buy property in Northern Cyprus.

The authorities in the north say efforts to get direct flights into the north of the island are also blocked at every turn by the southern government, which regards the north as occupied territory.

As a result, only Turkish Airlines flies direct to Ercan airport in the north, which means tourists having to first travel to Istanbul. Lack of trade links with other countries also means produce such as potatoes and oranges in the north are often left to rot.

The UN secretary general Kofi Annan said after the Turkish Cypriots voted for his settlement plan that he wanted to see an end to the isolation they are suffering. However, northerners say they are still waiting for this to happen.

Mr Denktas says his government will continue to try and reach a settlement with the Greek Cypriots. Only last month it offered to give the Greek side the city of Varosha in the north which remains barricaded off since 1974 because neither side could agree who should have it (it is protected by Turkish troops), but the Greeks didn't accept the offer which was made in return for direct flights being allowed into Ercan.

Mr Denktas has warned that while his government will keep trying for solutions, it will not wait forever. "Our time is limited to the presidential election in the south in February 2008. We will see which mentality has won the election. If it's the same, then what we should do is stop searching for a peaceful solution with the Greek Cypriots," he said this week.

He quickly pointed out he wasn't referring to a move to take up arms, but to putting more pressure on the international community for the TRNC to be accepted as an independent state.

It occupies one-third of the island and has a population of about 200,000. The population in the south is almost four times that.

Without a hasty solution to the isolation, Mr Denktas said he feared the young people in the north would leave altogether or "retaliate" against the Greek Cypriots in the south.

The whole island is technically in the EU, but northerners do not see themselves as being in the EU because EU accession was negotiated by the Greek Cypriots who, they say, have no right to represent them.