We have studied a most interesting article in the Sunday Times of the 26.4.09, which refers to British who buy permanent/holiday homes abroad in search of a better life. We will report some aspects of this report not so much to rest our Cypriot market anxieties, but so as not to feel alone in this global situation regarding the real estate market in Cyprus and its attraction to the British market. Far from it, Cyprus, it appears, that by comparison to other countries, Cyprus is not doing too badly.

Spain:
Some people pack their bags and go, leaving the Banks to sell their property and recover what there is to recover from their outstanding debts.

There is approximately 1 mil. unsold property in the Spanish market, making a resale very difficult (out of the 1 mil. vacant properties ½ mil. are new built).

Unemployment has reached 15% and it is escalating towards the 20% mark.

Banks are aggressive and as soon as people fall into arrears to their mortgages the Banks take action.

Approximately 4500 Britons are in the process of having their houses repossessed in one region alone of 50.000 British buyers.

A substantial percentage of the 1 mil. Brits who own property in Spain, are thinking of returning home. The resale situation becomes even more difficult since Brits tend to create enclaves reducing other nationalities/local interest to buy.

Those who live in the Eurozone have ascertained an 1/3rd reduction in their income from the U.K., due to the exchange rate.

Dubai:
Prices have dropped by more than 40% over the last 12 months.

The Sharia law is very tough on defaulting payments and a defaulting borrower can lead to prison.

As an indication of the situation, foreigners are leaving the country abandoning their luxurious cars at the airport and disappear (last few months 3.000 cars were abandoned at the airport!!).

Portugal:
A similar situation as in Spain and even the British Government is turning now its attention to ascertain how it can help the expats. Road shows are organized by the British Consulates in order to explain to the distressed British their rights and offer advice.

Some areas have a concentration of British residents in excess of 75% and with their limited/little effort to intergrade, makes life for themselves even worse.

Charities are even offering hot meals to distressed British residents!!

Like Spain, Portugal prices have dropped on average by 30%-40%!!

Approximately 50% of the estate agents have closed down.

France:
The estimated price drop is approximately 15% over the last 18 months. The situation there is not as bad as Spain and Portugal because buyers were required to come up with 25% own contribution. The Spanish/Portuguese buyers were financed 100%+ plus.

There are approximately 20.000 British residents in France and approximately 2500 Brits have returned home this year (using the statement of only a single removal Co).

France is requiring non working ex-pats (if not at retirement age) to seek a private medical insurance which costs approximately €2800 p.a. This new measure has aggrevated the situation.

Italy:
Tuscany is not in a bad shape. No signs of a British exodus.

British owning property in Italy amount to approximately 19.000 although it is estimated that there are 50.000 British permanent residents.

Most difficult to set up a business/employment in a country where the red tape is very bad and English is not widely spoken.

Etc etc

Turkey:
A nation of two completely different worlds. Western Turkey and in the tourist resort areas, the situation is more or less acceptable. Outside of these isolated localities and if one ventures east, it is another world altogether. Rape of tourists in Turkey is the highest in the European resorts.

Not a big problem in terms of currency since the Turkish lira vis-à-vis sterling is now lower than before.

Bulgaria:
Sales to Brits with promises of immediate rental and huge capital gains has not come true. Sales of touristic apartments “are just not selling” not a matter of price, but no demand at all and no interest by locals. Available financing to potential buyers next to zero.

When we study all these information and other, we feel a bit better for our British investors who have chosen this country for their hard earning money/investment. On this point we stress the advantages for Cyprus:

• Widely spoken English to the point that it makes even those who want to intergrade by learning the language an almost impossibility.

• Banks are easy going at this point of time and legal action takes months giving the opportunity to buyers-debtors time/the market to recover.

• Unemployment is still very low and although at an increasing rate (from 3% last year to 4.5% this year) jobs are still around (be it at a lower salary) especially at the handyman level.

• Health is free at Governmental hospitals and foreign residents are treated as the locals (it depends on income-retirees are free of charge).

• Cyprus remains the most popular housing market for the U.K. even during this period (based on U.K. statistics). Property prices have been reduced by up to 30% but only for those non-competitive property and where there is a large concentration of foreign people (precludes buying by locals).

• Yes, there is the title deed problem, but at least it is not as bad as Spain, where local authorities can compulsorily acquire part or the whole property without the payment of compensation (reported at the E.U. Commission) and where the Spanish Government has issued a demolition order for around 5000 units being illegally built. Nevertheless the title issue is a problem, which must be addressed and as pressure is being built we hope the Government will respond soon.

• Good quality property is still in demand and for those areas where there is no “little Britain”, demand is forthcoming from other less affected nationalities, including locals.

• The interesting debate of “stay or go” in Cyprus, pros & cons, which had approximately 200 British attendants have concluded that 85% prefer to stay based mainly on the quality of life as compared to Britain (crime rate in Cyprus is 6% of that of the U.K.!!).

Having said that, it does not mean that everything is lovely in Cyprus, but, human nature being what it is, we might feel better psychologically when we examine the plight of others.

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