Research Articles Base: Investment Policy Guidelines And Restrictions

Non-Direct Investments – Quoted Equities (Specific Investment Guidelines)

Non-Direct Investments – Quoted Equities  Specific Investment Guidelines   The Specific Investment Guidelines for this class of investment, supplementary to the General Investment Guidelines given above, are as follows: 1.         The Company will not purchase, otherwise acquire or control for its own account, more than 10% of the issued share capital of a quoted Company under this asset category. 2.         Quoted equity investments outside the Arab world will normally be undertaken through third party managed vehicles rather than directly unless approved by the Board Investment Committee. 3.         Quoted equity investments will be closely monitored with respect to risk. Two primary measures of risk will be used in this respect: ·        First, the price of each individual investment asset will be monitored in comparison to its weighted average cost for the year, adjusting for dividends or other corporate actions. A 15% loss will trigger an automatic meeting of the Board Investment Committee, which will determine a specific course of action. In the event that the position is maintained and the loss increases to 30%, this will trigger an automatic meeting of the Board of Directors, which will in its turn determine a specific course of action, including any stop loss limits if applicable. Minutes will be taken of all decisions made for the record. The average cost price, for assets already on the books at the start of any financial year, will be taken as the price at which the asset was valued at the end of the previous year. ·        Second, each investment will be monitored with respect to the overall loss exposure by comparison to Shareholders’ Equity, to determine the absolute risk of the investment position. The profit and loss calculation for each investment will take into account any dividends received or other valuation impacts from other corporate actions. A loss representing 0.25% of Shareholders’ Equity will trigger an automatic meeting of the Board Investment Committee, which will determine a specific course of action. In the event that the position is maintained and the loss increases to 0.50% of Shareholders’ Equity, this will trigger an automatic meeting of the Board of Directors, which will in its turn determine a specific course of action, including any stop loss limits if applicable. Minutes will be taken of all decisions made for the record.     Credit:ivythesis.typepad.com

Non-Direct Investments – Quoted Equities (Specific Investment Guidelines)

Non-Direct Investments – Quoted Equities Specific Investment Guidelines The Specific Investment Guidelines for this class of in...

Bahrain Duty Free Company Investment Policy Guidelines and Restrictions

General Investment Policy   General Objective  To seek investment opportunities that would maximize shareholders return and maintain appropriate/prudent level of risks to protect capital and assets.   This objective is to be achieved with appropriate risk diversification by: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify"> Asset Type </li> <li class="MsoNormal" style="text-align: justify"> Geography </li> <li class="MsoNormal" style="text-align: justify"> Execution Strategy – Investing through Funds or other vehicles where appropriate </li> </ul>     Terminology Terms used in this document are defined as follows:   Surplus Fund – The Surplus Fund is the excess fund available after deducting all funds required for the core business of the company. Such fund shall be calculated at the start of the relevant financial year as described in the Company’s Audited Consolidated Financial Report and Accounts, or the quarterly financial statements, whichever is more recent. For the avoidance of doubt, Surplus Fund is calculated based on the maximum permissible leverage set by the BOD at the time the investment is made.   Shareholders’ Funds – The value of Shareholders’ Funds at the start of the relevant financial year as described in the Company’s Audited Consolidated Financial Report and Accounts, or the quarterly financial statements, whichever is more recent.   Board of Directors or BoD – The Company’s Board of Directors, as may be appointed by the Company’s Shareholders from time to time.   Board Investment Committee or BIC – An executive committee of the Board of Directors, charged with certain investment decision, monitoring and control duties as detailed herein.   Management Investment Committee or MIC – A Management committee charged with certain investment decision, monitoring and control duties as detailed herein.   Company – Bahrain Duty Free Company   Asset Categorisation The following listing outlines the general categorization of assets in which the Company may invest. This list sets out the framework for the investment process and methodology and is the basis for establishing a balanced portfolio approach to all the Company’s investment policies.   The primary asset distinction is between Direct and Non-Direct investments. The determining factor will be the liquidity of the investment as outlined within the sub-categories given below.   Direct Investments include: Long Term Equity Investments <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify"> Private Equity and other Unquoted Equity </li> <li class="MsoNormal" style="text-align: justify"> Strategic Quoted Equity – Strategic Stakes (medium to long term holding strategy) </li> </ul>   Real Estate and Real Estate Products   Non-Direct Investments include: Quoted Equities and Traded Quasi-Equity Instruments   Fixed Income <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify"> Deposits and Money Market Investments </li> <li class="MsoNormal" style="text-align: justify"> Bonds – general </li> <li class="MsoNormal"> High Yield Bonds – sovereign and corporate debt below investment grade, convertibles etc. </li> <li class="MsoNormal"> Long Term and Illiquid Fixed Income Investments – Hold to Maturity Bonds </li> </ul>   Structured Products – Capital Protected <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify"> Bond, Equity related </li> <li class="MsoNormal" style="text-align: justify"> Commodities </li> <li class="MsoNormal" style="text-align: justify"> Foreign Exchange etc </li> </ul>   General Investment Guidelines   The Board of Directors will be responsible for determining the investment policy and strategy of the Company. The Board of Directors will have full authority to change the investment guidelines as it sees fit. The General Investment Guidelines are set out as follows:                 a)         The upper limit of each asset category as a percentage of Surplus Fund is as follows:               Direct Investments                                                           60% ·        Private Equity and other Unquoted Equity                 35% ·        Quoted Equity – Strategic Stakes                              25% ·        Real Estate and Real Estate Products                        25%               Non-Direct Investments                                                                        100% ·        Quoted Equities Etc                                                  50% ·        Deposits and Money Market Investments                 100% ·        Bonds – general                                                       75% ·        Hold to Maturity Bonds                                            15% ·        High Yield Bonds – sovereign and corporate             10% ·        Structured Products – Capital Protected                    20%         b)      Investment decision making and approvals shall be governed and executed by a body of three authority hierarchy consisting of the Board of Directors, Investment Committee, and Management Team.   <li class="MsoNormal" style="text-align: justify"> The following functions shall be approved by the authority levels stated: </li>  Function Authority   Approval of investment policy and amendments thereto.   Board of Directors.   Approval of specific investment guidelines within the policy framework. Investment Committee Approval of Investment strategy and fund reallocation plans within the policy framework. Board of Directors   Approval of selected fund managers, mutual funds, brokers and custodian firms. Investment Committee Approval of eligible banks for deposit placements and relationship. Board of Directors   Deposit rollover and placements with eligible banks. Management Team Approval of Investment Procedure, Internal Accounting and Settlement Practices. Board of Directors                 2.     The following list is approval limits per one investment transaction: Limits Authority   Unlimited. Board of Directors Up to BD 500,000, or up to 2.5% of total shareholders equity, which ever is lower, for investment in “Direct Investment”   Investment Committee Up to BD 1,000,000, or up to 5% of total shareholders equity, which ever is lower, for investment in “Non Direct Investment”.   Investment Committee   <li class="MsoNormal" style="text-align: justify"> Listed below are the authority limits for realizing losses per one transaction: </li>  Loss Limits Authority   Above BD 150,000 Board of Directors   Up to BD 150,000 Investment Committee       c)         Decisions to dispose of any asset will be made using the same decision process, and   under the same constraints, as the original decision to invest in such asset.   d)         The Company will invest at least 50% of its Direct Investments in the Arab world, but will restrict its investments to only those countries with a convertible currency. The order of preference for investment will be Bahrain, GCC, Arab countries, OECD, Others.   e)         The Company will not invest in assets, or third party vehicles, which may themselves invest in, the State of Israel.   f)          The maximum total equity investment in any particular country other than Bahrain will not exceed 20% of the Surplus Fund, calculated at the time that the investment is made, except by prior approval of the Board of Directors. In the case of Bahrain the maximum limit may be up to 100% of the Surplus Fund, calculated at the time that the investment is made.   g)         The maximum total fixed income investment in any particular country other than Bahrain will not exceed 50% of the Surplus Fund, calculated at the time that the investment is made, except by prior approval of the Board of Directors. In the case of Bahrain the maximum limit will be 100% of the Surplus Fund, calculated at the time that the investment is made.   h)         The Company will not commit more than 15% of Shareholders’ Funds to any single asset (or multiple asset types of any one company) and will not place deposits or enter into any money market investments constituting more than 30% of Shareholders’ Funds with any one financial institution.             i)          The Company may invest in securities and unquoted investments issued in domestic currencies of Arab countries and will therefore assume the foreign exchange risk. The degree of foreign exchange risk will be a significant factor in determining the eligibility and attractiveness of the investment. Such risks will be considered on a case-by-case basis with due regard to overall foreign exchange exposure and the single country and asset limits set out herein.   j)          The Company’s borrowings, excluding non-recourse borrowing for property, will not exceed the figure approved by the Company’s Board of Directors.   k)                  Investments in third party managed vehicles will be subject to appropriate independent custody, audit and administration arrangements.   l)                    The Company may use, for efficient portfolio management and hedging purposes, options, futures, currency swaps, interest rate swaps and other derivative instruments. However, the Company may not use such instruments for leverage or for any purposes other than those described above. As such, the Company may not invest in derivatives for which the underlying asset values in aggregate exceed the maximum limit levels for that asset class. Credit:ivythesis.typepad.com

Bahrain Duty Free Company Investment Policy Guidelines and Restrictions

General Investment Policy General Objective To seek investment opportunities that would maximize shareholders return and maintain a...

Summary of historical facts that were related to factors that affect decision of a certain country or company to obtain multinational investment

Introduction             It is difficult to integrate the economic framework of the contemporary times to the ancient and early international trade primarily because of the difference in the methods imposed to attain an economic goal.  Thus, a presentation of evolutionary stages of multinational investments of active participants across different periods from ancient times until recently is necessary to at least have a grasp on where such integration difficulties stemmed.  Since the modern definition of multinational investment expelled the coercive and military means of acquiring assets offshore, the historic examples was operating differently and oftentimes in opposite of such.             Presented in the paper are summary of historical facts that were related to factors that affect decision of a certain country or company to obtain multinational investment.  To wit, the paper highlights the foreign trade relations of the ancient people, Dutch colonization acts and trade modernization in foreign countries and British-owned multinational company.  Conclusions are provided at the end of each data presentation to cite main theories that can evaluate the motivating factors of a country or company in embarking multinational investment.              The paper limits its scope when it avoided mentioning at least two foreign countries wherein the multinational investment should be directed by the home country to be called as one to concentrate in evaluating their investments, prevent too much factual presentation and give way to minimal historical compilations.  However, the historical evidence will concretize that these capitalist countries, especially when colonization was rampant, had indeed travel to different lands backed by their coastal vessels’ superiority.             The Evolution of Ancient Foreign Investment             The Old Stone Age or Paleolithic could be considered incapable to ensue, at the periphery, foreign trade or if it was, which would be considered an extreme thinking, rare anthropological evidences had conceded.  People were characterized as hunters who used simple wooden tools and primarily concerned survival of individual and family lives.  Although tribes were introduced, no formal property ownership was established making trade an impossible scenario.  In later part of the period, however, jewelry had been argued to travel from one place to another but no concrete evidence that exchange of goods happened, at best, there was the intention from the parties to profit from such situation.  With the absence of capital in people’s daily works, the factor of labor served as the greatest achievement in this period (1957).             In the book, only at the start of Mesolithic and Neolithic Ages the term investment was vividly utilized to describe how people of this middle and new age saw the potential of human labor to create wealth which was a breakthrough to withdrew from the traditional subsistence hunting and food gathering.  As people discovered to organize its value, labor was invested in plant production for a specific harvesting season, tree cultivation to be used by future generation and domestication of cattle for future gains in trade.  Although the system was largely pioneered in the local setting and informal communities, this served as the trigger that would later ignite, at least, foreign exchange of goods.  Labor, then, could be considered as the pillar of capital accumulation that was destined to be transported across nations, ultimately, to be as an investment tool (1957).  In the period of Ancient Orient which started in 5,000 BC, export trade became very active.  As a result, the need to formalize mode of money was applied, loan was introduced, and eventually, the formation of cities and civilizations began.  With this, no doubt that ownership rights was officially protected by the state that encouraged people to engage in foreign trading to possess unique and valuable endowments from other countries.  Babylonia exported salt as it imported perfume from Arabia.  Metal, gold, silver and bronze became popular export trade although few regions were able to produce them 1957). With the trend, if foreign investment would be defined as the movement of capital across national frontiers wherein the investor retain the control over the acquired asset (), then the motives of retired merchants of this era could be acknowledged as one of the oldest and non-armed and non-violent feat to profit abroad.  These retired merchants had foreign exchange career outside national borders and would hire competent agents to continue their efforts abroad.  In such course, they provided the necessary capital to make the expedition possible including the financing for the acquisition of local goods to be traded.  These agents, in return, should arrive to the home country with both the principal and profit on hand, or else, face state sanctions from the frustrated capitalists.  Although no factories or headquarters were built in the host lands at that point in time, agents profited amidst their vulnerability to local seizures and imitation.  They had fought hardships in the journey through mobility and restless travel (1957).              The era, although was not explicitly shaped in foreign direct investment, had industrialized mining, quarrying and other manufacturing sites.  Such stagnation was largely caused by the principle of national solidarity as the domain of many regions, which was noted as “dangerous”, that formal establishments to host countries was deemed profitable but highly risky venture with host native’s discriminatory and hostile clauses.  Several daring merchants and gallant explorers, however, in the likes of naval superior Phoenicians stayed in coastal areas of host countries profiting from seaport trades, and possibly resorted to, because of their relative advantage in the sea; say, when intruders post threats, they can be easily saved by the waters from attacks.  Nevertheless, the foreign investment portrayed by retired merchants, although labor-intensive, seemed to be a relatively stable and profitable foreign investment (1957).                    At the unfolding of the AD centuries, colonization was the focal point of a home country’s foreign investment which was largely on coastal expeditions, warfare equipments, human labor and even human lives.  Since the states, empires and governments were the ones who frequently initiated the act, funding came from the coffers of the country.  Being politically motivated and absence of long-term trade, foreign lands that were founded and colonized either diplomatically or violently against the existing settlers remained a blurred foreign investment in economic sense.  The absence of private ownership in terms of the funds used to raise the capital needed for the expedition and unpopularity of exchanging goods between the colonizers and the subjects prompted some economic researchers to exempt the extent of the evolution of foreign investments, particularly multinational ones, on the later centuries particularly at the onset of the seventeenth century.            Conclusion             The need to exchange what was abundant and retain or outsource what was scarce remained the motivation of the ancient traders to invest, primarily in human labor, abroad.  With the presence of political risks (I 2003), especially in an established region, ancient merchants relied heavily in the host country’s openness to trade, or on their part, the investors level of endowments given as a gift to the ruling empire for a possible license to operate in its borders, if not obtain monopoly in certain commodities.  Economic risks ( 2003) could be observed by host countries capability to establish commercial complex, provide a hostile-free environment for the investor to maximize its profits and realize surplus from the value of his investments by bringing back home the unique line of commodities of host country for dearer value.                          Dutch Multinational Investments from 1600-1800 The VOC Period of Colonization             The idea of (1999) about the crucial role of the home government intervention was best reflected on how the Dutch States General organized a group of merchants to explore wealth across different nations.  This announcement brought into being the oldest multinational company (MNC) () (VOC) on 1602 tasked to conduct colonial activities in Asia.  The control granted to VOC succeeded through monopolizing oil and spices like nutmeg in the South Eastern part.  Other Dutch naval explorers and colonizers followed which constituted national strategy to systematize the firms’ voyage by granting exclusive rights to respective multinational companies within specified regions.              The initial attempt of Dutch MNCs was characterized by suppression and mass murder to acquire forcefully natural resources of other nations especially those situated in Asia.  Where was then the Dutch foreign investment?  Truly, this period of colonization expelled the requirement of financial or physical capital from the home country to be able to establish MNCs in host countries.  However, VOC had deployed human resources in the form of military personnel including transportation resources like naval ships that was used to arrive in Asian lands.  The investments did not involve trade in the sense that acquisition of host resources was not paid but stolen through coercion (1999).             Using dependency theory (), the advancement in Dutch coastal navigation and probably their military troops succeeded in the conquest to extract wealth from naturally-rich poorer countries.  The dependency, however, was not merely conducted to acquire cheap labor or transform the local market as customers instead colonization was used as means to achieve the ends of MNCs.  Since the host country was relatively less advanced in terms of weapons and less organized in terms of military infantry, Dutch colonizers exploited their vulnerability.  This market imperfection (1991) between the colonizers and the colony in several competencies served as an incentive for the home country to invest heavily in MNCs and disincentive for the host countries to invest and try to interrupt Dutch MNCs’ objectives of colonization.              The fruits of foreign investments and expeditions were equated trade gains for the home country.  The natural resources they had acquired from colonized countries were traded to European and Russian countries that traveled a long way to purchase relatively precious merchandise.  In effect, Netherlands created surplus basically in the hands of group of merchants which had invested not only within the country through real estate, banks and lotteries but also outside by financing export goods and establishment of enterprises abroad (1999).             The Emergence of Modern Trade What was exemplified by VOC was rather an indirect mechanism of foreign investment because violence was the focal point in acquiring resources. Although it had headquarters, issued stocks and bonds () to represent ownership, applied firm strategies and processed inputs to build ships, the actual deployment of investment in the foreign soil did not suggest modern approach to foreign investment.  It was characterized by distorted, if not barbaric, form of foreign direct investments () and inapplicable portfolio investment () scheme.    After a decade, however, the country learned to adapt to nations in which its MNCs will invest suggesting a shift of strategy away from Asian experiences. An example is the short lived-history (1614-41) which situated a manufacturing facility in the island of Spits Bergen to process marine inputs from America and produce soap and lamp oil that gave rise to one of the first foreign direct investment (FDI) of Netherlands. Another prominent MNC (WIC) certified on 1621 obtained sole rights to operate in North America and established posts in the region to trade firearms, bullets and iron ware.  These foreign endeavors marked the modernization of the country in terms of foreign investments.  Eclectic theory (1991) was found in Asian exploration as Dutch had ownership advantages because they were the proprietor of colonization on several regions.  However, as early as 1589, English had colonized North America () exploiting its aquatic, tobacco, sugarcane and corn endowments.  Thus, Dutch can no longer maximize potential to own natural resources and could only maximize its investment through cooperative strategies with the original colonizers.  In effect, the capital it used in the expedition fell short compared to the Asian gains.  If this will continue, similar North American expeditions would be non-profitable and could only cause conflict from the already established English government.  The imperfections in good and factor markets (1991) were not favorable to its side that internalization (1991) of English activities was resorted.  Instead of stealing and invoking violence, it built facilities to manufacture raw materials into merchandise in which it was known (1999).  It sympathized with the political environment through strictly trading and manufacturing endeavors.  It also utilized its coastal trade experience, in effect, gave rise to marine manufacturing and export of reclamation knowledge abroad.  With this, it optimized foreign coastal areas that served as location advantages (1991). In respect to metal trade, political intervention from the host country stimulated the competence of Dutch investors.  The primary Dutch investor that succeeded in foreign investment through portfolio strategy (), particularly lending, was.  When the King of Sweden cannot afford to repay, it compensated the merchant with iron and copper industry monopoly in the ruled lands.  Striking how a king ran out of money, it was more interesting how used political lobbying to own an industry.  The story of was almost the same with the Emperor of Austro-Hungary as non-liquid debtor providing mercury and cooper monopoly to the Dutch and Italian creditors (1999).  Again, political disruptions 1991) dictated the Dutch fortune.  However, the initiative came from the host country.                            Conclusion             Using Wilkins Model (1991), the VOC exploration in Asia can be described with low market but high resource opportunities and low degree of political stability of conquered Asian regions, low extent of cultural similarity of the Dutch and Asian inhabitants, and fairly Dutch experienced foreign investment strategies.  As the lands were endowed with rich spices and wares (China), Dutch conducted colonization albeit unfamiliarity of the newly explored lands.  To their disadvantage, Asian inhabitants were relatively subsistence settlers and did not impose substantial threat to impede Dutch colonization.  The latter had the modern tools both in knowledge and equipment and advanced naval capabilities that gave them the strength and speed over the subjects. In addition, the resources that were acquired in the process would be diverted back in the harbor of Amsterdam where international trade occurred (1999).  Hence, the price of the Asian products, rare at this point in time, was maximized from the pockets of the willing-to-pay foreigners.  With this, the Dutch could have exercised vertical foreign investment that linked explored unique commodities to their country’s international ports.  Exploited resources were driven back to Netherlands to sell at a high price.  Also, with the presence of Dutch manufacturing firms in near their seaport trade complex, converting raw materials saleable merchandise was possible and done in an efficient manner through minimal of transportation costs.  Because of these facts, savings equated to higher returns and more surpluses for the companies and the government.             In a different approach, the North American exploration did not gave Dutch the advantage of tapping unique natural resources instead the ideal strategy was to exercised expertise in building and maintaining factories that can process raw materials.  Because of this, they could transform the English-owned natural resources into a new kind of merchandise, probably profiting in the rent for the manufacturing services, and perhaps, due to their coastal expertise, transportation.  In the case of metal-based products, the acquired monopoly in other countries provided the merchandise sold in the region.  As a result, they offset the lost opportunity to personally exploit the North American unique endowments by exposing these unique products.   The British East India Company 1600-1858                Its two and a half centuries of prosperous trade monopoly in India () was sparked by giving gifts to the ruler of mainland India.  From then on, the chartered company established somewhat fair trade in an Asian region relative to VOC doings in the south east part.  It flourished by establishing factories primarily in the mainland which competed the spices industry the Dutch companies had topped as an export good.  In several points in time, it faced financial difficulties and armed threats from other foreign military and industrial states.  However, it had seemingly impressed the British parliament in its performance and created a strong lobbying position to its favor.  This resulted greater autonomy in the region as British imports accounted 15% of purely Indian trade from the company operations.             As its corporate history unfolded, it kept expansion up to small states of the country amidst the resistance of native and foreign settles and other traders who were unwilling to be driven away.  In the process, the company strengthened its military force with the most monumental warfare observed against French counterparts.  With several experiences through industrial-related battles, the company matured not only in military but also operational efficiency of its plants with the support from local chieftains as political influence of British had spread into the local government particularly in the mainland.  In effect, the company conquered more states all over the country integrating them under the umbrella of its ambitious trade goals ().             However, the company shelter, especially in Bengal, seemed to exaggerate its competence particularly in the production of basic needs leading to a catastrophic death of 10 million people in the province due to famine.  Because of this, the Crown identified the inability of the company to take over such enormous number of lands and providing the inhabitants sufficient commodities for a living.  This prompted to impose a formal control of the British Empire over the Indian country which slated the drought for the company.  Blurred established jurisdiction in administering states between the Crown and the company ensued, as the latter was officially confined strictly in industrial matters amidst its military presence across India ().              As the end drew near, it tried to surpass financial bottlenecks relying in the capability of the host country to produce opium which was exported to China.  The refuge was short-lived, however, as China imposed war in such trade that entirely opened the door for the company to exit Indian trade monopoly.  This event was completely realized as mutiny of Indian Soldiers happened in 1857 and other succeeding acts that deteriorated its operations ().      Conclusion             Unlike the early missions of Dutch in Asia which could be described as violent and intimidating, British resorted to diplomatic ways fairly throughout the company life with exception of relatively fewer armed coercion.  A signal of the emergence of modernization theory (), the company helped the country to attain its economic competence and independence by transferring the knowledge of enterprise management and efficiency in production ().  Although there was no doubt that ethnocentric influence of Western values had infiltrated the Indian culture, this was limited largely in the mainland and positive gains could somehow outweigh the mechanism of cultural imperialism.              Not so much competitive advantage in terms of navigation unlike Dutch and Portuguese (), British was known by its diplomatic and systematic mercantilism policies ().  There was absence of ownership advantages but location foothold (1991), as factories were situated within mainland, prevented unnecessary collision against the better foreign counterparts on the coastal areas.  The British company produced in-land crops like cotton and tea and internalized (1991) the operations of the firm in the local state’s norms that equate to efficiency.              Implication of theory of the obsolescing bargain (1991) was observed in the increased military forces of the company across time and its continuous lobbying in the home country.  As there was local resistance from the unwilling Indian states, the company had imposed pressure to them to recuperate its investments.  It also increased its host exports for the home consumption and re-export rejuvenating its parliamentary influence and lobbying presence at times of financial problems.  One indication of this was the increase of its export in North America for Indian produced tea through the Tea Act ().              The motivation is parallel and the stimulus was the same.  British government saw opportunity in the country, amidst established Indian states and the presence of foreign traders and colonizers, which prompted the Crown to send MNC there.  Implications of Wilkins model (19991) suggested political stability in Indian government and chieftain-ruled states that the Crown succeeded in their diplomatic way of doing business and lobbying to the host country rulers.  In terms of strategy, it had established networks in North America that served as the market of Indian commodities.  As it counted the years of operation, its experience curve had increased that showed during Industrial Revolution and French War wherein the company exercised efficiency in its operations to produce more due to threats of factory seizing and operation’s block-out.  In aggregate, embarking a multinational investment in India gave the company and Crown alike their ambitions both in industry and administrative aspects that made the exploration a successful one.        Credit:ivythesis.typepad.com

Summary of historical facts that were related to factors that affect decision of a certain country or company to obtain multinational investment

Introduction It is difficult to integrate the economic framework of the contemporary times to the ancient and early internat...

THE INVESTMENT OPPORTUNITIES IN THE RESIDENTIAL MARKET OF SOUTHERN CYPRUS

The investment opportunities of British expatriates in the residential market of Southern Cyprus Structure of dissertation Title page Abstact Acknowledgements Contents Chaprter 2 Litereture review, baackground data, construction industry Analysis of the statistics of properties. Chapter 3 investment -tax braks. Are there any specialized propertie? Test the hypothesis that there is investments opportunities with greater returns. Chapter 4 British expatriates Chapter 5 :Summary & conclusions and recommendations Bibliography  Hi this is some research i have done, Cyprus Newspapers Baris Gazetesi (Famagusta) Cyprus Mail Cyprus Oberver [In English] Cyprus Telegraph [In English] Cyprus Today [In English] The Cyprus Weekly Famagusta Gazette Financial Mirror Financial Mirror [In English] Halkýn Sesi (Lefkoþa) [In Turkish] Haravgi Kibris Gazetesi London Cyprus Information Centre Mikres Aggelies [In Greek] PameGipedo.com (Nicosia) Phileleftheros Politis ReportFromCyprus.com Shmerini Online Sportnetcy [In Greek] Star Kibris Typos Typos Online (Nicosia) Yeni Kibris [In Turkish] Cyprus newspapers for information on local issues, politics, events, celebrations, people and business. Looking for accommodation, shopping, bargains and weather then this is the place to start. Information about holidays, vacations, resorts, real estate and property together with finance, stock market and investments reports; also look for theater, movies, culture, entertainment, activities and events all covered in Cyprus newspapers. Sydney Hotels Online Magazines Back to Main Index Please EMAIL US if you know of any new online newspapers or those on our lists where the address has changed. Search Australia with Web Wombat: Interesting Sites: Sydney Online Melbourne Online Brisbane Online Enterprise Search Solutions Car Finance Adelaide Online Car News Hotels in Sydney New Car Broker Credit Cards Web Hosting Australian Education Domain Names Sydney Hotels Sydney Festivals Sydney Boutique Hotels Car Finance Calculator Home | Site Map | Privacy Policy | Add Newspaper | Online Magazines |Tell a Friend About Us | Link to Us Copyright (c)1995-2008 . All rights reserved. Guide to Cyprus Property Investment Investors guide to buying property in Cyprus Ultimate Guide Homepage Property Buying Guide Property Investment Guide News Forum Privacy Sections Ultimate property guide Property buying guide property investment guide Property price index Cyprus market analysis Market predictions Property price guide Cyprus property values Cyprus government rules & regulations Essential legal advice Cyprus luxury properties Custom Cyprus properties Resource centre Cyprus property news Cyprus property forum About Nigel Howarth Sponsored Links Guide to Cyprus property investment Cyprus is becoming increasingly attractive to overseas property speculators with the buy-to-let property investment market now accounting for more than 25% of all sales. However, the ‘traditional’ property investment market has concentrated on the increasingly over-developed tourist sector – and short and medium term returns on jet-to-let properties are beginning to fall. In some areas it’s possible to get a gross income from your investment in the region of 4%-6% of the property’s value. However, the value of a property is not necessarily the same as its purchase price and you will not achieve such a high return everywhere! A large number of properties are grossly overpriced A typical example of overpricing was the sale of a 75m² apartment at Oroklini, a village near Larnaca. The apartment has two bedrooms, a large veranda and has good views towards the beach some 2km distant. It sold for CYP 160,000 although the guide price in the area for similar two bedroom apartments is about CYP 75,000. Buy-to-let holiday home investments If you are making an investment in the Cyprus property market, you’re unlikely to get a good return from short-term holiday lets (unless you have an exceptional property in a good location). You only have to look at the number of buy-to-let properties being advertised to see the sort of competition you’ll be facing. Remember too that you’ll need to advertise & promote your property, furnish it, get someone to clean & look after it for you, make repairs, redecorations, replace breakages and pay telephone, electricity and water bills & local taxes. If you’re buying an investment property in a tourist areas, do not budget on renting it out for more than 18 weeks a year. Figures released by the Statistical Service of the Republic of Cyprus reveal that tourism has dropped by 12% since 2005. If this trend continues, there will be even fewer holiday makers looking to rent holiday homes. Some developers offer guaranteed rental returns of 15% per annum for the first two years and I’ve recently seen one developer giving away cars to property buyers. Needless to say the cost of these ‘incentives’ has been factored into the selling price! Buy-to-let residential property investments A more sensible property investment strategy for Cyprus is to buy a property in one of the residential suburbs of Nicosia or Limassol where there’s a steady demand for long-term (one year and more) rentals. Although the weekly rate you achieve will be lower, this will be more than offset by the longer rental period. And your overheads too will be considerably lower. Copyright (c) 2004 – 2008 . All rights reserved. Privacy Policy, About, Site Map, Contact | Ultimate Cyprus Property Guide | Cyprus Property Buyers | | Property Buying Guide | Cyprus Property Investment Guide | | Government Rules & Regulations | Cyprus Property News | Cyprus Property Forum | Basic Characteristics ·         The Cypriot economy is a small, robust and fairly flexible economy, and has shown itself able ton adapt to circumstances. Intertemporally the Cypriot economy Is characterised by a very satisfactory rate of growth (the average annual rate of growth of GDP amounted to 5.1% in real terms, over the period 1961 -2003 ),full employment conditions and internal and external macroeonomic stability. As a result,Cyprus has achieved an enviable level of real convergence with the advanced economies, with a per capita GDP in 2003, expressed in purchasing power standards, standing at 76,3 % of the EU 15 average, according to the latest Eurostat estimates of May 2004, and exceeds that of Greece and Portugal. In brief, the basic characteristics of the Cyprus economy are the following: ·         The dominant role of the private sector in the production process. The role of the state is a supportive one, and concentrates mainly in: ·         Maintaining conditions of macroeconomics stability and favourable business climate by creating the necessary legal and institutional framework ·         Securing contitions of fair competition ·         Creating modern economic and social infrastructure, utilising, inter alia, the new instrument of pulic private partnership ·         Ensuring conditions of social cohesion ·         The small size of the domestic market. The population in the Government controlled area was 709.600 in 2002, out of wich 69,1 % live in urban areas and 30,9 % in rural areas. The small size of the domestic market constitutes an adverse factor in the realisation of economies of scale and in the development of satisfactory intersectoral relationships. ·         The small size of enterprises. According to the Registration of Establishments of 2000, the size of enterprises remained very small, with 4,4 persons on average per unit in 2000, as compared to 4,3 persons in 1995. More than half of the total number of enterprises, 58% employed only one person. The “micro enterprises” , that is the enterprises employing less than 10 persons constituted 95% of the total , other “small-sized” enterprises with 10-49 employess constituted 4% and “medium –sized” enterprises with 50-249 employess constituted only 0,7% of the total. The large enterprises with a workforce exceeding 250 empoyees amounted to solely 67, representing 0,1% of the total number of enterprsises. The small size of the business units hinders the exploitation of economies of scale and the adoption of advanced technogies and modern methods of management, production design and marketing. ·         The small size of the labour force, given the small population base and certain quantitative and qualitative imbalances in the labour market.The quantitave and qualitative imbalances are evident both at the sectoral and occupational level and have been partly ameliorated by the employment by the employment, to a large extent, of foreighn labour. At the sectoral and occupational level and have been partly sectors of hotels and restaurants, construction, agriculture and manufacturing, whereas at the occupational level, the shortages are observed in technical and low-skilled occupations. ·         The openness of the economy, with total imprts and exports of goods and services accounting for around 102% of GDP in 2003 as compared to an EU average of 66,9% ·         The predominance and increasing importance of the service sectors, which accounted for 75,7 % of GDp and 71,5% of total gainful employment in 2003. The development reflects the gradual restructuring of the Cypriot economy from an exporter of minerals and agricultural products, mainly copper,mainly copper asbestos and citrus fruits in the period 1961-73 and an exporter of manufactured goods,mainly clothing and footwear, in the latter part of the 1970s and the early part of the 80s, to an international tourist, business and services centre during the 1980s and 1990s. ·         Partial dependenc on the tourism sector, whose total contribution, derived from the value added, either directly through the purchase of goods and services of tourists in various sectors of economic activity or indirectly, through the intersectoral linkages, amounted to 15-20% of GDP in the period 1990-2003. Housing Finance Corporation (HFC) The Housing Finance Corporation (HFC) is a state-owned organisation governed by a nine-member Board of Directors,appointed by the council of Ministers, normally for a three-year term. The main aim of the HFC is to provide long-term housing loans, with a priority to lower and middle-income groups. To impement the purpose of its establishment the HFC provides a range of  savings accounts to attract deposits from the public. It uses most of these funds to provide mortgage loans to families for the acquisition of their first home. Besides providing its own housing loans, the Corporation is instrumental in the implementation of the Government’s social policies, especially in the area of housing. It provides several special housing and social loans, including schemes for: a)     Large families, with four children or more b)      Small and isolated rural and mountainous communities c)     Very low income families d)     Depressed urban and rural areas, along the Attila military zone e)     Various types of housing and other social loans for persons who were displaced during the 1974 turkish invasion and occupation of the northern part of Cyprus. The terms of the HFC loans compare very favourably with the loans provided by other financial institutions. The repayment period varies from 20 to 25 years. Loans are normally secured by a mortgage on the property to be financed. The corporation accounts for a very substantial part of the market for new housing loans in Cyprus. Its total market share in this respect is estimated to be in excess of 33% What EU Membership Means for Cyprus and Europe Eu accession is the most important challenge facing Cyprus in the 21st century. With a modernised economy Cyprus is ready to be part of a new peaceful and prosperous Europe in which Greek and Turkish Cypriots together will be ready to utilise the vast opportunities that membership offers. The challenge facing Cyprus is to ensure that both communities have a role to play in the country’s future. Membership of the European Union provides the most suitable environment for a fair and lasting settlement in the island as it will give both Greek and Turkish Cypriots a sense of Security and safeguard their fundamental human rights within the framework of the acquis communautaire which each member-state must strictly adhere to. Economic and social reforms as a result of harmonisation with EU legislation have and will futher improve the living standards of all Cypriot ciztizens. Social policy is in line with the social Charter and greater emphasis will be given to environmental issues and the improvement of safety and quality standards. EU accession has opened up the world’s largest market to Cypriot goods and services and will enable the island to make a positive contribution to the formulation of EU policy. With accession Cyprus has become the southeastern frontier of the newly-enlarged Europe. Cyprus geo-strategic position at the gateway to three continents and its close proximity to the important oil routes of the area can provide EU countries with access to the large Arab markets and place them at an advantage with respect to their trade and commercial interest. At the same time it provides the Union with a foothold in the Eastern Mediterranean from which to exercise greater economic and political influence and play a leading role in facilitating peace in the regior. Cyprus EU membership will in itselfbring greater stability and security to the region The acquisition of the island mercantile fleet, which ranks sixth in the world in terms of gross tonnage, has made EU the world’s largest shiping power. Because of the island geographical location,serious problems facing Europe such as illegal immigration, drug trafficking and money laundering can be more effective monitored and combated. As a financial and business hub the island will also afford member-states attractive investment opportunities.   min of foreign affairs –property purchauses in the area of the republic under Turkish military occupation Caution regarding property purchases in the occupied area Foreighn citizens are warned against the purchase of greek Cypriot owned property, in the part of theRepublic of Cyprus which has been under Turkish military ocoupation since 1974 As a result of the Turkish invasion and subsequent occupation of 36.4% of the territory of Cyprus, 170,000 Greek Cypriots who constituted 2/3 of the inhabitants of the inhabitants of the occupied area , were forced to flee from their homes. According to the 1964 Land Registry office Records, Greek Cypriots owned approximately 78% of the privately owned land in the territory now under Turkish occupation,while persons belonging to the Turkish Cypriot community owned approximately 21%. The displaced persons are to this day prevented by the Turkish armed forces from returning to their homes and peacefully enjoying their properties. However, under Human Rights Conventions, as well as international and national law, they retain their title to their property. Under the laws of the Republic of Cyprus , the explotation of property registered in the name of another ,constitutes a criminal offence, for which a European arrest warrant, executable in any of the 25 EU countries, and an intrernational arrest could be issued. As such the illegal secessionist entity in the occupied area of Cyprus does not have jurisdiction to perform valid transfers of property ownership. Thus, foreign citizens interested in purchasing property in the area under Turkish military occupation are strongly advised to thoroughly examine the legal ownership status of the property concerned, through the lands and surveys Department of the Ministry of Interior of the Republic of Cyprus, in order to ascertain, at first , that no violation of the property rights of the legal owners will be affected through the transaction, and ,second, to safequard that purpoted seller is the true owner of the property and can transfer a valid title. Foreign visitors are futher advised  that, material advertising property offered for sale in the areas which are not under the effective control of the Government, Found in the possession of persons coming from the areas situated north of the buffer zone to the areas under the effective control of the government, can and may confiscated.   Top 10 reasons Capitalizing on its strategic location, Cyprus has developed through the years into a reputable international services hub especially in the banking and chipping activities. Since Cyprus accession to the European Union, it’s role as a business bridge between Europe, Asia and Africa is futher being enhanced. Cyprus offers a unique basket of advantages to foreighn investors utilising Cyprus as a base for conducting their business activities worldwide. Cyprus competitive advantages derive from its strategic geographical location, favourable business climate, fiscal regime, stable macroeconomic environment, high educational level of the labour force in conjuction with the comparatively low level of graduates’ remuneration, modern legal, banking and financing systems, excellent infrastructure with advanced transport and telecommunications network, as well as the widespread knowledge of English. Living and working on the island for all seasons One of the major benefits of being a Mediterranean island is the plentiful sunshine throughout the year, and Cyprus is no exception. In fact, Cyprus epitomises the ideal weather of the region with sunny days and fine temperatures almost every day. Cyprus has something to offer every month of the year, whether it’s swimming in the crystal clear waters (from early May to late November) or enjoying cultural sites and festivals( all year long). Mediterranean Climate Cyprus has a pleasant climate with dry summers and mild winters, enjoying about 300 days of sunshine. The rainy season is confined to the period between November and March. In January, the coldest month, minimum and maximum mean temperatures are 60c and 130c respectively, while in August, the hottest month, the corresponding minimum and maximum mean temperatures are 21c and 36c Top quality of life Based one the worldwide Quallity-of-life Index 2005 conducted by the Economist Intelligence Unit, Cyprus marks favourably on the 2005 Quality of life index ; hence enjoying an exceptional lifestyle and top quality of life. The survey took inton account a variety of factors including income, health, freedom, unemployment, climate, political stability and security, gender equality, and family & community life.   In Cyprus English is widely spoken and extensively used in business as well as in every day life; for example, various road signs and restaurant menus are also available in the English language. Remarkably, a good number of media such as newaspapers, local radio stations, and television programmes are in English. A variety of high-standard private schools operate in all towns, catering for the needs of foreign speaking pupils. English speaking private institutions of tertiaty education can be found in all towns. Compared with many European countries, Cyprus enjoys an exceptional low crime rate. Indicatively, in 2004 the number of serios crimes was 1,033 per 100.000 popuation, far below the corresponding figure for the European Union, according to Interpol statistics. Mission Eurozone Upon the first anniversary of its accession to the European Union, Cyprus achieved an important goal when, on 2nd of May 2005, the Cyprus pound joined the European exchange rate mechanism , a prerequisite for joining the eurozone. Following the firm commitment to pursue sound fiscal policies essential for preserving macroeconomic stability and ensuring the sustainability of the convergence process, the Cypriot authorities have announced performance and reach the Eurozone targets. On 10th of July 2007 the EU councilo of the Finance Ministers decided for the adoption of the euro on 1st January 2008 by Cyprus with the conversion rate at 0.585274 Cyprus pounds to the euro.   Q1 I have been told by my estate agent/ Lawyer/ developer that “Things are done differently inCyprus”, is that true? The process of buying property is similar to that in the Uk and most developed counties, yet threre are many pitfalls for the unwary. Unlike the Uk, where property buyer’s solicitors carry out various plan out various plan and title searches automatically, no such ‘standard’ method of working are in common use in Cyprus. Some lawyers will guide yoy through the process, others will not. It is essential that you. Ø      Apoint an independent lawyer who is experienced in property conveyancing Ø      Ensure that he/she carries out the required tasks to safeguard your interests Ø      Do not sighn any papers or hand over any money until you have taken independent legal advice. Q1.                 Q2         I have been told that it is now safe to buy property in the north of Cyprus.  Is this true? There are a number of practical, financial and legal issues associated with buying property in the north, most of which relate to the complex political situation.  These include the non-recognition of the “Turkish Republic of Northern Cyprus”, the suspension of EU law in northern Cyprus, the possible consequences for property of a future settlement, and the many thousands of claims to ownership from people displaced in 1974.  There is also a risk that, as a result of the disputed ownership of many of the properties, purchasers could face legal proceedings in the courts of the Republic of Cyprus, as well as attempts to enforce judgements from these courts elsewhere in the EU, including the UK.   In addition, purchasers should ensure that they are fully aware of the specific Turkish Cypriot rules on foreigners purchasing property in the north including the requirement to obtain consent to the transfer of property.   On 20 October 2006, an amendment to the Republic of Cyprus criminal code relating to property came into effect.  Under the amendment, buying, selling, renting, promoting or mortgaging a property without the permission of the owner (the person whose ownership is registered with the Republic of Cyprus Land Registry, including Greek Cypriots displaced from northern Cyprus in 1974) is a criminal offence.  The maximum prison sentence is 7 years.  The amendment to the law also states that any attempt to undertake such a transaction is a criminal offence and could result in a prison sentence of up to 5 years.  This law is not retrospective, so will not criminalise transactions that took place before 20 October 2006.  Furthermore, documents relating to the purchase of property in northern Cyprus will be presumed by the Cypriot authorities to relate to the illegal transfer of Greek Cypriot property and may be subject to confiscation when crossing the Green Line.  Anyone in possession of these documents may be asked to make a statement to the Cypriot authorities and could face criminal proceedings under the 20 October 2006 amendment.  The full implications of this legislation are not yet clear.  Any enquiries about its scope should be made to the Republic of Cyprus High Commission in London           Investment property guide : Cyprus property market analysis   Some Cyprus property developers and agents will tell you that if you buy offplan and then sell it when finished, you will double your investment. Although this was true some years ago, the Cyprus property market has cooled down considerably in recent times.   Factors affecting the Cyprus property market There are a number of factors affecting Cyprus position I the international property market. Some of these are due to eternal influences, others are due to home grown issues. Cyprus’ competitive position is adversely affected by the high cost of air fares. The free Skies Agreement could change this situation considerably, when low-cost point-to point are allowed to fly directly to the island.   External events, such as conflicts in the  Middle East and terrorist attacks, reduce tourist numbers; this has a knock on effect on property sales   Upgrades to Paphos and Larnaca airports are in progress. Once completed, both airports should be able to handle more flights thereby increasing the number of visitors to the island.   Much of the property built for foreign buyers tends to be uninspiring in desighn with very basic fixtures, fittings and finishes. In a recent article, a leading firm of charted surveyors bemoaned the fact that the quality of property bought by overseas investors was in decline and expressed concern over the long-term viability of the companies involved.   Cyprus adoption of the Euro will remove the annoying currency fluctuations that the dog the property market and reduce the costs associated with trasnsfering money to the island.   Many of the more popular areas of the island are littered with property development, much of which is owned by foreigners.As well as creating expatrtriate ghettos and denuding parts of the island of its natural beaty, the volume and pace of construction places heavy demands on the infastrure and resources of the island. In some places, over development results in frequent cuts in the supply of electricity and water. Cyprus property market performance , of  (chartered surveyors, property valuers, project managers & estate agents), published a review of the property market’s performance in 2005.         Investment property guide: Cyprus property price index Cyprus Real Estate, a real estate advertiser, publishes a monthly Home Price Index-the only one of its Kind in Cyprus. The company started to produce the index in 2004. It shows the movement of the prices at which residential properties in Cyprus are sold and is based on an average of around 400 to 500 property sales/month. When the price index started in January 2004, the average price of residential property in Cyprus was 133,117 euros. By the end of 2007, it had reached 185,117 –an increase of 39.06 over the 48 months since its introduction. This equates to an approximate annual growth of 9.77%. During 2005, the index rose by 2.48% During 2006, the index rose by 5.87% During 2007,Index rose by 16.13 %   During 2006, the Index rose by 5.87%. During 2007, Index rose by 16.13% (The graph above has been produced using the figures published by ).             Cyprus is becoming increasingly attractive to overseas property investors with the buy-to let investment market now accounting for more than 25% of all property sales. However, the traditional investment property investment market has concentrated on the increasingly overdeveloped tourist sector-and short and medium term returns are beginning to fall. In some areas it’s possible to get a gross income from your investment in the region of 4%-6% of the property value. However, the value of a property is not necessarily the same as its purchase price and you will not achieve such a high return A large number of properties are grossly overpriced A typical example of overpricing was the sale of 75 m2 apartment at Oroklini a village near larnaca. The apartment has two bedrooms, a large veranda and has good views towards the beach some 2Km distant. It sold for 160,000 although the guide price in the area for similar two bedroom apartments is about CYP 75,000. Buy –to-let holiday properties If you are buying investment property in Cyprus, you’re unlikely to get a good return on your investment from short-term holiday lets (unless you have an exceptional property in a good location). You only have to look at the number of properties being advertised to see the sort of competition you’ll be facing. Remember too that you’ll need to advertise & promote your property, furnish it , get someone to clean & look after it for you, make repairs, redecorations, replace breakages and pay telephone, electricity and water bills & local taxes. If you’re buying investment property in Cyprus Tourist areas, do not budget on renting it out for more than 18 weeks a year. Figures released by the Statistical Service of the Republic of Cyprus reveal that tourism has dropped by 12 % since 2005. If this trend continues, there will be even fewer holiday makers looking to rent holiday homes.   Buy-to-let residential properties A more sensible investment strategy is to buy a property in a residential business area in the suburbs of Nicosia or Limassol where there’s a steady demand for long term ( one year and more) rentals Although the weekly rate you achieve will be lower, this will be more than offset by the longer rental period. And your overheads too will be considerably lower. Inspection visits Overseas estate agents & marketing companies charge commission Amounting to 12 %-14% (plus VAT). This, of course, is of course added to the purchase price of the property. If you purchase a property at a price of CYP 180,000 the agents receive around CYP 27,000 of your investment.             How difficult is the property purchase process in Cyprus? Foreigners can buy one home in Cyprus , and are intitled to hold lnd freehold, but there is a maximum limit on land donums (4,0114 sq m) A permit to register a property is needed from the government, but can easily be obtained through a lawyer. However since Cyprus’ accession into the EU on 01 May 2004, there have been plans to ‘de-restrict the housing/property sector. The plans target to allow unencumbered property acquisition by 2011. Before the EU negotiations, no foreigners could rent out property. Even today, non-EU property owners cannot rent out property. After the offer is accepted, a nominal deposit is made which can be as low as CY£ 2,000. This deposit is binding, so there is no gazumping. The contract is then drawn up, and on signing, the buyer has to pay 20% to 30% of the value of the property, the remainder being payable according to the contractual terms agreed. The contract must then be deposited at the land registry, within two months of signing. A non-Cypriot buyer must then make an application to the Council of Ministers to acquire immovable property – largely a formality – including bank reference, criminal records, the size of the land, and a statement that this is the only home he will hold in Cyprus. Though the procedure can take up to one year, there is meanwhile no restriction on using the property, and in the unlikely event that approval is not granted, the buyer can re-apply, and anyway has 17 years in which to sell the property. Nor does lack of approval affect inheritance rights.   The case of Ayia Napa within the context of tourism in Cyprus Prior to 1960, tourism on the island of Cyprus was limited, with the majority of the 25,700 tourists being attracted by the hill resorts. There were only 4000 tourist bed spaces, 30% of which were located along the coastline around the country (, 1992). Forty-five years later, tourism plays a major role in the economic prosperity of Cyprus .Nearly 2.4 million tourists visited Cyprus in 2004, contributing an estimated CYP982 million (.8 m) of gross receipts to the national economy.Revenue from the tourist sector accounted for 45.3% of the total foreighn exchange earnings. There are currently approximately 90,000 beds in licenced establishments throughtout the country.   This pattern of development has been particularly pronounced in the once sleepy fishing village of Ayia Napa, lcated in the South-eastern corner of the island, which together with the surrounding area, now accounts for almost half of the tourist arrivals to the country.  Conceptual and theoretiacl Issues. Aspects of Tourism     1.Find a property or investment deal that you want to purchase. Read the Cyprus buying Guide on how to research and find reputable developers/agents. 2. Permission to Own Property in Cyprus.Apply for permission to own a Cyprus Property from the Councils of Ministers. Either you can do it or your lawyer can do it for you. Its not necessary to obtain before you buy the property however you need to get it at some point. You will need the agreement in order to sell the property on. Property Inspection. Many people buying in Cyprus pass over this step, which is fine if the property is relatively new. Yet the cost of a survey is quiet inexpensive. Just as it is in the Uk, if you neglect to get a survey and the house falls apart later, its your responsibility and your cost to pay. New properties have a lifetime quarantee for major structural problems; however you have to prove negligence. And anything minor has a 1 year quarantee. For the most part, the only time you really want to get a survey is when the property  is old and may have structural issues. Your lawyer will be able to put you in touch with a good surveyor. Survey & Valuation. To get these done, you can ask your solicitor of contact the Cyprus Civil Engineers and Architects Association (CCEAA) or the Association of valuers & Surveyors. They will be able to value the property that you’re interested in buying. If you’re going to rent your property, make sure that you get one that also knows about property management and how much properties are renting for. Note: mortgage lender valuations are not a substitute for an independent valuation. Agreement on Price. This happens between the seller/developer and you and when reached a Sale Agreement is creted. Whether it’s a buyers or sellers market (high demand and low supply or low demand and high supply) dictates whether there’s room for negotiations. 6.Stamp Duty is Payable. The tax is due within 30 days of signing the Sale Agreement. This is at the rate of 2.57 euros per 1,710 and thereafter at the rate of 3.42 euros per thousand thereafter (note: numbers are a bit odd due to the fact that when the Cypriot Pound was in Circulation, it was £1.50 per £1,000 and £2.00 thereafter. After the sale Agreement is filed with Land Registry your Lawyer will then apply for the transfer of the title of the property. 7. Transfer Fee. When the title deeds have been drafted you or your lawyer will meet the property owner at the District Land Registry Office to pay the transfer fee and transfer ownership A. Up to 85,500 euros               3% B. 85,501 to 171,00 euros      5% C. Over 171,001 euros              8% Very important note : If two people are buying the property(e.g Husband and Wife) these figures are for each person. Thus , with a couple purchasing a house for 171,000 euros the total piad would be 3% )or 85,500 euros for each peron). Big No- No: Your solicitor may advice you to put the name of the property in one of your parents or other relatives names if you’re buying as a single person. By doing so, you could save a few bob, HOWEVER, this could cause a Huge issue with inheritance tax if you relative still lives in the Uk. If they die, their estate will comprise of the Cyprus property and will cause the value of their estate to increase under UK tax law. If it pushes their estate over the threshold, and you’re the beneficiary of their estate you might have to pay a very large bill that was totally unnecessary! 8.Take Possession of Property. When the terms of the Sale Agreement have been met you can take possession of the property. Once you agree to the sale agreement, provided your solicitor is happy ( and you better have a solicitor!) and you have the finance in order, you will be legally bound to it. Within the agreement will be an outline of staged payments. At signing of the Sale Agreement, you are usually required to pay an initial deposit, this can be 20% -30% value of the property).And then 3 to 4 more stages making up 100% of the payment. In some cases there are finance options where you pay X% now and nothing until completion. Check with your developer/agent or mortgage lender to understand what your options are. 9. ‘Notice of Completion.’ When a stage is completed the developer will notify you or your solicitor that the payment is due. The ‘Notice of Completion,’ will be signed by the civil engineer or the architect. You will have a short period of grace to pay (see top tips on stages and mortgages in the Cyprus Buying Guide). 10. Final Completion. Once you pay your last payment you will have to pay Stamp Duty and the Transfer fee (from the developer to you) and then take possession of the property. As with new UK properties, you’ll need to walk around and create a snag list to help you check every possible corner before accepting the property. Unbelievably the buying process in Cyprus can be very quick – many buyers fly down and purchase a property within a week! Cyprus property professionals provide property to many Brits, thus they’re completely geared to getting contracts in place and providing you with the property of your requirements. HOWEVER, stating that, things can happen too fast. When you go to Cyprus you’ll notice that the competition is strong and there are many hard sales tactics used. An unethical salesperson knows that they only have a few days to get you to buy, so many use every trick in the book. One common sales trick being used in Cyprus is the ‘Bait & Switch,’ method. What happens is the agent/developer will show you a very good priced unit. Let’s say a 1 bed flat for 80,000 euros. You’ll agree to buy it, spend hours filling out contracts, visiting the solicitors and become emotionally drained. And then…just before you leave, the agent/developer will call you back to say, ‘You won’t believe this but as I was selling the flat to you, my business associated sold it before me…but don’t worry, we can provide you with the flat next door and it’s only 93,000 euros guaranteed…But of course, you must act fast to get it.” By the time you hear that your sale has fallen through, you don’t want to expend any more time and energy so you seriously contemplate the 93,000 euros offer. This is s TRICK, so don’t let it happen to you. In order to avoid dealing with tricksters and unethical developers, please let me help you find the best property professional for you. Since I work with Cyprus buyers and investors every day (along with the developers and agents), I know who is good and who is bad. Please fill out my form on the Property ‘Matching Service’ page. Buying in Cyprus can be fun, but you really must do your homework and ensure that you’re dealing with good people                     Reasons on WHY and WHY NOT to invest in Cyprus ! Ø       The country is beautiful and so are the people. This wil attract future renters and dream home buyers so your property will be in demand as long as you buy in the right location.   Ø       Cyprus is sunny and warm year round and attracts potentilal tenants throughout the year. Many Brits and other  nationalities like to stay for several months so your option to let out for long periods is high.   Ø       Cyprus ,now in the EU, was once a British colony and quite a bit of the British ways have stayed. This allows visitors to feel like they are home away from home making it an attractive place to rent and buy. Eighty percent of Cypriots speak English, their law system is based on English Comon Law and they drive on the same side of the road as us   Ø       Due to discussions held about the “ Cyprus Problem”, there is the potential that Southern Cyprus and Nothern Cyprus will iron out their differences-this will have huge effects. The country will achieve an enormous boost to their economy which will in turn increase property values .   Ø       Cyprus has Huge tax advantages especially for business(corporation tax is as low as 10% and retirees (foreign pensions are taxed only5%)Crime is extremely low-the lowest in Europe.It’s unlikely that your property will be broken into and visitors  (tenants) like the low crime rate as they feel safer.     Ø       Capital growth for the next two o three years has been forecasted to 40% and a long term forecast, over the next 10 years has been forecasted at an annualised rate of growth of 18% to  20% stated in the Cyprus Market and ForeCast Report provided by .   Ø       Gross rental yields, since joining th EU have been averaging between 7%-10% (provided you buy at the right location)   Ø       Excellent Mortgage Finance is available. You can get offers for 25 years at up to 80% loan to value if you buy off plan, you can defe mortgage payments until the build is complete and they pay interest only for up to tws   Ø       You  can still find properties for under £ 80,000 (GBP) that will make great investments   Ø       Eeach area of Cyprus has numerous things going for it. Whether it’s new golf courses. More marinas, a larger airport or a better  infastucture , the country is putting serious effort into increasing its appeal to tourists   Reasons Against Investing Ø       Not every area attracts tenants year round so you need to do your homework to find out the best location to get the least amount of vacancies as possible. Ø       The “ Cyprus Problem “ can deter some people from visiting and /or buying a property in Cyprus. Anywhere that there is a political unrest some people want to kep away. Ø       Since the island still has quite a bit of space to develop you may locate a wonderful property only to find that 2 years later the view is obstructed by new developments or a new road is being laid down. Ø       The flight is 4 hours away from England, which is a bit longer than mainland Europe hoewhowever the flight services are fantastic and the rewards of Sunny Cyprus are worth the trip. However, keep in mind that if there is a problem, it will take you a while to get there and get back. Ø       This information I provide is on Southern Cyprus (the Republic of Cyprus) only however just to ensure you know about Nothern Cyprus . Currrently it is occupied by Turkey, which invaded the country in 1974 and are illegally occupying the properties of many displaced Greek Cypriots. If you buy a property in North Cyprus  you run the chance of buying from someone that does not legally own the property and thus cannot legally sell it to you. My suggestions is to stay away as the risks are too high NOTE: The UK government has a warning against investing or buying in the North. And although many developers in the North will offer your money back if you fail to get tittle deeds, what happens if that developer goes under? If you buy in the North and are taken to court the prosecutors can not only take away your property , but they can also go after your assets back in England if you purchase an illegally owned property Ø       Prices are rising and since they’ve entered the EU there’s very little chance of getting a 3 course meal for £5, however this increase in prces seems to be a reflection of many EU countries and is expected. Ø       There are well over 3,500 developers in Cyprus and it is rumoured that over half of them are operating illegally. Further, most Estate agents are not really eastate agents at all. Ø       In many areas there is an OVERSUPPLY of property and some developers are overpricing their properties so it is imperative that you compare between developers.   Financing your Property in Cyprus How are you going to fund your purchase in Cyprus? When you find the property that you want,  reservation  fee or small deposit will be required. The amount can very, but is usually around 2,000 to 3,000 euros. You’ll want to make sure the fee is refundable in the event that you cannot get a mortgage or have to pull out of the purchase. The reservation fee allows you to take the property of the market and freeze the price. Some buyers use their debit or credit card to pay the fee is to pen an account with a currency company prior to your trip and placing a small amount of sterling with them-enough to cover 3,000 euros.  If  and when you choose to make  a reservation an exchange and transfer can be sent to Cyprus very quickly. And if you decide not to place a reservation, the currency company can move the money back into your account in the UK. Paying Cash If you have the cash available then the whole payment process is quite straight-forward.You simply pay when the money is due. Also note that local currency (Euros) can be reserved at today’s currency exchange rate for purchase in the future. This is a very simple way to ensure that you don’t unduly suffer from the adverse currency movements. Local Cyprus Mortgages This is a somewhat complicated thing to explain. Cyprus doesn’t really have mortgage brokers….well, they have a few, but I’m not sure what you would pay them for as you’re usually ‘forced ‘ to use the developer’s bank. If you buy a new property off-plan (which most people do), you’ll need to get a mortgage from the bank that the developer has a mortgage for the land on. The developer  goes to the bank and gets a loan to build properties. The bank gives the developer money based on the security of the land. When you go to buy a property on the land that the developer has mortgaged, you then have to: 1.       Use the same bank the developer used as  they’ve already deemed the developer worthy and will thus guarantee that they’ll either pay back the loan or they’ll take the land.   2.       Use another bank with other mortgage offers. However you will have to get a bank guarantee. A bank guarantee will cost 1.5% to 1.8% of the value of the property annually (until you get the title deeds). If you choose to use a bank independent from the developer you will be required to get a guarantee.   3.       If you’re buying a re-sale property and want to get a mortgage, the best thing you can is visit the main banks and see what their deals are. It’s very easy for you to get to each bank, compare the offers and make a decision. In the UK there are thousands of packages, thus the need for a mortgage boker..in Cyprus there is a limited choice   4.       The Cypriot mortgage market is not as developed as the Uk market and the competition is not as stiff, but, the local banks are still keen to lend. Depending on your status, a loan can be obtain from  80% on your first  property.   Mortgage periods can be up to 30 years. Repayment is interest and capital. Interest only mortgages have just started to come in,but thy’re interest-only for a set period of years rather than for the duration of the loan. Better options will most likely come in time. The age limit for a mortgage is up to 65 although flexibility has been shown up to the age of 70 for individuals with suitable assets and /or private pensions. The banks use a scoring system similar to the Uk. One key test is the ability to make the repayments(rember capital and interest).  For this , the banks will require that the repayments on your mortgage and other credit agreements you have are less than 35% of net relevant  earnings. Net relevant earnings include income from all sources(e.g employment, rental income ,pensions ,etc). and from which you deduct certain costs such as tax and pension contributions. The banks are trying to establish a level of net income that will be more than enough to cover your onoing and regular payments. The process is very quick if you are organized and able to provide the necessary documentation rapidly. If you are really on the ball you may be able to get a principal offer from  a bank within a matter of weeks.   The foreign Investors Service Centre operates under the auspices of the ministry of  Commerce, Industry and Tourism for Foreign-based companies interested in investigating opportunities in Cyprus .  It constitutes the central agency of information, support, anf foreign investors relations. It plays a vital role in attracting FDI in targeted industries , especially focusing on the development of high technology products, the enchancement of R& D and technology transfer ; fields essential for the upgrading and the enrichment of production capacity and the productive fabric’s competitiveness. The Centre’s activities include: Ø      Promotion of Cyprus as international business as well as an R &D centre. Ø      Organisation of promotional activities for the dissemination of Cyprus’ competitive advantages and encouragement of foreign investment Ø      Provision of information to investors regarding financial, legal and taxation matters in implementing a project in Cyprus. Ø      Provision of advice to potential investors regarding the most effective way of making use of the package of the various benefits offered (e.g Grant Schemes) Ø      Liasing with various governmental departments and facilitating the process of granting the necessary approvals, such as the work permits, required for implementing a project. Ø      Provision of aftercare service aimed at anchoring existing investors and encouraging them to upgrade their activities in Cyprus. The Foreign Investors service Centre ia a member of ANIMA-the euro-Mediterranean Network ofInvestment Promotion Agencies, as well as WAIPA-the world Association of Investment Promotion Agencies.   Continued growth in Foreign Direct Investment Ιnflows   According to the ” 2007″ published by , Cyprus ranks among the front-runners, indicating both high FDI performance and high FDI potential. The FDI inflows for 2006 were above 1.4 billion dollars continuing an upward trend for third consecutive year, showing an increase in the range of 23% from 2005;indicating the country’s attractiveness as an international investment and business centre.     The Statistical Service that it has published the annual report “ , 2003”. Thee report contains detailed data on the construction sector, pertainining, inter alia, to output, capital formation, inputs, new dwellings completed, building permits authorised, labour cost index and price indices of construction materials. The main developments in the construction sector in 2003 were a)      The sector registered an upwards trend for the third consecutive year, recording a positive rate of growth in its value added in real terms of 7,0 % compared to 5,5% in 2002 and 3,7% in 2001. This is attributed mainly to the significant increase in the construction of residential buildings. b)      Gross output at current market prices rose by 10,5 and reached £929, 8million compared to £841,2 million in 2002. Dwellings accounted for 49,2% of the gross output, non –residentil buildings (shops, offices , factories, hotels , etc) for 20,4% civil engineering projects (roads,water supply and sewerage networks, telecommunications and electricity lines etc.) bfor 18,2% and repairs and maintenance for the remaining 12,2 % c)      Employment in the sector in the sector increased by 5,8% compared to 5,0% in 2002. The price index of contstuction materials recorded a rise of 4,6% compared to an increase of 2,4 in 2002 d)     Labour cost in contruction increased by 5,8 compared to 5,0% in 2002. The price index of construction materials recorded a rise of 4,6% compared to an increase of 2,4% in 2002 e)      The number of new dwellings completed rose by 44,1% to 8.734 dwelling units compared to 6.059 in the previous year. The average area per dwelling completed in 2003 was 202 square metres for houses and 111 suare metres for apartments , compared to 225 and 124 respectively in 2002 f)       The cost of Construction per square metre (excluding the value of land ) rose from £353 in 2002 to £370 in 2003 for houses and from £336 to £345 for apartments.         Caution regarding property purchases in the occupied area of Cyprus Foreign citizens are warned against the purchase of Greek owned property, in the part of the Republic of Cyprus which has been under Turkish military occupation since 1974 As a result of the Turkish invasion and subsequaent occupation of 36.4% of the territory of Cyprus, 170,000 Greek Cypriots ,who constituted 2/3 of the inhabitants of the occupied area, were forced to flee from their homes. According to the 1964 Land Registry Office Records, Greek Cypriots owned approximately 78% of the privately  owned land in the territory now under Turkish occupation, while persons belonging to the Turkish Cypriot community owned approximately 21%   Cyprus has never experienced a downturn in it’s property market, but that is not to say that it is without isk, a purchaser must get independent professional advice and not just use the vendor’s/developers lwayer/solicitor. “The Acquisition of Immovable Property” (Aliens Amended) law 54 (1) of 2003 which came into force on 1/5/2004 the date of the Cyprus accession to the EU brought about some significant changes to the old policy, lifting considerable restrictions in the case of European Union Nationals acquiring property.     Property Taxation in Cyprus Whether you are intending spend long periods of your retirement in Cyprus ,or just use it as a stopp off point as you jet round the world, you may want to purhase property there. In order for a non –resident expatriate to do this, permission must be obtained from the Council of Ministers, although this is usually granted provided that the property or land is not intended for commercial development. If you decide to rent out your Cyprus property when you are not staying in it, be prepared to pay tax on the income of between 20-25% if you purchased it through some form of company, or between 20-45% as an individual. Individual non-resident homeowners cannot claim all of the deductions that are available to companies, but can deduct a notional 20% on the rental income independent of whether any epenses are incurred in deriving the rental income. Other duties pursuant to the purchase and ownership of Cyprus property for non resident expats include: Capital Gains Tax A gain n the disposal of property held by a non-resident(and acquired with the importation of foreign currency between August 1980-July 1990) is not subject to CGT. In the majority of other cases, CGT at a rate of 20% applies. There are certain lifetime allowances which apply to gains on the sale of Cyprus property, and in any combination ,they may not exceed CY £50,00 Immovable Property Tax Immovable property tax is calculated on the market value  of the house as of January 1980, and is levied at varios rates Tranfer fees The purchaser of a property is liable to pay these, at varying rates depending on the market value of the propert Stamp Duty and Mortgage fees The purchaser is also liable to pay the stamp duty arising from the sale of the house.     Ten reasons to invest in Cyprus 1.The general price level of property in Cyprus has remained ery low in comparison to the UK, or even in comparison to spain. A relatively low cost of living often accounts for a substantially iproved quality of life . Cyprus enjoys a high standard of living with good facilities. The Cyprus economy is characterized by robustness and stability that is evidenced by the favourable evaluations of the European Commission and the international Monetary fund. The achievement of the Cyprus economy have been recognized by the European Council, which predicted Cyprus entry into the Euro by 2008 is a futher vote of confidence. Tourism is predicted to grow by 4.6% over the next 10 years, contributing about 13.9% to the country’s GDP by 2014. This is good news to property investors looking for a ready market. Cyprus boasts a very efficient land registry system with straightforward and well administered procedures, making property purchase a safe option Cyprus has a British –based legal sytem, where English-speaking lawyers abound. A British –based banking system in Cyprus makes mortgages and managing your money similar to the UK. Taking advantage of Cyprus privileged and strategic geographical location at the crossroads of 3 continets, Cyprus cooperates with neighbouring countries such as Greece, Israel, Lebanon, Syria and Egypt. Investors can take advantage of fiscal incentives and a relatively low level of taxation Special tax incentives offered by the Government (e.g.The Double taxation Tready existing between the U.K and Cyprus, allows a U.K citizen to receive their pensions and investment income in Cyprus, with exemption from U.K taxes.)   East coast property in Cyprus is most popular amongst young Britons, largely due to the party town of Ayia Napa where many British package holiday companies arrange action –packed holidays for the young. These holidays are based on the beautiful beaches and nightlife. Property on the east coast of Cyprus is still reasonably priced with solid growth potential. Many new property developments are currently under construction and the entire east coast offers much potential in the holiday property rental market. For potential buyers looking to relocate and looking for the best value for money it is important to consider property on the east coast of Cyprus as these homes are often a mere 30 minutes from the airport and offer the perfect balance of value for money and great investment potential. Added to this, increasing numbers of British based administrative systems are in place, thus avoiding the cultural shock a move to more “foreign” country often involves. Short –Term letting v Long term Letting The final decision to be made by the “Buy to let” investor is which letting strategy to use. Its obvious that the highest income is made by the property owner by letting out short term during the high season. However you can off-set this against the increased overheads in constantly finding short term rental clients and the maintenance costs between clients. Long term rentals typically pay less on a month basis but usually require far less input from the property owner and the rental income is fixed over the course of the year. Some property owners choose to rent long term during the low season and then short term to higher paying holiday clients during the high season. The decisions to be made on your letting strategy are usually answered in part by the property you purchase. Some properties lend themselves to short term holiday makers and others to long term locals as a permanent home The “Buy to Let” Strategy is not ideal for every investor and it is essential that property for this strategy is chosen wisely as it needs to be rentable property in a popular location to allow the investor to maximize income from the investment. The other benefit from this type of investment is that during the time this property is being rented and earning the investor an income and holiday home it is still appreciating in value at one of the fastest rates available. All in all the buy to let Investment model is sound investment decision in Cyprus is currently an ideal location to deploy this strategy.   Important Factors and Expectations for the South Cyprus Property Market Cyprus has always been a popular destination for holiday makers and those seeking a quieter pace of life.Investment in Cyprus remains a good prospect with solid returns on investment of up to 20% per annum. Cyprus has long been a popular holiday destination for British tourists, possibly because setting in is not as much of culture shock as on other Mediterranean islands. English is widely spoken on this former British colony. For property investors, the land registry is similar to back home. Famililarities such as these, set in the context of over 300 dys of sunshine a year and 648 km of costline, are clear enticements for the British to continue to flock to the island for both business and pleasure. Main property hotspots are in and around Paphos, Larnaca, Limassol and the ancient city of Nicosia. Cyprus is considered to be high-income country and holds 16th place in the world in terms of per capita income, making it a strong and stable country in which to invest. It enjoys a standard of living that is higher than other European Union mmnber –states while economic performance compares very well to that of most other EU countries. The downturn of the Cyprus Stock Exchange pushed most of the capital towards the property market, since the stock market could not rise up to investors expectations leaving the roperty market as the best major investment alternative in Cyprus. The banking sector is the major financier for both investors and developers alike. Cyprus property is expected to benefit from the uncertainty and pessimistic expectations in the English property market, since many investors prefer to transfer their capital to more secure property markets with better future potential. British investors have very strong buying power in Cyprus and they can use gearing from their investments in England to buy significantly more in Cyprus. Interest rates in cyprus are set at 2.54% and unemployment is at 2.9%-both rates are encouragingly positive. Cyprus has double taxation treaties with 26 countries, including the U.S.A and there are no restrictions on current interrnational transactions. Non-reidents and foreign investors may freely repatriate proceeds from their investment in Cyrus. Offshore status allows many foreign companies (located in Cyprus conducting business aboad only) to benefit from high beneficial tax and duty-free concessions.   Cyprus Growth on Track for 2007/2008 By , 29 June 2007 Despite falling from tourism, Cyprus is expected to notch up growth of 3.9% in the current year and 3.8% in 2008, according to an economic analysis published this week by PricewaterhouseCoopers. , Senior Economist at PricewaterhouseCooprs, said that, “the economic outlook for the Cypriot economy remains positive and the goal of adopting the euro in 2008 is looking increasingly attainable. However, inflation deserves vigilance over the rest of the year, given the upside risks from robust domestic demand, excess credit and the possibility of futher oil prices rises.”   Cyprus Unveils New Policy to Attract Foreign Investment By , 16 September 2005 Announcing a major overhaul of government policy, Cypriot Minister of Commerce and Tourism  has announced that Cyprus should seek to exploit its unique position as the trade bridge between Europe and the Middle East in order to entice more foreign investment to the country. Our basic aim is to attract foreign funds for immediate investments in the fields like  the production of high technology products and the transfer of technical knowledge,  noted The minister also stated that Cyprus will use the tools already at its disposal to attract investors, such as its geographical position, low corporate tax rate of 10%, membership of the European Union, network of double tax treties, it’s foreign income tax credit system, high standards of services, and favourable climate and quality of life. All these advantages as well as the revolution mainly in the sectors of information and communications create the conditions to establish Cyprus as the main trade, finance and services centre in the Eastern Mediterranean, as the pipeline that will connect a market of 450 million Europeans with 300 million consuers of the Middle East, “ added.   Cyprus Legislates Against Property Owners in the North By , 23 March 2005 The Cypus parliament last week passed a crucial amendment to a law penalties for illegal possession and use of immovable property which may allow European arrest warrants to be issued against foreign owners of Greek Cypriot properties in the occupied north of the country. The law already existed, but provided for imprisonment of 6months and a fine of CYP 450 the new law provides for up to 2 years imprisonment and a fine of CYP5,000 European arrest warrants can be issued only in cases where the crime commited is subject to at least 12 months imprisonment. It is known that many hundreds or even thousands of British buyer have been taking advantage of lower property prices in the north, despite worries over title and possible compensation claims.   “Cyprus Housing Market stable” say Agents By 20 January 2005 The Cyprus estate agents association says that although house prices have gone up by as much as 50% over the last four years, the market is now stable. On average the value of property in Cyprus is now CYP85,533 (EUR147,271), less than in most other popular Mediterranean regions ,which have seen rises of 20% a year or more, compared with 15% a year in Cyprus between 2000 and 2004. Three years ago in Paphos a detached property on 600m plot with a pool would sell for CYP98,000, now that same house would sell for as much as CYP 190,000 depending on the location. In the Larnaca area the same house would sell for considerably less. Cyprys house prices went up on average by 7.2% last year, but started to slow down towards the end of the year. In November and December prices dropped by 1.5%. There was a rise in January through to May when Cyprus joined the EU and it continued until August when it began to level out. The Association says it has no reason to expect any major change either upwards or downwards in the immediate future. It is forecasting a 5% to 7% rise in 2005. There are many reasons for the increase in demand and prices, says the Association, particularly that Cyprus has become very popular and also that it is now much easier for foreigners to borrow. For the last two years lenders have been willing to offer facilities for the long-term loans for up to 30 years, which were not available before, and deposits have fallen to as low as 15% from30% to 40%. The rise in property prices was also due to a rush to buy beore My 1st because people supposed that once Cyprus joined the EU, prices would increase.   Cyprus Central Bank  Governor warns over Property Boom By 03 December 2003 The Governor of the Cypriot Cenrtal Bank,  has issued a warning to banks and mortgage lenders to exercise caution in their lending policies for home loans and property deals, as the nation’s property prices continue to soar, According o , house prices have risen by up to 50% in the last eightenn months, and told reporters recently that the situation was serious enough that “ as the monitoring body we have told the commercial banks to be extra cautious in reviewing loan applications.” The central Bank chief argued that the press and media were partly to blame for the situation by playing up the impact that European /union membership will have on the property market, which he said has created a psychology of demand” If the rumours continue that the English and the Germans want to buy a house in Cyprus then surely prices will continue to increase, “  explained. In a bid to avert a potential economic cisis in the event of a crash in the real sector, it has emerged that a leaked Central Bank memo has advised banks to lend only up to 70% of a property’s value. According to reports, around 64% off all new loans approved in 2003 were intended to fund a property transaction, compared to 24% in 2002.   Uk Real Estate Agent Highlights Tax Advantages of Cyprus By , 16 October 2003 The tax and cost of living advantages for expatriates living in Cyprus have been highlighted by leading UK international estate agency Parador Properties, which recently opened an office in the Gulf city of Dubai. “Cyprus has always been a popular destination with Gulf epatriates and has an ever increasing intrernational appeal. Many people are now looking to purchase property for investment, for holiday homes or thinking futher ahead, to retire there, “Tim , Parador Properies General Manager –UAE commented in an AME report. “Quite simply, your money goes further in Cyprus,  observed, adding that the standard of living is high whilst the cost of living is relatively low compared to the rest of Europe. Mr  went on to explain the tax advantages the island has to offer, particularly to British expatriates: “The Cypriot economy enjoys a comparatively low level of taxation.Many investors will be keen to note that Cyprus has a unique tax system that includes, for example, a double taxation treaty with the Uk meaning that pensions can be received free of Uk taxation.” He continued: “The total tax liability on many overseas residents of Cyprus can be as 3%. Foreign residents living in Cyprus pay income tax at a flat rateof only55 above the CY £2,000 tax free threshold. Other major benefits are that real estate is excluded from VAT in Cyprus and inheritance tax has been abolished on the island, tremendous news indeed for long term financial planning.”   Latest Figures :, Dec2007 On the basis of the results of the passenger Survey, revenue from tourism reached 51,4m euros (£30,1 milion) in December 2007 compared to 49, 1 mm euros (£28,8million) in the corresponding month of the previous year, recording an increased of 4,5% For the period January-December 2007 revenue from tourism is estimated to 1.858,1million euros (1,087,5milion) ompared to 1.755,3 mm(£1.027,3mn) in the corresponding period of 2006, recording of 2006, recording an increase of 5,9%   Buying property in Cyprus –The Buying Process In Cyprus the purchase of a property by a non-cypriot requires the approval of the council of ministers under the immovable property acquisition law. The approval is in most cases a formality provided the buyers can prove the financial means to support themselves in Cyprus. Non-cypriots are restricted to buying one apartment, house or building plot not to exceed 4013m2. Permission for larger property must be sought from the council of ministers-this may be considered favourably in the case of an area where the government wishes to promote tourism for instance. An initial contract of sale is drawn up confirming the name and address of seller & purchaser and property details including the agreed sale price. Transfer of ownerhip will be registered at the land registry as soon as the title deed is issued by the relevant government authority and the account has been settled.   Cyprus Mortgage Fees Most lenders charge a minimum of 1% arrangement fee, but this can be up to 1.5% if finance is required in a currency other than CYP£. A transfer fee is payable at completion between 3% – 8% depending on property value. Annual Tax is payable between 0% – 3.5% per £1,000 CYP depending on property value. Stamp Duty is payable at c1.50 per £1,000 up to £100,000 property value or c£2 per £1,000 if property value exceeds £100,000. Lender Max Loan Rate Bank Fee Max Term Typical Cyprus Rates 70% 5.10% 1% 30 years Bank of Cyprus 60% 5.50% 1% – 1.5% 15 years Laiki Bank 70% 4.25% 1% 25 years Hellenic Bank 70% 4.25% 1% 10 years       Getting Finance in Cyprus Mortgages can be granted in a range of currencies including CYP£, US Dollars and Euros. All mortgages are full status and proof of income and outgoings will be required. Cypriot mortgages can be arranged for acquisition & construction purposes. A deposit of 30% of the purchase price is generally required and you will also be liable for solicitor’s fees. Cypriot mortgages are repayment loans (unless construction, when interest only is available during stage payment release) and the maximum term available is 15 years. All mortgages should be fully repaid by the age of 65 and life cover is required by the lenders. Cypriot lenders assess eligibility for a mortgage on the applicant’s ability to service the loan and not potential rental income from the property. The general guideline is as a maximum of 40% of net available income. If you are self-employed income is assessed as the average of the last three years’ net income. A percentage of rental & investment income may also be considered.   Cypriot laws are pro-tenant Rents: Can landlord and Tenant freely agree rents in Cyprus? The rental market can be divided into two broad categories: Houses controlled by the Rent Control Law (1983) and the free market. The Rent Control law and its uptaded amendments apply to tenancies of residential or business premises which lie within what the law defines as controlled Areas i.e., towns, suburbs and rural centres, which were completed before 29 December 1995.However foreigners (except the non-Citizen wife of a citizen of the republic) and legal entities controlled by nonresidents, are not covered by the provision of the law, and do not benefit from Rent Control law protection. After the first tenancy has expired or been terminated, the law allows for an agreed increase of maximum 14% of the existing rent, but not before the lapse of two years from the date of the last application, or the date of the last voluntary increase. In case of refusal by the tenant, the Rent Control Courts will determine a reasonable rent, taking into account the opinion of the official valuer, and factors such as age, dimensions, location and condition. A rent control tribunal is composed of a president (who is a judicial officer) and two lay members, representing the tenants and the landlords. What rights do landlords and tenants have in Cyprus , especially as to duration of contract, and eviction? Before the EU negotiations , no foreigners could rent out property. Even today, non –Eu property owners cannot rent out property. Eviction of tenants is relatively difficult. The Rent Control law introduced the concept of the statutory tenant. This is the person who at the expiration of first tenancy, in case of a property within the ambit of the Rent Control law, remains in possession of the premises. A statutory tenant cannot be evicted except in three cases ·         Where he failed to pay the rent ·         Where the landlord needs a house for himself or for members of his family or his dependent parents ·         Where the landlord intends to demolish and reconstruct the house, or to effect such substantial alteration or reconstruction as to render the recovery of possession of the premises absolutely necessary   Even in such cases, the rent Control Court may order the landlord to grant to the tenant in lieu of damages, the right to a new tenancy after the reconstruction. Finally, the Court may award damages equal to 9-18 months rent, and /or damages for loss of goodwill of a business EVICTION FOR NON-PAYMENT OF RENT Duration until completion of service of process 60   Duration of trial 120   Duration of enforcement 180   Total Days to Evict Tenant 360     The Rent Control Law 1983. Agricultaral Land , furnished apartments for less than 6 months, hotels and petrol stations do not fall within the ambit of the Rent Control Law. The present law rose under circumstances that tenants needed extensive protection. The  Turkish military invasion of 1974 caused thousands of refugees to move to Southern Cyprus and created serious housing problems requiring immediate steps to prevent landlords evicting tenants.   Expartiate hot spots A recent study found that foreign nationals from different countries prefer to live in different areas of the island: Ø      60% of the British live in Paphos while another 20% live in limassol. Ø      Virtually all of the Serbians live in Limassol Ø      70% of Russians live in Limassol, 10% in larnaca, 10% in Paralimni and 10% inPaphos Ø      The most popular place for business-based Germans is Limassol followed by Paphos Ø      Almost all of the nationals of the Nordic counries live in the Famagusta region Regrettably, many of the more popular areas of the island with non-descript property development, much of which is owned by foreigners. As well as denuding parts of the island of its natural beauty, the volume and pace of construction places heavy demands on the infrastructure and resources of the island. In some places,over development results in frequent cuts in the supply of electricity and water. Tips for Property Investors At the turn of the Millenium, Cyprus experienced a property boom as its popularity increased with most notably, the British buying public. After Spain and France, Cyprus be came the most popular place for Britons seeking place in the sun; it’s been estimated that over 60,000 own property on the island. But at the beginning of 2004, the property market started to cool. Cyprus’ entry into the ERM may encourage futher buyers to the island although at present time , the supply of property outstrips demand. Changes resulting from EU accession Prior to EU accession, most  foreign buyers were relatively mature people seeking property for retirement or for short holidays as: Ø      The government placed restrictions on  the amount of property they could legally acquire Ø      The regulations prohibited investment (other than lettings for periods exceeding 30 days) and excluded company residential purchases Ø      Work permits were usually granted to foreign nationals. On its accession to the  EU: Ø      Cyprus lifted many of the restrictions placed on the property investment by EU citizens. But to protect its sensitive property market, it agreed a five-year transitional period with EU preventing non-resident EU citizens acquiring secondary residences on the island. By the time this transitional period ends, it is envisaged that any remaining restrictions will be lifted. Factors affecting the property market There are a number of factors  hat effect Cyprus position in the international property market. Some of these are due to external influences, others are due to external influences, others are due to home grown problems. Ø      Cyprus competitive position is adversely affected by the high cost of air fares. The Free Skies  Agreement could change this situation considerably, if low-cost point –to-point airlines were allowed to fly directly to the island. Ø      External events, such as conflicts in the Middle East and terrorist attacks, reduce tourist numbers; this has a`knock-on effect on property sales Ø      Upgrades to Paphos and Larnaca airports are planned. Once completed, both airports should be able to handle more flights thereby increasing the number of visitors to the island. Ø      Much of the property built for foreign buyers tends to be uninspiring in design with very basic fixtures, fittings and finishes. In a recent article, a keading firm of charted surveyors bemoaned the fact that the quality of property bought by overseas investors was in decline and expressed concern over the long-term viability of the companies involved. Ø      Cyprus eventual adoption of the Euro will remove the annoying currency fluctuations that dog the property market and reduce the costs associated with transferring with transferring money to the island. Ø      Many of the more popular areas of the island are littered with property developments, much of which is owned by foreigners. As well as creating expatriate ghettos and denunding parts of the island of its natural beauty, the volume and pace of construction places heavy demands on the infrastrure and resources of the island . In some places , over-development results in frequent cuts in the supply of electricity and water.   Rental income prospects  There is a lot of competition for holiday accommodation anf finding people wanting to rent yours may prove difficult. Although the numbers of properties being built is at an-all time  high, tourist arrivals have dropped by 12% since 2005. If you manage to rent  your property to the tourist market, expect a maximum return on your investment of between 4% and 5% gross per annum. Remember that you will be taxed on any rental income you receive and you’ll need to budget for advertising, insurance, repairs, maintenance, property management fees, etc. A number of property developrs offer guaanteed rental income for the first one or two years; some even offer free cars. Needless to say , the cost f these incentives has factored into the selling price. Capital growth prospects In recent years the capital value of property has doubled. But since January 2004, the market has cooled considerably with values increasing by around 7% per annum. Some pundits in the property industry predict property values will double when Cyprus adopts the Euro in 2008. Economists are less enthusiastic predictcting much lowr rates  of growth, with values doubling by 20016. Buying a`Home in Cyprus ( ) British tourism to Cyprus on the slide Tourist arrivals to Cyprus for January hit their lowest levels in over a decade, with a drop of 21 per cent since the year 2001, Statistics Department fifures show. While overall January 2008 figures declined 2.3 per cent , the British market, the island’s main source of tourism, fell a straggering 15 per cent over January 2007. According to the figures released, only 50,658 tourists –less than half of them British-visited the island last month,compared to 51,848 in January 2007. Although the fall is not significant in itself, whe compared to the previous seven  years the decline in winter tourism since 2000 is evident. In January 2000, 63,553 tourists visited the island. In 2001, which was the last peak year for Cyprus tourism, 64,213 visitors arrived.   A dramatic drop to 54,067 occurred in January 2002 in the aftermath of the 9/11 attacks. By January 2003, despite the imminent US invasion of Iraq in March that year , numbers had recovered somewhat to 59,529 but have never reached that level since. Tourism bosses said last week it was evident that visitor numbers  to Cyprus were dropping , not due to external problems but to internal ones given that global tourism was up over six  per cent for 2008 While the British market continues to slide, inceases from Greece and Russia have continued And Germany , the islands second biggest market , which was briefly replaced by Russia last year, appears to be howing a turnaround. According to the arrival figures , tourism from Germany seems to be rebounding with a hike of 24.3 per cent Overall, arrivals in 2007 barely broke even, showing a marginal .6 per cent rise over the 2.4 million tourists who vsited in 2006. The British market dropped 5.7 per cent in 2007 to 1.28 million arrivals from 1.3 million in 2006.   After years of Cyprus attracting only a certain brand of Brit who spends little and moans a lot (juddjing by last weekends encounters ), Cyprus has finally entered the pmarket leagues , with an appearance in the financial Times House & Home supplement The “ FT” which is standard reading for highly paid bankers , lawyers , accountants and other executives across Europe, hosts a regular holiday home supplement for those with plenty of income to spare. But  although Cyprus has the best weather in Europe and is just a hop away for execs who spend half their working life on aerolanes , Cyprus hs been conspicuous by its absence. That is now beginning to change . The Sunday Times had a big spread a few weeks ago and last weekend, the FT’s ‘Southern Europe Special” had a full page on someone who splits his time between “ afarmhouse in rural france and a two-bedroom cottage in a quiet corner of coastal Cyprus (Polis)  22/03/2006   An expected rise in second –home property market follwing changes to the uk pensions system has prompted the establishment of a new company in Cyprus. The  Group will be one of the first on the island to provide professional advice and investment management services to the UK taxpayers who will, for the first time, be able to purchase residential property within a private penion fund. Proposed changes to self –invested personal pensions (SIPPs) in effect from 2006 will mean that UK taxpayers will be able to conrol their own pension investment and will be able to use  it to purchase residential property . The changes  come into effect on Aprill 6, 2006 but the new rules can be taken advantage of immediately. The  Group is a family –owned professional services company with the principal offices located in limassol , Cyprus. The company aims to guide individuals easily and securely through the processes involved in realizing their dream of owning a second home in the sun , and is already involved with numerous clients wishing to purchase holiday homes in Cyprus  as result of the relaxation of the rules regarding self-invested personal pensions (SIPPS). The changes to Uk pensions law  are expected to fuel a new property boom in Cyprus  with private pension holders  keen to take advantage of generous tax breaks from both the UK and Cypriot governments.                                                                                                                                                               Credit:ivythesis.typepad.com

THE INVESTMENT OPPORTUNITIES IN THE RESIDENTIAL MARKET OF SOUTHERN CYPRUS

The investment opportunities of British expatriates in the residential market of Southern Cyprus Structure of dissertation Title page Abs...