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New Property Checklist – Oceania Bay Village

New Property Checklist

Development Name: Development Name: Developer: Developer:

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Oceania Bay Village. Oceania Bay Village. Landcase Development Ltd. Landcase Development Ltd.

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New Property Checklist – Oceania Bay Village

Section 1: General Development Details Full development address:

Larnaca. Full postal address to be issued by the Town Hall nearer to completion Google Earth Co-Ordinates: Latitude: 34°59'31.33"N Longitude: 33°41'28.43"E

Completion date: (Include dates if a phased completion)

February 2011.

Total number of units proposed for development:

101 (Apartments).

Number of floors in the development:

3 (Ground, first and second floors).

Total number of units allocated: (Percentage of total)

101 units. (100%).

Total number of property types: (E.g. One-bedroom, two-bedroom, apartments, villas, maisonettes, other)

• 34 × 1-bedroom apartments (33.5%). • 63 × 2-bedroom apartments (62.5%). • 04 × 3-bedroom apartments (4.0%).

Construction of the building: (E.g. Steel, concrete, traditional build)

Foundations: Reinforced concrete with the latest anti-seismic regulations. Walls: High quality perforated bricks. Cabling: CAT5.

On-site facilities:

• Dedicated Management Office. • Convenience Store. • Large communal outdoor swimming pool. • Solar heated indoor swimming pool. • Health/Treatment Rooms.

Any commercial property in the development: (Detail type, amount & location in relation to units)

1 × Convenience Store, situated on the Ground Floor of Block 8.

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• • • • •

Large fully equipped gymnasium. Communal sauna. Family changing rooms. Jacuzzi. Pool Bar.

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New Property Checklist – Oceania Bay Village

Section 1: General Development Details continued: What insurance does the development have? (E.g. NHBC, Zurich, other - please specify)

Alpha Bank (General Insurance Ltd).

Plans submitted for approval (Y/N):

Yes.

Full planning permission granted (Y/N):

Yes AΑΡ/00685/2007 issued on 19/2/2008. (Planning permission is issued by the government planning office and checks planning issues including size, car-parking facilities etc.)

Title Deeds:

Title deeds are issued to the purchaser up to 5 years after completion. In the meantime clients are 100% secured of possession through the lodging of the sales contract with the Land Registry.

Building Licences:

Planning Permission & the building permit have been obtained.

Any other licenses or permission required:

The developer remains a guarantor of the purchaser’s mortgage until the issue of Title Deeds.

Section 2: General Contact Information Developer’s name:

Landcase Development Ltd.

Full address of developer:

Makariou Avenue III 41 Postal Code 6017 P.O. Box 40462, 6304 Larnaca, Cyprus

Developer’s company registration:

H.E. 29430.

Site Valuation Officer (full name and title):

Photis Ioannou (Licensed Property Valuator).

Site Valuation contact.

George Kassianides, Director, Landcase Development Ltd.

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New Property Checklist – Oceania Bay Village

Section 3: General Property Details Is the building new build/refurbishment?

New build.

Term of lease (Freehold, leasehold, shared freehold):

Freehold.

Fittings/white goods provided with units: (E.g. Fridge/freezer, dishwasher, washer/dryer)

The following items are included within the price: White Goods: • Oven. • Hob. • Extractor Fan. Provision for air conditioning is included as standard. Additional white goods can be purchased via BHI Global Cyprus Limited at an additional cost nearer to the formal completion date.

Does the apartment include flooring? (Ceramic/marble/other)

Yes. (Ceramic tiles to sitting, dining and kitchen areas).

Will the apartment have airconditioning pre-installed or installed? (Is there an additional cost?)

Air conditioning is not pre-installed. However, the provision for air conditioning is included within the price.

Is furniture included in the price? (Is a choice of furniture styles available?)

No. Furniture and additional white goods can be supplied via BHI Global Cyprus Limited at an additional cost nearer to the formal completion date.

Parking available on the development (Y/N): (Detail type, e.g. underground, roadside)

Yes: An allocated space for each apartment is included within the price.

Parking facility included in price (Y/N):

Yes. The cost of parking is included within the price of the apartments.

Cost of parking if applicable: (Is this a discounted cost?)

The cost of parking is Included in the price of the apartments.

Principal views: (E.g. Road, golf course, sea, mountain, pool)

• Surrounding green gardens and countryside. • Sea views (distant) on selected units. • Mountains of Pyla.

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New Property Checklist – Oceania Bay Village

Section 3: General Property Details continued. Values & price per square metre in the locale: (Comparable developments & price per square metre)

Obtaining comparisons from other developments in the area is extremely difficult when considering the following points: 1. location 2. build quality of the development 3. facilities on the development / area 4. living space within the unit 5. internal specification 6. build density 7. distance from the sea & sea-view facing.

Name: Oceania Bay Village Developer: Landcase Development Limited Location: Larnaca Ave Price / m²: €2,303 Name: The Views At Pyla Developer: Quality Group Location: Larnaca Price / m²: €2,315 Name: Pyla Gardens Developer: Hassapis Developers Location: Larnaca Price / m²: €2,189 Name: Aqua Residences Developer: Giovanni Location: Larnaca Price / m²: €2,389 Currency conversion correct as of 10th June 2009 (£1 = €1.17)

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New Property Checklist – Oceania Bay Village

Section 4: Area Why Cyprus?:

Cyprus will take over the EU Presidency in July 2012.

The anticipated population growth in Cyprus is vast. According to recent European Union projections, the number of people living in Cyprus will rise by 66% by 2058, strengthening the property market and stabilising cost predictions.

Internationally, Cyprus promotes its geographical location as a "bridge" between West and East, along with its educated English speaking population, moderate local costs, good airline connections, and telecommunications.

A fantastic EXISTING tourist sector which is expected to significantly increase with: o The approval of a further 14 golf courses making 17 in total on the Island. Cyprus aims to become a prime international golfing destination. o

The proposed construction of a “Disney style” theme park located in Pyla/Larnaca, anticipated to open in 2012 creating an estimated additional 500,000 tourists per year, and creating over 3000 jobs.

o

The construction of 4 international super marinas to be located across Cyprus.

An excellent business sector that has become a popular off-shore haven for investors worldwide.

A member of the EU since 1st May 2004, and utilising the Euro as currency since 1st January 2008.

Cyprus offers investors one of the lowest corporate tax rates at 10% in the EU.

In 2008 the Republic of Cyprus was classified by the International Monetary Fund as amongst the 32 advanced economies of the world. Source: Wikipedia

With regard to Europe, ‘The IMF forecasts that Cyprus will be the only developed economy to enjoy continuous growth rates through the 2009 financial crisis’. Source: Wikipedia

GDP - 3.7% real growth rate (2008), 2% (2009 est) Source: www.cia.gov / Cyprus Finance Minister, Charilaos Stavrakis

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New Property Checklist – Oceania Bay Village Location:

South East Cyprus: Oceania Bay Village located in “New” Pyla is in an excellent location – a 10 minute drive to the vibrant popular Larnaca district and within easy reach of all essential amenities, and well connected for travel to other areas of the island. Oceania Bay Village is situated just 15 minutes from the new international airport which opened on 7th November 2009 providing the capability to handle in excess of 10 million passengers per year. Airlines flying to Larnaca include British Airways, Easy Jet, Monarch and Thompson. All major airlines throughout the Middle-East and the UAE fly direct to Cyprus. • Larnaca/Pyla is the anticipated location for the proposed Disney style Theme Park scheduled for completion in 2012. • 1.65 km North of beaches. • 1.4 km South of Pyla town centre.

Transport Links:

15-minute drive from Larnaca International Airport.

Facilities in the area:

• • • • • •

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1.65 km from the beach-front tourist area. 1.65 km from bars, restaurants, shops, and banks. Broad mix of leisure facilities, from watersports to archaeological sites. Six-screen cinema on Larnaca outskirts. Approved plans for a new super marina complex at nearby Larnaca. The main resort of Larnaca boasts a mile long promenade full of restaurants, bars and family attractions.

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New Property Checklist – Oceania Bay Village

Section 5: Marketing Material Site plans available (Y/N):

Yes.

Site plans submitted (Y/N):

Yes.

Floor plans available (Y/N):

Yes.

Floor plans submitted (Y/N):

Yes.

Technical specification submitted (Y/N):

Yes.

Photographs available (Y/N):

Yes.

Images available (Y/N):

Yes: 3D computer generated images

Video Walkthrough available (Y/N)

Yes.

Brochure available (Y/N):

Yes.

Location map available (Y/N):

Yes.

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New Property Checklist – Oceania Bay Village

Section 6: Property Management Company Full name of Management Company:

BHI Global Cyprus Limited, in conjunction with its tour operator company Book a Place Away Limited, will provide a lettings and property management service on your behalf. Comprehensive services will include inspections, rental collection, and collection & management of service charges which may be due on selected properties.

Full name of Marketing Company:

Millionaire Circle.

Estimated rental management charges:

BHI Global Cyprus Limited will provide additional detailed information closer to completion of your property.

Service Charges:

€342 – €427 p.a. approx.

What is included within the Service Charges?

Public liability insurance for the communal areas.

Currency conversion correct as of 4th January 2010 (£1 = €1.11751)

Cleaning and maintenance of communal areas including: • Corridors. • Elevators. • Stairs. • Gardens. • Communal swimming pool. • Communal Gym. • Communal Sauna. • Parking areas. Level of occupancy required to meet costs (not considering any rental guarantee offered & given the operational costs):

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In general, full occupancy (12 months) will cover costs for long-term rental. For short-term lettings approximately 18 -20 weeks occupancy would be required to cover the interest on your mortgage.

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New Property Checklist – Oceania Bay Village

Section 7: Investment Appraisal Market Growth: (Growth in the area last year 2009)

With the exception of Nicosia, it is widely considered that capital growth throughout Cyprus remained static during 2009. Growth during 2010 is predicted to be steady at 5% p.a. Property prices in Cyprus have steadily risen by 10-12% per annum on average over the past 10 years.

Predicted Market Growth:

The following factors contribute towards the market growth predictions, and where possible include sources relating to the statistics. ‘Russians start investing in Cyprus’ The Russians have proved to be shrewd property investors over the years, with others following ‘hot on the heels’ of their decisions. With the Russian stock market becoming increasingly erratic, wealthy Russians are selling their shares and tending to re-locate their resources into overseas property markets and one of the main beneficiaries of this vast wealth is the Republic of Cyprus. Source: Oban Multilingual / www.propertyarticles.com 31 March 2009.

‘ …. predictions for 2010 are that property prices will remain steady’. Source: Planet Cyprus 02 January 2010.

Over the past three months we have seen increased activity in the property market, with a number of acquisitions from mainly Cypriots and some overseas buyers. The transaction volume for 2009 is expected to be 50% lower than for any of the years during 2000-2008. Whilst things are not positive in terms of transaction volume, the three month average is showing an upward trend probably indicating that the worse is behind us. Source: Antonis Loizou & Associates Chartered Surveyors. October 2009

Rental Yields: Rental yields in Cyprus are currently conservative, however, with the introduction of the proposed Disney Style Theme Park, additional Golf Courses and extensive investment in new, exclusive marinas, rental yield is anticipated to rise. In its ‘country investment ratings’ the influential Global Property Guide rates Cyprus’ gross rental yields for apartment in Larnaca as currently being 4% - 6%. Source: Cyprus Property News 04 January 2010.

Rental yields in Cyprus are currently conservative at around 4 – 6%. Source: from excepts www.prlog.com March 2009

Continued…

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New Property Checklist – Oceania Bay Village Predicted Market Growth (Continued):

Cyprus: Pyla Property Boosted by New Disney Style Resort In January 2009 it was announced that there are plans to build a new Disney theme park in Europe. This park is one that is currently planned to be located in Pyla, Cyprus. The building plans for Disneyland Cyprus are expected to be the biggest plans ever for a new development in Cyprus. Source: www.disneyland-cyprus

Cypriot Government initiative on over-development: The Cypriot government initiative to ensure that over-development does not occur ensures that all properties built remain an attractive investment proposition or an appealing living solution. Source: Lowtax.net, an independent electronic source of information on offshore and 'low-tax' regimes worldwide

Cyprus Urban Policy (Department of Town Planning and Housing) The following objectives are included in the Cyprus Government Urban Policy: • Sustainable use of natural resources and judicious management of the natural environment. • Functional integration of multi-centred urban complexes. •

Efficient and effective use of land designated for development, especially with regard to the timely provision of adequate infrastructure and services.

Improvement of amenities, quality of life, and service provision for the entire urban population.

Organisation of residential areas in such a way as to achieve a functional balance between population distribution, employment opportunities, and service provision.

Implementation of forward-looking integrated transportation policies to address present and future needs of urban complexes and their populations.

Adequate provision of a hierarchy of public open spaces to strengthen the availability of recreation opportunities for the entire population

Restrictions on Developable Land: Cyprus enjoys a year round rental market which is complimented by the initiatives being implemented and operated by the Cypriot government and the fact that the restrictions on developable land is limiting the availability of high specification apartments and villas. A substantial quantity of land in the South of Cyprus is sovereign owned or agricultural land, therefore land available for development is at a premium, a situation that can only benefit the shrewd property investor or homeowner.

Continued…

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New Property Checklist – Oceania Bay Village Predicted Market Growth (Continued):

Infrastructure • Infrastructure development has already commenced and will continue to experience growth due to robust domestic demand driven by rising incomes, low real interest rates, and an increase in infrastructure spending. • Reformation commenced in early 2003 with the construction of the three main avenues of Larnaca. Social and economic benefits have been witnessed from the construction of these roads. • The aim is to continue urban development throughout Southern Cyprus which will include: – Roads and highway construction and improvement; – Development of port and airport facilities; – Improvement to storm water piping, wastewater and sewer construction work. – Cyprus is currently undergoing the Strategic Plan for Tourism 2010, which plans the upgrade of its facilities and resorts in line with changes in tourism trends, with the chief aim of launching Cyprus tourism well into the 21st century. Economic Drivers: Cyprus enjoys a sustainable economy with the following supporting drivers: •

In the past 20 years the economy of Cyprus has shifted from agriculture and light manufacturing services. Agriculture makes up only 2.4% of the GDP and employs 8.2% of the labour force while industry which includes mining, manufacturing, and electricity and water contributes 19.6% to the GDP. Sources: www.cia.gov 04 January 2010 / www.state.gov

The only two sectors that grew in the third quarter OF 2009 were financial intermediation and real estate, and publicly provided services. Source: PSEKA 15 December 2010.

The main crops are wine grapes, potatoes, cotton, and fruits.

Mineral resources are limited and mainly include copper, pyrites, chrome, asbestos, and gypsum.

The area of the Republic of Cyprus under government control has a market economy dominated by the service sector, which accounts for 78% of GDP. Tourism, financial services, and real estate are the most important sectors. Tourism contributed €61million to the economy in November 2009 Sources: www.cia.gov / Cystat 04 January 2010.

Offshore activities are led by Cyprus based companies with foreign capital, which carry out their business activities exclusively outside Cyprus but are entitled to substantial tax benefits.

Cyprus has the sixth largest merchant shipping fleet in the world.

Source: www.cyprusnet.com 04 January 2010.

The geographical location of Cyprus (the country acts like a bridge between West and East), along with its excellent airline and telecommunication infrastructure, has resulted into developing the country into an important regional and international business centre.

The commodities mainly exported are electric & electronic equipment, mineral fuels & oils, vehicles and pharmaceutical products.

Continued…

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New Property Checklist – Oceania Bay Village Predicted Market Growth (Continued):

Leisure and Tourism A new Disney style theme park has been proposed for Pyla, Larnaca, by 2012. • • •

€800 million investment to Cyprus. 3000 – 4000 jobs to be created. 500,000 additional tourists predicted annually.

3 major international golf courses are available, with planning approval for a further 14 to be developed in Cyprus, a new 542 berth marina in Pernera, and a further exclusive 900-berth marina in Larnaca with the capability to accommodate ‘superyachts’ over 35 meters long. The government initiative to transform Cyprus into an international golfing destination will only strengthen the property market both in terms of sales, which will contribute towards the limitation of available properties and also the rental market which will be unaffected by seasonal trends. Travel: With two international airports, Larnaca and Paphos, there is a wide network of air routes connecting Cyprus with Europe, USA, Asia, and Africa. The ‘new’ Larnaca Airport was completed in November 2009, and will increase capacity from 3 million up to 10 million visitors annually. Low cost flights are available between the UK and Cyprus by airlines including British Airways, Cyprus Airways, EasyJet, Thomas Cook Airlines, and Alitalia.

‘The rewards from following EasyJet, Ryanair and the rest of the no-frills operators can be substantial. Recent research by Savills and Holiday-Rentals.co.uk indicated that property prices within 10 miles of an airport served by a low-cost airline are nearly 40 per cent higher than those of properties a similar distance from airports with scheduled services only, and that the rents were about 30 per cent higher. It seems that holidaymakers want to save on the air fare but are willing to spend extra on the accommodation.’ Source: The Independent

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New Property Checklist – Oceania Bay Village Achievable rental in the area Short-term: Prime season May – October:

The following statistics provide an overview of average weekly achieveable rentals currently being realised in Pyla: Pyla Penthouse, Pyla Month

1 bedroom Apartment GBP

Euro

Jan

279

312

Feb

279

March

Pyla Palms Resort, Pyla Month

2 Bedroom Apartment Sleeps up to 6 people. Wheelchair and lift access

GBP

Euro

Jan

249

278

312

Feb

249

278

179

200

March

249

278

Apr

249

278

Apr

349

390

May

249

278

May

349

390

Jun

259

289

Jun

349

390

July

299

334

July

399

446

Aug

299

334

Aug

399

446

Sep

279

312

Sep

399

446

Oct

249

278

Oct

399

446

Nov

199

222

Nov

249

278

Dec

279

312

Dec

249

278

Luxury Holiday Apartment –

Ariona Gardens, Pyla

Ref: 92153

Month

2 Bedroom Apartment

Month

3 Bedroom Apartment

Sleeps up to 4 people.

Sleeps up to 6 people.

GBP

Euro

GBP

Euro

Jan

446

498

Jan

360

402

Feb

446

498

Feb

360

402

March

446

498

March

360

402

Apr

446

498

Apr

360

402

May

446

498

May

495

553

Jun

541

605

Jun

575

643

July

541

605

July

575

643

Aug

541

605

Aug

575

643

Sep

541

605

Sep

450

503

Oct

541

605

Oct

450

503

Nov

446

498

Nov

450

503

Dec

446

498

Dec

450

503

Source: www.holidaylettings.co.uk. Comparable figures correct as of 4th January 2010. Currency conversion correct as of 4th January 2010 (£1 = €1.11751)

Oceania Bay Village is sold with a 2 year rental guarantee at 5.5% p.a. Book a Place Away Limited will provide a rental solution for your investment.

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New Property Checklist – Oceania Bay Village Achievable rental in the area (Long-term):

Property Type

Monthly Achievable Rental

2 Bedroom Apartment

€500

3 Bedroom Apartment

€600

2 Bedroom Villa with pool

€750

3 Bedroom Villa with pool

€1,000

th

Currency conversion correct as of 4 January 2010 (£1 = €1.11751)

Are lettings likely to be seasonal?

No, Cyprus has one of the longest tourist seasons in Europe with over 340 days of sunshine annually, ensuring that properties attract a sustained and attractive annual rental proposition. Excellent short and long-term investment prospects can be achieved.

Letting Options: Short-Term vs Long-Term?

The final decision to be made by the property Investor is which letting strategy to use. The highest income is made by the property owner by letting out short term during the high season. In the case of Cyprus there are obviously seasonal variants on the achievable rental, however, due to the diversity of the ‘attractions’ relating to Cyprus with agro-tourism, golfing, scuba-diving, and the anticipated Disney style Theme Park etc, it is usual to secure a good annual return. However, this can be partially off-set against the increased overheads in constantly locating suitable short term rental clients and the potential increased maintenance costs between clients. Long term rentals typically pay less on a month on month basis but usually require less input from the property owner and the rental income is fixed over the course of agreed let. Some property owners choose to rent long term during the low season and then short term to holiday-makers who will pay higher rental for the property 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 additional benefit from investing in a Cypriot property is that the property is being rented and will be earning the Investor an income while appreciating in value, it can also be utilised as a holiday home for the investor.

Any other investment companies involved: (Provide names & proportion of the development)

We have exclusivity on this development.

Why is Cyprus regarded as a prime location to invest in property?

Cyprus is the third largest island in the Mediterranean Sea, situated at the crossroads of three continents and in the trading paths of the first merchants of antiquity. It already has an excellent communications infrastructure, which has contributed to the progressive development of the island, an excellent road network, ensuring that no two places are far away, telecommunications ranking amongst the most efficient in the world and fast, reliable postal services. It also has an excellent business infrastructure. Cyprus is aiming to avoid low-end tourist apartments in favour of high quality accommodation. Capital Growth is currently predicted to be a steady 5% p.a. in 2010 for an apartment in Larnaca. It has been predicted that this will continue due to the limitations being imposed on developable land by the Cypriot government, the increased government expenditure on infrastructure and the countries aim at becoming one of the prime international golfing destinations in Europe, complimented by the highly anticipated Disney style Theme Park for which UN approval has already been gained and will generate a huge sustained annual tourist revenue.

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New Property Checklist – Oceania Bay Village Why is Cyprus regarded as a prime location to invest in property? Continued.

With its largely English speaking community, a legal system based on English law and its favourable taxation policies has made Cyprus an enviable destination to invest and also the number one location for British retirees to live! Cyprus provides a fairly high European level standard of living, low crime, and excellent medical care. The cost of living is relatively low in Cyprus, with prices around 25 per cent lower than in most northern European countries. Limassol was recently highlighted as one of the five least expensive cities in Europe. Source: www.justlanded.co.uk

Comparing post-EU figures with current statistics, tourism in Cyprus has been significantly boosted. For the period January – November 2009 revenue from tourism is estimated to €1.450,6 mn (Source: Cystat 22 December 2009). However, the Cypriot government is keen to popularise every facet of Cyprus to not only include the traditional sun, sea and sand vacations but also agro-tourism in the Troodos Mountains and the beautiful fauna and flora that Cyprus has to offer, adventure orientated holidays including scuba-diving and cycling etc. Cyprus is aiming at a sustainable number of 250,000 tourists per month. Statistics for tourism last year (2009) in Cyprus have recently been released by the Statistical Service of Cyprus (Cystat). Cystat's report showed that in the period November 2009 arrivals of tourists totalled 89,670. The demographic breakdown of travellers visiting Cyprus in this period showed that travellers from the United Kingdom headed the list with 36,187, followed by Germany at 13,585, Greece at 10,317 and Russia at 4,872. (Source: Cystat 22 December 2009).

€1 billion marina project set to boost Cyprus property market! A €1 billion private/state consortium is to undertake the biggest infrastructure project ever in Cyprus that will boost the building industry, inject millions of Euros into the economy and boost the real estate industry. The Larnaca marina and port project will involve the building of a 1,000 berth marina and hotels, giving a much needed boost to the Mediterranean island's depressed real estate and construction markets, according to the government's communication Minister Nicos Nicolaides. Sources: Cyprus Property News 29 September 2009

Cyprus property sales increase According to the latest figures from the Cyprus Land Registry, there was an increase in the number of properties sold during November last year (2009) compared to November 2008. Overall, 792 contracts of sale were deposited at Land Registries throughout Cyprus in November, compared to 723 last month and 782 in November 2008.

Sources: www.news.cyprus-property-buyers.com 03 December 2009

Cyprus has year-round sun, glorious beaches and a British heritage A recent survey showed that Cyprus is the 4th most popular destination with readers looking to buy abroad. June 2009

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Why is Cyprus regarded as a prime location to invest in property? Continued.

Cypriot property 'to bounce back' The property market in Cyprus is set to bounce back, it has been predicted. Chairman of the Association for the Promotion of Property Development George Mouskides acknowledged in an article for the Financial Mirror that there has been a fall in prices and transactions during the world economic crisis. However, he stated, matters should now improve in the coming months as the world economy begins to recover. The British tourism sector is one such area Mr Mouskides pointed to, suggesting many who have held back from taking foreign holidays will now book last-minute breaks to the island. Summarising the prospects for Cyprus, he concluded: "The situation in Cyprus will begin to become more positive and this, according to all visible signs, will first and foremost influence the property sector."

Sources: Financial Mirror / Cyprus Mail 06 October 2009

Cyprus Investment Opportunities. Cyprus offers a robust investment opportunity. Title deed is generally good (we are talking about the Republic of Cyprus not the north of the island), and the law, based on English law, is sound. Investment Potential: Capital Appreciation, the boat has sailed for the time being. House price increases of 20 per cent plus for each year of the five from 2003 to 2007 are unlikely to be repeated in the near. If you’re looking for good capital growth, buy off-plan at the higher end of the market on new developments where prices are likely to hold firm and even increase a few per cent per year and maybe more.

18 November 2009

Property: One of the safest investments in Cyprus Property is one of the safest investments. Conservative investors lose their sleep over stock market investments as portrayed by the recent rollercoaster behaviour witnessed at the Cyprus Stock Exchange, whereby within a period of three days we had a drop in share prices to the tune of 20% after a still bigger rise that preceded it and a still bigger drop before that. The greater stability of real estate prices in Cyprus is further reinforced by the fact that while we experienced the worse international economic crisis in decades, that has negatively impacted Cyprus, properties have more or less retained their value.

Source: Financial Mirror 29 December 2009

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Section 8: Tax VAT reclaim on Business Assets:

The VAT authorities in Cyprus allow the reclaim of 15% of the VAT inclusive price on a residential property that has been purchased for the intention of operating a short-term rental business. In order to qualify for the VAT reclaim the following criteria must be met: 1. The property must have no more than 3 months personal use in any tax year, which in Cyprus is the calendar year (1st January – 31st December). 2. If the asset is sold within 10 years of the purchase, the VAT authorities will request a pro-rata rebate. 3. A formal agreement must be entered into with an established Property Management company relating to the property. 4. There must be a holiday rental contract in place provided by an established organisation in the industry to promote short-term rentals to holidaymakers and the tour operator industry. 5. A furniture pack must be acquired/ordered for the property in order to satisfy the criteria set by the VAT authorities to enable the property to be utilised for short-term rental. The furniture pack must comply with tour operator standards.

Foreign Dividends:

The tax treatment of dividend income received by domestic shareholders will depend on the country of residence of the payer. If the dividend is received from a company residing in an EU country and the relevant conditions are satisfied, then the dividend will be received by the domestic shareholder gross, free of withholding tax based on the principles of the Parent-Subsidiary Directive. Generally, dividends are exempt from tax in Cyprus, except when received by a Cypriot tax resident individual.

Capital Gains Tax:

Capital gains tax is charged at the rate of 20% on gains arising from the disposal of immovable property in Cyprus or the disposal of shares of companies which own immovable property in Cyprus. Note: The first €17,086 of a gain per person from the sale of a property is tax exempt. An exemption limit of €85,430 is added to the initial payment (€17,086) if the seller has lived in the property continuously for the previous five years. In certain circumstances, further allowances are granted for transfer fees, inflation and improvements made to the house, but the total exemption cannot exceed a €85,430 limit. Source: www.lowtax.net

Inheritance Tax:

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Inheritance tax was abolished in Cyprus in 2001. Any persons UK domiciled (as apposed to resident) will be subject to UK IHT on their worldwide assets unless a new domicile of choice outside of the UK has been established.

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New Property Checklist – Oceania Bay Village Section 8: Tax continued. Tax paid on rental income, (if any), including taxable allowance & likely payment:

Income € 0 – 19.500 19.501 – 28.000 28.001 – 36.300 36,301 + • • •

Income Tax Brackets Tax Rate Tax Cumulative Tax % € € 0 0 0 20 1.700 1.700 25 2.075 3.775 30 -

Rental income is taxed at normal income tax as per brackets above but you are allowed a 20% deduction for expenses including management and maintenance fees and expenses. 100% of mortgage interest paid for buildings which are rented is deducted from rental income. Any other income earned in Cyprus will be taxed as normal income as per the table above.

Source: www.lowtax.net

Other taxes:

Real Estate Transfer Tax to transfer the freehold into the owner’s name. This is paid once the transfer of deeds takes place, which can be up to five years after completion. Up to the first €85,430: The next €85,430 - €170,860) Above €170,860:

3% 5% 8%

Transfer Tax can be significantly reduced by purchasing in joint names. Source: www.lowtax.net

Other tax benefits:

Cyprus boasts 5% taxation on pensions compared to 22% in the UK, which could go some way to explaining why it is regarded as the number one destination for British retirees.

Section 9: Purchasing Fees Reservation fee:

£1000.

Solicitor’s fees:

The solicitors fee is 0.75% of the price list.

Council Tax:

€200 p.a. approximately.

Registration of Electricity and Water:

Electricity: A new owner must register with the Electricity Authority - €40 Water: There is no registration charge.

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Section 10: Solicitor’s Details and Legalities Recommended solicitors (if any): (Detail background & experience, likely costs & when these are payable. Can the purchaser source their own solicitor?)

Adamos Hadjichristodoulou & Co. 2 Sotiras Street, 2nd Floor, Office 2, PO Box 33275, 5312 Paralimni. Tel: 00 357 238 11630 Fax: 00 357 238 27631

Typical searches carried by the solicitor:

Land search for legal encumbrances.

Will the exchange and completion be conducted by Power of Attorney? Please provide a copy if available & state whether this needs to be notarised.

All Contracts are sent by courier and signed by the buyer personally. A Power of Attorney can be used to complete the mortgage papers.

Can the contract include more than one name?

Yes. There are tax advantages to having the mortgage in two names i.e. Transfer Tax.

Can the contract be in a company name? If not, can the title deeds be transferred to a company name after completion?

Yes, but the bank will carry out separate evaluation.

Required Exchange Deposit: (Is this a percentage of market value or discounted price?)

An initial deposit of 30% of the value of the property is required. The remaining 70% can be obtained through a bank mortgage or paid in cash.

Bridging Loan Costs.

The bridging loan costs will be covered directly by World Conveyancing Partners Limited.

What insurance is there to protect the client’s deposit (if applicable)? (Ban guarantees/Escrow accounts/insurance)

Normally a sales contract ensures possession and the amount paid to developer at any stage, represents the true value of the property at the time. Any deposit funds will be transferred to an Escrow Account held by the solicitor. The solicitor has a licence to receive money on client’s behalf and has professional liability insurance.

Copy of Contract of Sale with developer for client (Y/N):

The developer’s solicitor will prepare the contract of sale. The client’s solicitor will represent the client by liaising with the developer’s solicitor. The client will receive a copy of the contract in English.

The Power of Attorney must either be notarised or signed in front of the Cyprus Embassy or High Commission in the UK.

A bridging loan facility will be used in the event that any discounts are provided by the developer. The bridging loan will be redeemed at the point of exchange of contracts.

Usually 5 copies are signed and stamped (for Land Registry, Developer, Bank, Solicitor and Client). Can the client buy more than one property?

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Yes, but the percentage Loan To Value for the second property may be restricted depending on the financial position of the applicant.

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New Property Checklist – Oceania Bay Village

Section 11: Contract Terms Exclusivity period:

Indefinite period.

Contracts fully assignable (Y/N):

The contracts are fully assignable, however, the property developer will assign only if all taxes are paid.

Reservation Forms:

Yes.

Developer’s solicitor’s details:

Pelecanos & Pelecanou Law Firm Q Tower, 5th Floor, Ioanni Condilaki 47, 6042, Larnaca. Tel. 24-659930, 24-623685. Fax.24-623243.

Mortgage on completion as % of LTV & % on exchange:

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70% Loan To Value (LTV).

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New Property Checklist – Oceania Bay Village

Section 12: Mortgages Recommended finances: (E.g. Recommended/English speaking lender) Alpha Bank Head Office Yiorkion Building 1 Prodromou St. P.O. Box 21661, 1596 Nicosia • • • • •

Capital and interest will become repayable upon expiry of the deferred period. LIBOR*¹ + 4% (4.515%) based on securing a mortgage in GBP (£). Please note LIBOR can change on a daily basis). Currently LIBOR 0.5150% as at 7th January 2010. If a Euro bank mortgage the base rate is 3.4% plus 3.5% (6.9%) (Please note the rate can change on a daily basis) Up to 40-year term or to purchaser’s 70th year of age (whichever is first) Bank fees are payable prior to the activation of the mortgage loan.

*¹ The term LIBOR stands for the London Interbank Offered Rate. It is a key reference interest rate, showing the lending rate between the different Banks.

*² The term EURIBOR stands for the (Euro Interbank Offered Rate): is the rate at which euro interbank term deposits within the euro zone are offered by one prime bank to another prime bank.

Mortgage options available (e.g. Full document mortgage, selfcertified mortgage): (Are rentals taken into account? State any standard documentation required (Passports, P60s, salary receipts, bank statements, accounts, etc.)

Full document Mortgage. Documents Required: • Reservation form completed by client. • Reservation fee. • Copy of Passport. • Copy of a current utility bill (not more than 3 months old). • Mortgage statements for the past 6 months (if applicable). • Bank statements for the past 3 months. • Original Proof of income - Payslips, P60, Accountant’s letter etc. • Experian Credit Report to be provided by client. Full details of the Alpha Bank mortgage will be provided separately.

Current interest rates, & predicted rates & terms at the time of completion?

If a Euro bank mortgage, the base rate is 3.4% plus 3.5% (6.9%). (details correct as of 7th January 2010). LIBOR + 4% (4.515%) for mortgages in GBP (£).

Will the mortgage be based on the valuation (Loan to value (LTV) or purchase price (Loan to Purchase (LTP)?

Loan to Value (LTV).

Recommended currency for mortgage:

• •

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Cyprus adopted the EURO on 1st Jan 2008. Mortgages are available in many currencies including, Euro, GBP, Swiss Franc, USA Dollar and Japanese Yen. Choice depends on client’s risk profile & investment portfolio.

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Section 12: Mortgages continued. Will the purchaser need to open a bank account to make mortgage repayments. If so, will the purchaser need to visit Cyprus?

Yes, but there is no need to visit Cyprus. The solicitor, through the Power of Attorney (POA), can open an account for the purchaser.

Will the purchaser need to visit Cyprus to meet the lender/bank manager, or to be present at closing?

No – the acting solicitor will undertake all legal work on your behalf through Power of Attorney (POA).

Any limitations (e.g. age, employment status):

Employment status is inconsequential, provided the purchaser has adequate annual/monthly income to satisfy Bank requirements (the relevant proof must be provided to the Bank).

Does the financial market support equity release/re-mortgage facility? If so, please provide details.

Yes. Remortgages are generally available after the issue of Title Deeds.

Any special requirements for the loan:

No.

Section 13: Life Insurance Is life insurance compulsory for a mortgage? If so, can English policies be accepted?

Yes, life insurance is required to the value of the loan. Recognised English insurance policies are acceptable if the policy is issued by a bank.

Can compulsory medicals for life insurance be conducted in the UK or will the purchaser need to go to Cyprus?

Yes.

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Section 14: Re-Sale Options Re-sale market summary:

Cyprus is currently regarded as the number one destination for British retirees looking to relocate abroad. In addition, interest from Russia and other European countries is escalating. Theses factors when coupled with the government orchestrated building limitations provides for a strong resale market. After the EU accession in 2004, Cyprus was no longer just another tourist destination offering sandy beaches and fun. It became the home, work place, business destination, retirement place for more than half a billion people coming from all over Europe.

Cost involved in re-selling the property:

• •

Recommended re-sale companies:

BHI Global Cyprus Limited.

Capital Gains Tax – See Para 8. Agents Commissions.

Section 15: General Any legal complications /requirements to prevent the purchaser completing on the property or acquiring a mortgage:

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No legal complications. Mortgages will be granted subject to the financial position requirements set by the bank and the provision of necessary documents that support the financial position declaration of the client.

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New Property Checklist – Oceania Bay Village Example Fees (approximate): At the Purchase Stage:

Currency conversion correct as of 4th January 2010 (£1 = €1.11751)

Description

Rate

Comment

1.

Property Purchase Value

-

Includes 15% VAT

2.

Solicitor Fee

0.75% of the list price

3.

Stamp Duty for Purchasing Contract

0.15% < €170,860 0.20% > €170,862 +

Of contract value paid to the solicitor

4.

Stamp Duty on Mortgage Contract

0.15% < €170,860 0.20% > €170,862 +

Of loan Value

5.

Document Stamp Duty

0.15% < €170,860 0.20% > €170,862 +

Of loan Value

6.

Bank Fees

1.2% Arrangement Fee

Bank fees are not added to the loan.

€85 Preparation of documentation. €102 Miscellaneous Fees. 7.

Mortgage Fee Registration of Legal Charge with Land Registry*

1% of Mortgage amount, payable to the Land Registry Office.

This amount is payable by the owner at the time of the issue of Title Deeds up to 5 years after completion. (Bank charges are not added to the loan).

8.

Interest rates

If a Euro mortgage, the Bank base rate is 3.4% plus 3.5% (6.9%)

As of 7th January 2010.

LIBOR + 4% (4.515%) for mortgages in GBP (£).

After Completion: (these charges are the Cypriot equivalent of the UK Council Tax charges) Description

Rate

Comment

1.

Immovable Property Tax (annual)

0.35% on 1980 values

1980 values are defined as €393/sq.m. for Villas and €256 sq.m. for Apartments.

2.

Sewage Fees (annual)

0.35% on 1980 values for residential areas

1980 values are defined as €393/sq.m. for Villas and €256 sq.m. for Apartments.

0.60% on 1980 values for tourist areas 3.

Refuse Collection (annual)

€68 – €103

Depending on Municipality

4.

Municipality Taxes (annual)

€17 – €34

Depending on Municipality

5

Individual Property Management (annual)

€513 – €854

Dependent on agreement and service provided.

6.

Project Maintenance and Management Costs (annual)

€427

For common areas – depends on agreement

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New Property Checklist – Oceania Bay Village At issue of Title Deeds 3-6 Years after completion: (Only paid by the client at the time)

7.

Description

Rate

Comment

Title Transfer Fees to Land Registry

3% < €85,430 5% >< €85,432 - €170,860

Of contract value. Paid only by the owner at the time of issue of the Title Deeds (Up to 5 years after completion)

8% > €170,862

Transfer Tax can be significantly reduced by purchasing in more than one name.

Interest Payment Information: 8.

Interest Payment Calculation.

During the 2 years of full grace period (if applicable), the interest payment is capitalised every 6 months. Each of the four payments is based on EURIBOR or LIBOR (whichever applies) plus the interest. Up until full repayment (including 5 years interest only period) 3 months Euribor or LIBOR plus Interest which is calculated on the balance of the mortgage

EURIBOR: (Euro Interbank Offered Rate): is the rate at which euro interbank term deposits within the euro zone are offered by one prime bank to another prime bank. LIBOR: (London Interbank Offered Rate): is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market).

Note: These figures are for illustration purposes only and do not necessarily represent actual amounts. Values and costs can vary dependent on individual circumstances and market fluctuations.

Disclaimer: Whilst every effort has been made to ensure the accuracy of this material, it is for illustration purposes only and we accept no liability for any misprints, omissions, or errors contained herein. Millionaire Circle shall not be liable for any loss or damage of any sort as a result of a person acting or refraining from acting in dependence on any information contained herein. This document should not be construed as a direct or indirect inducement or invitation to engage in investment activities. We are not FSA regulated but, on request we can suggest an FSA authorised company for financial advice. The value of any investment can rise as well as fall. This document is not a financial communication. It contains marketing information.

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Oceania Bay Property Checklist  

Oceania Bay Cyprus

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