1.5 Importance of the Study
In this fast and changing world, investment is widely used and it is done by most of the people especially the British. These British expatriates are mostly allowing themselves to go into the account of investing in other country wherein they can get high income return and can get much of its profit with less capital. Most of the British chose to invest their homes and their belongings to the country which has only the small, fairly and yet the robust and flexible economy and built its dignity in adapting to this circumstances. One country fits these characteristics and most of the people are eager to transfer to the small island called the Cyprus. In this research, not only the British expatriates but also the interested investors can have the idea and the knowledge regarding the Cyprus economy and the risk they should take in stepping into investment in Cyprus or specifically in the Southern Cyprus. The study is also significant for the public view regarding the pros and cons in investing to the island so that they can be aware on the status of not only in the investment but also its status whether economic, social, technological, financial and legal. In the side of Cyprus, there is a huge impact to the development of the country as recognizing the country in not just as one of the options in the tourist spot but to recognize also as one of the center in business and investment. The reader will also determine the nature and importance of expatriation in Cyprus and its relevance to the economic growth of one’s country. This is also regarded as the investor’s blueprint in fulfilling its objectives of doing business in Cyprus.
1.6 Statement of the Problem
The contents of this text will basically be revolved in the following guidelines. These questions will serve as the basis for the development and improvement of this study. This will also be the guide of the study in achievement its objectives and to its betterment. This guidelines and questions includes:
1. Is there a large opportunities to invest in Southern Cyprus?
2. What is the possible return in investing to the Southern Cyprus?
3. What are the risks that the investors are facing upon investing?
4. Does the residential market will occupy all the possible investors in Southern Cyprus?
5. Is there a significant difference between investment to Southern Cyprus and to the other part of the island?
6. Does investing in residential market in the island will be in a long term manner?
7. What are the different factors to consider in residential investment in Cyprus?
1.7 Limitation of the Study
This research is primarily concerned in the investment of the British Expatriates in the Southern Cyprus Residential Market. This is a survey type of research which is commonly taken from the past and existing investors of the residential market in Southern Cyprus. This also studied the British expatriates and their market which can be the reasons on the diversification and transferring for the betterment of their lifestyles and their businesses.
1.8 Objectives
At the end of this research, the reader can be able to:
Determine the British perspective regarding their expatriation.
Informed the British expatriates in choosing the best investment procedure to the residential market investment and accompanied by the risks.
Determine the best possible methods and things to consider when investing.
Identify the pros and cons in investing to the residential market in Southern Cyprus.
Determine the solutions in the network development of the further investment of the people in Southern Cyprus.
Chapter 2
Review of Related Literature and Studies
In order to provide the respected background in the problem which is under construction, the researcher decide to have an extensive research of the relevant literature about the properties in Cyprus and particularly, the British Expatriates that have the plan in considering the Southern Cyprus as the best spot to consider in investment.
The investigation and analysis had always been conducted so that the researcher can have the broad idea about the study. The facts are the keys being got and are commonly gloomed in ones mind. The other important opinions had also been better to problem which can add the awareness of the readers to the researcher’s subjects and can make the views of ample things which are primarily can find in this research.
2.1 Related Literature
There are many related literatures and studies which had been associated in investment to the Residential Market in Southern Cyprus. Accordingly, there are also still fears in the in the head of the investors regarding the nature and the possibility of their success. This can also considered to be a gamble wherein there is a huge regarding in taking into the account of investment. The following related literature are the basis of the study and therefore be use for the betterment of the study and for the support of the researcher in the betterment of the study. This will also tackle the supporting details regarding the nature of investment in Southern Cyprus and the British economical disorders. This also have the supporting topics in the comparison of the Southern Cyprus onto the other land.
The stock of UK had been underperformed which also added to the tax raid starting 1997. The fashion and the other switching of the stocks are also part of the reasons why most of the people are transferring to invest in other nations. Additionally, there are also increases in the weighting of the indices of the banks which are commonly low rated compared to the other companies. The FTSE also rise for about 50% in the past 10 years which recorded to be the major yet the worst-performing in the stock market. [11]
The economy of Cypriot is robust and small yet it has fairly an economy which is flexible and can adopt in the circumstances. This means that the economy of Cyprus is recognized by the satisfactory growth and rate and had been recorded of 5.1% of the GDP annual increase while having the internal and external stability of macroeconomics and full employments conditions. This had been resulted to the achievement of the desirable of advance economies and has the GDP purchase standard of 76.3%. The private sector has also the role which includes the concentration on the macroeconomic stability in regards to the favourable business climate which is the creation of the institutional framework. The fair competition and its securing condition will also be the role of the state which can create social infrastructures and modern economic. The partnership of the public and private enterprises can also add to the cohesion of the condition. In reality, the growth of population in the government’s controlled area was 709.600 in the past 6 years whereas the 69.1% lived in the urban areas and the rest are all in the rural areas. The size of the enterprise also remained to be vey small which only have 4, 4 persons on the average of unit in 2000. This means that greater that half of the total number of the enterprise are employed by one person. In the micro enterprises, it made a record of less that 10 persons and constituted in 95% of the entire organization and the 10-49 employees made to be medium-sized while 50-249 made to the 0,7% to the overall. This only shows that the small sizes of the business will be the hindrance to the adoption of the advance technologies and to the exploitation of the economies of scale as well as to the modern methods of production, management and marketing. The qualitative and the quantitative imbalance are important both the occupational and the sectoral level which can be ameliorated by the employment in the large extent. The sectoral level covered the constructions of the hotels and the restaurants together with the agriculture, the construction, and the manufacturing and being observed by the technical workers.
The economy of the country is also open for having the total exports and imports of its goods and services which had been accounted to be 102% of the GDP as compared to the 66.9% in the EU. The increase of the service had been accounted by 75.7% in its GDP and 71.5% for the total employment in the year 2003. [12]
Cyprus is also been part of the European Union or EU which is a challenge for the country in the 21st century. This is due to the fact that the country had been modernized, and be ready to be part of the new and peaceful part of Europe that cannot be utilize and cannot find to the other places as in the Turkish and in Greece. The main challenge that the Cyprus is facing is the assurance of both the communities will have the part to play in the future of the country. In this manner, the membership of the country in the European Union can give the most appropriate environment for the lasting and fair settlement in the island which can give security and safeguard in the rights inside the framework of the strict member state. The standard of living of the Cypriot citizens will be the result of the harmonization in the legislation of EU. The accession of EU had opened in the largest market of the world which can enable the services and enable the country to have a positive approach in the EU policy formulation. Its geo-strategic positions will also be the gateway in the three continents as a route in the area of EU countries and to the large Arab markets which can be advantageous to the commercial interest and trades. At this move, it can provide the Union with nearly in the Eastern Mediterranean that can exercise greater political and economic influence and can be the major role in the facilitation of the peace and region added to its stability and security. The islands acquisition in the fleet of the mercantile made to rank sixth in the whole world for the terms of the tonnage recorded to be the largest shipping power. Due to the geographical location of the island the serious problems in EU can be monitored as the illegal immigration, money laundering and drug trafficking. This implies that the island is the business and financial hub which can be a member-state and can attract expatriates for the investment opportunities. [13]
Since 1974, the foreign citizens are being warned to purchase in the Greek Cypriot and under the Turkish occupation of military and resulted to the 170,000 Greek Cypriots mad to the 2/3 of the inhabitants and forced to flee in their respective homes. In according to the 1964 Land Registry, 78% of the privately owned lands are all under the Turkish occupation while the Turkish belonging are owned approximately 21%. The foreign citizens who are interested in the property made to have a proper examination in the legal ownership and the status of the concerned with the aide of the surveys and the lands. [14]
There are certain reasons in believing that Cyprus can be the center of investment. These characteristics can be physical, economical or even financial. The strategic location can also be considered to be the asset of the country which had been developed in years into the reputable and international services which are commonly the shipping and banking industry. The country also serves to be the bridge in Asia, Europe, and Africa and it is also being enhanced. The country also offers the unique advantages on the foreign investors which utilizes the country as the base on the worldwide business activities. In short, the competitive advantage of the country is taken from the favourable business climate, to the geographical location, its stable macroeconomic environment, fiscal regime, for having the high level of education in the conjunction of labor force which are comparatively low level in the remuneration of the graduates, financing and banking system, in the modern legal, the excellent infrastructures and having the advanced telecommunication and transport network and to the widespread of the English language. [15]
Living and working in the island during the season can be benefitted to the overall Mediterranean island as having the plentiful sunshine in the entire year and there is no exception. Moreover, epitomise of Cyprus of the ideal weather of the region is the sunny days and has the fine temperature everyday. The Mediterranean Climate enjoyed all the investors and all of the foreigners which were being experienced for about 300 days in sunshine and the rest of the days are rainy. The island is also offering quality of life which is according to the 2005 Index of Life as conducted by the Economist Intelligence Unit; it has notified to have the top quality of life and exceptional lifestyles. The survey made to have a factor which includes health, income, unemployment, freedom, security and political stability, climate, community life and family and gender equality. [16] Below is the graph of the survey.
Figure 1.
The use of the international language is also widely spoken troughout the country and it is also extensively used by most of the businessmen and to everyday life and converstaion. As an example, the use of the various roads as well as the restaurant menus are using the language and by the media. The english speaking schools also are wide established so that it can accommodate all the needs of the country which are found in the towns. Cyprus is also one of the countries who recorded of having a low crime rate. [17]
The buidling and buying lands and porperties in Cyprus is just a common scenario to see. The searching for the land is similar to the location of property whereas it can be done through the contact of estate agents and developers, the magazines and newspapers with the aide of the powertool as the internet. Despite of the general reasons and many adavantages of purchasing property in the Cyprus, there are still reasosn that the investors must take note. This are the factors that the British Expatriates must be considered before entering into the account of investment. This reasons includes the choice of area wherein the tenants must be best to choose so that it can get the possible least vacancies. The problems in Cyprus can restrain some of the people and the other visitors for purchasing in Cyprus which only shows that there is political unrest and most of the people likely wants to keep away. There is also in need of location on the new road and new developments which is being laid down because the island is quite. The flight in going to the island is a little bit longer compared to the Mainland Europe. In the season of summer months, it can be too hot by having the standards of many peoples fo 40 degrees celcius. The prices are also rising which is only the reflection of the EU countries. There are many developer in the entire Cyprus but there are also rumored that they are illegal and most of them are not real estate agents. [18]
In the process of investment, there are different strategies to use in different analyses. This can be categorized in the level of Buy-to-let which is commonly used in the commercial and in residential. The buying-to-sell as in commercial and flipping the residential and lastly the renovate-to-sell are also part of the strategies. The buy-to-let is a long term option for the person who wants to have the home holiday and yet they do not want to pay for it. This method is primarily and also properly work is the investor and the buyer is smart. If the investor uses the strategy, then it is important to have proper analyses to the properties so that it can find the deals in the area wherein and most of the monthly flow as well as the potential for the capital which is large. It is also important to have some of the properties as having the break even and provide the good capital appreciation and can be the high potential for having the monthly capital cost yet low capital appreciation. The said strategy is also applicable in Cyprus which can put down of around 15% and 20% in the rest and in cash that can be mortgaged. Aside from that, the new laws will come near into the play which can purchase the property easier. This is also considering because it is cheaper in buying to Cyprus as compared to the UK. In this manner, the legal system is also secure and safe as compared to the investment of Eastern Europe spots. This system is also an English law. Lastly, there is a little deed that is guaranteed and solid land registry. Part of the advantages also is having the cash flow which can yield to 7-12% and can have the capital appreciation in the next 10 years. However, there are also risks in this strategy as not being to let it out which can be choosing the poor location and not to consider the market property. In general, this strategy is applicable entirely in Cyprus due to its plans and development so that it can be marketable. Part of the development is in the Famagusta opening of the race track and the new marina. The other part of the country also build improvement as in putting the golf course, oil refinery, infrastructure movement and construction of many road which can be the up-market destination for the people of having the disposal income and can also be the destination for the attraction of the visitors. [19]
The strategy of buy-to-sell is commonly for the rising market as in the European countries. This means that buying in first year for the given value and then the value can be appreciated after three years. This is risky because the prices are not rising quickly and therefore there is no much of the capital appreciation. Aside from that, there are also properties of Cyprus which are commonly more supply than of the demand which can make to the difficulty in selling and to the resale of the properties. There are also many reasons to use this because of the many investors can have the chance to experience the 15% – 30% in the capital appreciation and now is much lower. However, there are also risks to face in this strategy as trying to sell at the wrong time which is selling in the similar time as what the other investors did and resulted to flood in the market. The third strategy is buying and to start renovate which is being done by property buying and then sell it for the profit. This renovation cost is commonly 3 to 4 times in the price of purchase of the house. The key importance for this strategy is to decide and to inform the best way which can be suited in the requirements. [20]
The properties in the South Cyprus are the places that most of the investors can have the chance to find the new communities. There are many residential opportunities that are appropriate in the said community which covers the villas and can be the destination for the home due to the location which is near to the sea and can preserve the natural of the beaches and they are all available for the public in the whole island. In the southern part of Cyprus it offers property selection as the Larnaca, Ayia Napa, Nicosia, Limassol, Paralimni, Paphos, Pissouri, Polis, and Protaras. [21]
Cyprus is considered to be the third among the largest island in the Sea of Mediterranean. The southern part of the Cyprus is primarily consists of the modern infrastructures and has the landscape which varies in the midst of rugged coastline, sandy beaches, forest covered mountains, and rocky hills. This part of Cyprus as well is known for its growth area and continued stability. The capital of Cyprus is Nicosia which has the ancient and shops and many quaint. The part of the country also covers the most important port and it is the second city which is the center of the wine industry. In this area the people can also enjoy beauty of the Troodos Mountain which is the highest peak in the country. The island is easy to visit as using the British Airways and the Cyprus Airways which always offering the regular and non-stop flights to and from Larnaca and Heathrow Airport. There are also many flights which offer services to go into the country. [22]
The strategy of buy to let is more of sensible in the strategy of investment and in the residential business wherein the area of Limassol and Nicosia as seen in being stable of its demand for the manner of long term. This means that the rentals are low and has the low weekly rate for which it can earn lower overheads. The overseas agents of estate are charging the marketing commission of the companies which amounted to be 12% – 14% in the VAT and can also add up to the price purchase of the property. [23]
There is difficulty in purchasing the property and its process in Cyprus. This means that there is a maximum limit on the donums of land as well as needs to have the registered in the government which can only be obtained with the aide of the lawyer. The Cyprus made a plan of de-restrict the housing sector and this plan is expected to be implemented in the year 2011. The non-Cypriot buyer needs to have an application to the Council of Ministers so that it can acquire the formality, the immovable property, the criminal records, bank reference, size of the land, criminal records, and statement of the home. [24]
To see the movement of the residential prices of residential market, it is important on having the idea of BuySell Real Estate which is the advertiser and the publisher of monthly index of the residential market in Cyprus. The growth of the prices of the residential properties in Cyprus is being sold and has the average of amounting to 400 to 500 in its sales in property. When the index of the prices had been started in the year 2004 the residential property of the Cyprus market had recorded to have 133,117 euros. This growth continued until the year 2007 which recorded to rise for about 16.13%. [25] The graph of the Price Index of the residential market price is given below and is the proof that prices of the residential properties in Cyprus had extensively increasing.
Figure 2.
The analysis of the investment in the areas of the Cyprus is important which are the area that the investment can take place. The first one is Nicosia which is simply the city-center and had been developed a strong market property and has the residential and commercial sectors that can present the ample opportunities of investment. The property prices in this place are increasing due to huge interest if regsitering of the international companies. It can also attracts the private workforce and made to have the educational center which has the target of growing students. The second area is the Famagusta and it is the Southern Part of Cyprus. The prices in this part of the island is less tht compared to the other areas and there are also more space and land which are currently at least given to different options and innovations. The Larnaca can also found in the coastal town which are super close in the airport and it is in transitional phase. The developments of properties had been sold off and their availability are increasing. The town is not capturing the investor’ interest. In Limasol, is known as the most diversed market of property and the second largest city in the island. This had also recorded to be the center in of shore companies which had been emerged in the year 1990. The residentail property in the place range ther prices of about 10% lower than of the Nicosia and 10-15% higher that of Famagusta. The paphos has the greatest market property of growth of 1996-2002. This also offering the holiday home whereas the developers can have the chance in continuing the development scale. The polis does not become the construction site yet, though the demand is increasing. [26] The property performance of the areas in Cyprus is given below:
Cyprus Property Market Performance, 2005
T =
Sp 1/n1 + 1/n2
Where:
Sp = (n1 – 1 ) S1 + (n2 – 1) S2
n1 + n2 – 2
4. The formula for the hypothesis testing also had been used.
Ho : μ = μ
H1: μ < μ
With t = xbar – μo
s/ √n
The researcher will use the SPSS (The Statistical Package for the Social Sciences) to come up with the statistical analysis for this study).
APPENDIX 2
The Questionnaire
In the survey questionnaire, the respondents will assess each statement using a Likert scale with five responses and its equivalent values:
Numerical Rating
Descriptive Rating
Mean Value
5
Strongly Agree
4.51 – 5.00
4
Agree
3.51 – 4.50
3
Uncertain
2.51 – 3.50
2
Disagree
1.51 – 2.50
1
Strongly Disagree
1.00 – 1.50
SURVEY QUESTIONNAIRE
Name (optional): _______________________
Sex: ____
Age: ____
# 1 How do you rate the following? Strongly Agree- indicates strong agreement; Agree- indicates consensus; Neutral- indicates impartiality; Disagree- non-concurrence and; Strongly Disagree- indicates strong disagreement (Please check box for answer). Your reason why you invest or want to invest in Southern Cyprus.
Strongly Agree
Agree
Neutral
Disagree
Strongly
Disagree
Location
Climate
Economy
People
Culture
Investor Relation
Tourism
EU Member
NO Crime
Low Prices
Availability of Mortgages
Capital Growth
High Income Return
# 2. How do you feel about the following risks of you’re investment to Southern Cyprus?
Strongly
Agree
Agree
Neutral
Disagree
Strongly
Disagree
Attraction to Tenants
Discourage People
Space
Distance to England
Government Policy
Rising Prices
Number of Developers
Others
# 3 Is there a possible of Highest Income Return in investment to South Cyprus? Please Check _______ Yes _______No
# 4 Is the South Cyprus is better to put up investment? Please Check
______ Yes _______ No
# 5 Is the investment for long term manner? Please Check
______ Yes _______ No
[1] Expatriate, 2007, MSN Encarta Dictionary, Microsoft.
[2] British Expatriates Numbers Increase, 2004, Shelter Offshore.
[3] Ibid.
[4] Cyprus, 2008, Central Intelligence Agency.
[5] About Cyprus, 2005, Cyprus Dot Com.
[6] Cyprus Properties More Appealing, 2004, Shelter Offshore.
[7] Ibid.
[8] Cyprus Property, 2004, Amberlamb.
[9] Top Ten Reason Why to Invest In Cyprus, 2008, Pafilia.
[10] Hogwart, N 2004, Guide to Cyprus Property Investment.
[11] Nixon, S 2007, Money Week.
[12] Aspects of Cyprus 2005, Press and Information Office.
[13] Ibid.
[14] Press and Information Office, 2008, Ministry of Interior.
[15] Cyprus as an Investment Center, 2008, Invest in Cyprus.
[16] Ibid.
[17] Ibid.
[18] The Overseas Guides Company Limited, 2005, The overseas Guides Co.
[19] Ibid.
[20] Ibid.
[21] Property in South Cyprus, 2004, Sunshine Estate.
[22] Ibid.
[23] Buying Investment, 2004, Cyprus Property Buyers.
[24] Cyprus Buying Guide, 2005, Global Property Guide.
[25] Ibid.
[26] Cyprus Property Buying Guide, 2005, The Overseas Guide Company Limited.
[27] Ibid.
[28] Ibid.
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