A UN-backed peace deal to end the division of Cyprus would cover its own costs in the long term by creating jobs and prosperity, the world body's envoy said Tuesday.

"Having a united island at peace with itself and its neighbours will create more jobs, more prosperity. So, the solution will pay for itself," Espen Barth Eide told reporters.

"The only issue is that you need an upfront sum of money in order to make some of the initial investments and this is money that is coming into the island and not money that is leaving the island," he added after meeting president Nicos Anastasiades, the Greek Cypriot leader.

Anastasiades and his Turkish Cypriot counterpart Mustafa Akinci made an unprecedented joint appearance before global business and political leaders in Davos, Switzerland last month to proclaim their peace-building credentials.

Anastasiades called for a substantial financial contribution from the international community to finance a solution for Cyprus.

A large chunk of the funds needed for a peace settlement, estimated by think-tanks and economists on both sides at around 25 billion euros ($28 billion), will go on property compensation for those Cypriots unable to return home.

Eide said the financial side would involve a combination of elements such as public donations from donor countries, private sector investments and "a series of different instruments that together could create the necessary funding".

For Cyprus talks to move beyond where they have failed in the past hard decisions must be taken on thorny issues such as territorial adjustments, power sharing and property rights.

The leaders are working on a formula to resolve the issues and create a united, federal Cyprus.

Both leaders know that without a solid compromise on property and territory a solution will be hard to sell to their respective communities.

"There is still outstanding issues on property and other parts of the deal which the experts need to have in order to calculate the full package," said Eide.

"In Cyprus you talk about the cost of a settlement as if you are going to lose money. In reality all economic studies... say that a solution will create more wealth than a non solution over time."

And any peace accord must be ratified by Cypriots at the ballot box. Both leaders have said a deal is possible this year.

Long-stalled UN-brokered peace talks -- in what is seen as the last best chance to reunify Cyprus after four decades of division -- were launched last May.

Cyprus has been divided since 1974, when Turkish troops occupied its northern third in response to an Athens-inspired coup seeking union with Greece.