On the 12/1/08 Saturday Mr Antonis Loizou has given a lecture at Ayia Napa on behalf of the U.K. Alzheimer’s Society, which was attended by 120 mainly foreign residents in Cyprus. The subject was the Real Estate Market in Cyprus. We provide a shortened version of the speak.Real Estate Investment, be it a house, land income producing property or development, has been so far a “safe” investment in terms of security of capital. Since 1974 prices have been moving upwards at varying rates p.a. Upto the year 2001, prices moved upwards on average 7% – 10% p.a., but since the Cyprus Stock exchange crash, investors interest turned towards real estate. Cyprus’ inclusion to the E.Union, coupled with the most favourable tax system in the E.U. and the Russia-Cyprus double taxation treaty, has caused Cyprus to attract an increasing influx of European and Russian interest, which has helped real estate investment in Cyprus.The lifting of restrictions regarding property purchases by E.U. companies and citizens, has widened the scope of real estate investment and now, it is estimated that foreign buyers in Cyprus real estate contribute around CP700 mil. This is just short of the biggest foreign exchange earner, the Tourist Industry and its CP1.200 bill. p.a. and far ahead from the third biggest foreign currency earner i.e. the offshore companies contribution of around CP350 mil. p.a.This keen foreign demand, coupled with the local interest as well as the added taxation on real estate, such as V.A.T. of 15%, has caused prices to move at a rate between the years 2002 – 2004 of around 15%p.a., whereas the very recent years prices have shot up by almost 20% p.a.This is particularly so regarding building plots and land and more recently towards agricultural land. With prices of development land being so expensive and with the planning laws allowing the development of a single house just about everywhere, the public’s interest has been diverted with an increasing volume towards agricultural land, where prices have shown increases in excess of 30% – 50% over the last year alone.This situation of high development land cost, converts now to around 40% of the total development cost of any house/apartment, whereas a couple of years ago, the land cost on a building sales price amounted to 20% – 22% only. This unhealthy state of affairs will get worse with the introduction of VAT on building land from 1st August, 2008.So, when it will end and more importantly are we heading for a real estate crash? I doubt it. Since so far these substantial increases in property prices, have been absorbed by the public, be it, it has affected the rate of sale mainly for the less competitive projects making in part, the market, rather unpredictable and somewhat uncertain.To this negative picture one must bear also in mind that various positive/balancing measures that are now in hand. The reducing interest rates [as for 1.1.08 from 4.5% this rate it is reduced to 4.0%] and the longer repayment periods of loans that are now offered have helped.The new Central Bank measures regarding own contribution in buying or developing real estate which has increased the original contribution of 20% to 40% [for non own users - permanent residents] is expected to affect the “by to let” market, since returns/fields in Cyprus are very low [around 4% p.a.] and it is one of the lowest in the popular holiday home destinations in Europe, whereas high cost of air tickets etc. makes letting not as easy as in other countries [some balance may be gained when low cost air fair airlines are in full operation in Cyprus].The pending new infrastructure measures such as the pending development of the two airports in the Island, the pending development of the 4 new marinas [expected to come around the year 2012] now under offer, as well as the expected 7-8 new golf courses, will add to the island’s attraction, making Cyprus, perhaps, the most densely area in Europe in terms of golf courses per population. On the other hand if these projects materialise [i.e. golf/marina/Larnaca port projects] they will place in the housing market [mainly directed towards the foreign people] around 10.000 new housing units in addition to the normal number which are now produced [approx. 5.000 p.a.] With the existing demand of around this number [5.000 units] and even considering an increase in demand due to the above infrastructure properties, the supply will surpass demand in the year 2010 -2015 with possible negative affects on the holiday home market prices.Buying / building real estate/homes in Cyprus is easy, since it is the most popular business. At this point of time “Property Development” is carried out by just about everybody independently of qualifications, financial status, honesty etc. For this reason we note an increasing percentage of delays uncompleted projects, projects without a permit etc. and as such, care is needed. For this reason I have prepared for your consideration our firms “10 Building commandments” which every potential real estate buyer should follow as much as possible.Buying in Cyprus is easy, but selling your property is another matter however. One must compete with the aggressive and well connected developers, well organised estate agents [some of which charge in excess of the legal 3% -5% - rates reaching upto 15%] so you must take into account not to be in a particular hurry should you want to sell your property.As I have said before, real estate prices have recently moved upwards at a rate of 20%. This is partly due to the foreign interest which represents approx. 20% of the total real estate acquisition in Cyprus. This is a very high percentage especially where it is concentrated in certain areas. So care is needed since if you chose to invest in such popular areas of foreign people concentration, you stand a higher risk of price adjustments up and down, since foreign people behave differently than the locals whose demand/supply is inelastic.The following table is quite an interesting one illustrating foreign peoples concentration [on a % of the total demand of the area]Pafos Limassol Larnaca Nicosia Famagusta90% 40% 50% 5% 50%What are we going to do with the Russians my dear friends? As this country becomes more stable and as oil prices move upwards so the middle/upper middle income, Russian people will become more and more financially able and to turn their attention to the holiday home destinations. The average sale prices per sq.mt. for this type of property that the Europeans usually buy is in the region of CP1.500 – CP2.500 [max.] per sq.mts., the Russian market with a particular interest for Limassol, has even shown prices of CP4.000 – CP6.000/sq.mt. for beach units.With a mathematical calculation Cyprus beach and even the near the beach locations will be acquired by the foreign market and this is something which one must consider. Foreign buyers demand affects the local population whose income is not competitive to the foreign market and who is gradually outpriced.This will create several problems, whole areas/towns will be inhabited by foreign residents, at periodic visits [see Sotira area west of Ayia Napa] and even the complete take-over of small villages and I dare say towns [see Pafos in 10 years' time]. Ofcouse I am not against the foreign market and I know that Cyprus cannot go back to the restrictive system on foreigners real estate sale, so it is more of a theoretical approach than otherwise.We live in a global economy and now with the E.U. travelling and settlement abroad will become easier and easier. Cyprus is at a fortunate position regarding the weather, be it with little drinking water, but in closing, I will say that yes, invest in real estate, but take care and do not outstretch yourselves financially. Do not depend on rental income to repay the loan, bearing in mind that you need around 10% of the 12 month income of a residence to cover repairs/void periods and management, in addition to any tax implications, including your tax liability in the event of a resale.For those who are permanent residents however, my advice is try to learn some Greek words or even better, to speak the local language. I know that trying to learn Greek is most difficult [two types of languages, the written proper Greek and the local Cypriot speaking Greek - quite difficult]. If you manage to master part of the language, it will make your life much easier, although I am aware that even when you attempt to practice your Greek language skills, people will quickly reply to you in English.If you manage to speak the language I can assure you it will make your life much easier/happier here.

As our children grow, they need well-rounded stimulation and exposure to various interests in order to become informed and educated adults later. Most children are taught to engage in sports, while their exposure to the arts may not be as intensive. As the daughter of a teacher who has taught the basics of art, dance, music and theater to children; I have an appreciation for what they have to offer. My life has been enhanced greatly by art and music, especially. If you are thinking about enrolling your child in afterschool programs, consider an art, music or dance class to get them started in the fascinating world of the arts. My mother’s students through the 45 years she has taught have appreciated what they learned from her, and have come back at times to tell her so. The arts are meaningful and broaden your child’s world tremendously.For example, if you child wants to play an instrument, encourage this and find a tutor or enroll them in a class. Let your child choose an instrument then either rent one or buy a second-hand instrument until you know he or she likes it enough to get a new one. Music teaches discipline, and studies by experts claim that it can help with learning mathematics as well. Besides, music is a good outlet for children, and pulls them away from less educational pursuits like video games or chatting online. By stimulating your child’s brain, you are allowing them to gain mastery of a subject. By sticking with lessons and completing them one-by-one, your child will gain in self confidence, too.If your child loves to dance, there are courses at the arts or recreational centers in your community on ballet, tap or more. Sign up for a course in the topic he or she finds most interesting, and make sure to give encouragement as the courses progress. Dance promotes agility, grace and physical fitness. Install these interests early to set them up for interest in these disciplines as they mature. Go to the dance performance at the end of the course, and your child will be happy to know that you support all their hard work. It means a lot for them to see that you approve of what they are doing.Art is most near and dear to my heart, as I am a trained illustrator. Let your child try a broad spectrum of different arts and crafts, so he or she can see what is most interesting to pursue further. For example, there are courses in pottery-making, drawing, painting, enamelling, sculpture and much more. I myself have taught children in drawing and painting, and they absorb what is taught to them like sponges when interested in the subject. Make sure to find a teacher who will make learning fun and give them positive encouragement. Many of my students have told me at the beginning, “I can’t do this. I can’t even draw a straight line.” That doesn’t matter, there is no right and wrong in creative art. It’s the artist’s creative license to do whatever he or she wants. My main concern with insecure students is to let them know that it takes time and practise, like in any branch of the arts, to become skilled. It doesn’t happen overnight, no matter how talented you are. Then, I go ahead and teach them, project-by-project, to gain confidence and see that art truly is for them. Some of my students have taken off to create projects on their own, once they realized that perfection isn’t expected of them. The pressure is off, and they can be free to enjoy whatever medium they like the most.As a kid, my mother and father enrolled me in a wide variety of courses. As a shy child, it scared me at first, but even the courses I wasn’t as interested in were educational to me. I took away from each course a little more knowledge and appreciation for what the pros have to do to become good at their craft. Though I didn’t get into dance, I loved drawing, painting, music and pottery. And, trying different things pulled me out of my shell, making the shyness disappear later on.I am a professional artist, my preferred style is realistic art, but I appreciate different disciplines unlike mine, such as impressionistic or abstract art. My mother teaches her young students to appreciate the Old Masters (painters like Van Gogh, Monet, Degas, etc.) every year, and they love it. Each child is taught to choose a painting they like, then try to paint it, using basic tempera paint. It is amazing how lovely the paintings can turn out, and every year she gets copies of the work before it goes home with the kids. Unbeknownst to these three to five year old children, classic training in painting includes copying the Old Masters further along in art education. Trying it early is invaluable, and there is no pressure to create a masterpiece, just in having fun and seeing how each child interprets the original painting. The kids love it, and work hard to do a good job, so they can go home and give it to their parents. A very worthwhile project.Having grown up immersed in the arts myself, I truly encourage you to give your child exposure to them away from what they learn in elementary school. If they enjoy a certain branch of the arts, encourage it, and later as adults they will do this for their children in return. The arts make the world a prettier, more musical and interesting place. No time spent on learning them is wasted. So, go ahead and enroll them in a course after school. You won’t be disappointed, and maybe you will open their eyes to a new passion to pursue. It’s most definitely worth a try.