Spokesman for the Cyprus government, Stefanos Stefanou, said the actual decision had been taken by the previous government.“It was taken for the purpose of strengthening the tourism product in Cyprus and boosting economic activity,” he said.

It is expected that courses will be built in the district of Limassol at Ayios Ambrosios, at Paramali and Fassouri, at Polis Chrysochous, in Paphos and Ammochostos-Larnaca. (Tersefanou near Larnaca has already been given the go ahead)

The story builds!

I’m out to Abu Dhabi on 10th March to understand the finance situation (which appears to be easing with more liquidity entering the market via government capital injections) and set up an office! I’ll let you know how I get on.

The first is that from 31st March 2009 Easyjet will be flying from to Larnaca from Luton. Single flights look like they start from £41.

The second is that A Russian conglomerate called the Boema Group is applying for planning permission to build a €800million Disneyland holiday resort according to OPP magazine.

Scheduled to be the largest ever single investment made on the island, creating around 3,000 jobs,the project is likely to be built on leased state land near the UN buffer zone between Turkish and Cypriot lines around the Larnaca – Famagusta boder. The investors were reportedly looking at Serbia to locate the project, but changed their mind after a Cypriot delegation highlighted Cyrpus’ political stability, EU membership and year round sunny weather.

Christodoulos Papadopoulos, director of Boema in Cyprus, believes that his company has struck a deal with Russian tour operators, which plan to deliver an extra 500,000 holidaymakers from Eastern Europe alone. Alongside this, analysts believe the government is likely to speed up the approval process to complete the ‘Disneyland of the Mediterranean’ project ahead of Cyprus’ six-month European presidency in 2012.

Good news for those who have bought or are about to buy in Larnaca!

As you know Abu Dhabi is a market that we follow closely and indeed feel offers much opportunity in the medium to long term. We feel that the establishment of an appropriate regulatory authority is an important step in the evolution of the property market by improving transparency and trust in the property market. We believe it will provide an integrated framework for rentals and sales that will provide comfort to investors and developers alike.

We await further developments with interest.

Before we trampled the streets, Ash and I spent two weeks conducting some desk research where we thought the value might be. Initially we thought the secondary market with distressed sales at auction might be a good place to start. We quickly found it is a very time consuming task and potentially expensive with no gain (you have to do all your research and employ a solicitor to conduct all the searches in advance of the auction – i.e. you have to be ready to exchange if you win in the bid and you might not!). Also if we are looking on behalf of our clients apart from the time involved, we are not doing anything they couldn’t do themselves. It’s also a very slow process so we’d only be able to satisfy one or two clients a week! Additionally there is new government protection in place to postpone the repossession process for another 6 months. I think this part of the market has not hit the bottom yet!

After a chance meeting with a friend in the industry my attention was quickly drawn to the New Build market within the M25 principally. The reason? Well as you’ll be aware there was an explosion of new build over the last two years which, as much of it nears completion, has coincided with the credit crunch and the global recession. With a lack of liquidity to support the purchase of the massively overly inflated prices that were being asked by developers there is a lot of unallocated stock available. Developers have seen their land bank values reduce dramatically, they have breached many of their banking covenants and their share prices have subsequently tumbled. In short they need cash more than profit at the moment! If a development is near completion they need to recoup costs; if it is a long way from completion it will be mothballed and won’t be started again until the market picks up in 2010! So we have a moment in time when completed new build will be sold very cheaply; but as we have found out it is only available to those people that can buy in bulk and move very quickly. The individual investor does not really have much of a chance.

With this in mind we have been on the streets of London visiting tube stations I didn’t even know existed! We have seen in excess of 40 developments from some of the biggest names and some small independent developers. One thing is for sure that unless you visit the development in person you have no idea whether it is a good investment opportunity or not. Only one Developer has a brand that means something – i.e. a consistent quality that is carried from one development to another. Others have both excellent and very poor developments in their portfolio.

Having completed the task (for the moment!) of visiting sites, we have whittled down our choice to a small number of developments that we are currently negotiating on for our clients. If we can’t get the deal we want we will keep searching until we do. What we now know is that whilst price and location are very important drivers of rental yield and future capital growth, (as sure as eggs are eggs prices will rise it’s just we don’t know when because there is a fundamental issue that demand exceeds supply!), quality is also a very important factor. My goodness there has been some terrible developments built over the last couple of years!

I’ll keep you posted on how we get on……

The cyclical nature of investing has never been better highlighted than the conditions that are prevalent in the world today. At our launch in February, we highlighted the overheating in the UK market in our document ‘Property Investment – The Facts and The QIS Approach’ and stressed that caution was the keyword for the UK. We predicted that a major fall resulting in negative growth was likely, although the speed and size of the fall has surprised us all. However, the key point from our document was that professional and long term investors should focus on:

1) Pursue an Investment Strategy and do not be deterred by sentiment. Rely on Fact.
2) Investing is for the long term.
3) All markets are Cyclical so focus on the bigger picture and not just the short term snapshot.
4) Never ignore Change.

So what are the facts for the UK? Well as we all know, liquidity in mortgage markets and particularly the Buy to Let market has dried up, deterring buyers and forcing sellers to delay their moves or substantially reduce their asking prices. The immediate effect of this has seen a dramatic fall in the average house price in the UK with falls of around 16 to 20% being the norm. However, this sense of gloom and panic has created potential opportunities in the new build and secondary market as the double whammy of the virtual shutdown of the mortgage market and housebuilders being perilously close to breaching their banking covenants has forced prices close to a ‘generational’ low in my opinion.

So how do I arrive at this conclusion? Well the macro outlook for property, particularly in the South East, has not materially changed. In fact if anything, it has worsened. There will be a huge undersupply of homes in the future as housebuilders cancel projects in the current climate, resulting in the delay of homes coming online once demand returns from buyers. In fact with the number of new homes coming online in the South East expected to drop by two thirds over the next two years, any perceived overcapacity will quickly disappear and will be followed by a sharp rise in prices as property once again becomes more valuable. The current demand constraints seem to create an oversupply of property and this has lead to us being offered substantial discounts on both new build and secondary market properties within Greater London. These discounts are driven by hosebuilders and owners needing cash rather than profit and are truly creating generational opportunities.

So what next? Well as I said in our newsletter we are focussing on discounts of around 40% on market value and we are seeking projects that create instant equity BUT also are cash positive. By this I mean that we intend for the yields to comfortably cover any financing costs, even at today’s inflated levels. By the way, we have access to BTL financing options and even though the rates are higher than before, these should almost be viewed as medium term bridging facilities, as rates will normalise in the future – remember even this is cyclical! Ash will be talking about this in more detail soon.

As in so many cases, the best time to buy is when all around you are fearful of doing so. It is impossible to call the bottom of the market, but I feel that in terms of the value from bulk deals, we are very near the bottom. There are many people hoovering up property at these current levels and we intend to do the same.

If you would like a copy of our Property Investment report that I refer to above then please email us at information@qis.uk.com.

In times of crisis investors have typically sought refuge in property. However even though the UK property is plunging, as The Times says “the picture is not the same the World over.” Property in some regions is booming and the Times quotes amongst others Bulgaria, Slovakia, Russia and the Czech Republic. What I find difficult with recommendations such as these is they are based upon historic performance. I don’t know about you but I like to invest in places that are going to grow not that have grown already. If you read any commentator on Bulgaria they are saying that the boom is over and prices are already in decline.

The reason for this is that like many markets, the tourist has been targeted as the primary driver of demand. In times of hardship tourism becomes a discretionary spend. Therefore for property to be a solid long term bet it has to have the fundamentals of commerce and tourism (or leisure pursuits) in place. Within the EU (and the protection that this offers the property investor) there are not many places that have these drivers but Larnaca in Cyprus does. If you want to invest directly in property, have solid capital growth and good demand from commerce (Cyprus has the lowest rate of Corporation Tax in the EU so many companies will relocate ther in the next few years) then I urge you to look closely at Larnaca.

Interestingly the article also suggests that Funds are a better bet than investing directly in property. All I would say is that they are suggesting you rely on a Fund Manager then to look after your interest – look at all those poor individuals who have relied on a Fund Managers to manage their pensions for them over the last couple of years! Take control yourself and own a physical asset.

We were unsure what the sentiment would be back in the UK but in the UAE there was definitely concern but also a feeling that this is a time of huge opportunity. You should rely on fact not sentiment. For the savvy investor who is prepared to make a long term play (12 months +) there is plenty of value in what ever asset class you choose.

We obviously talk to many people about investment and long term financial goals. Naturally people like to have a balanced approach to assets, geography and risk. How ironic then that much of the value that has been wiped from people’s portfolios has been lost from the more traditionally safe investments of holding cash and pensions. Never was the term Due Diligence been more relevant; we even have to check out the strength of a bank before we can deposit less than £50,000 safely!

We believe that it will take many years before equity markets recover sufficiently to get back to their levels of 18 months ago let alone power forward to enable us to have a decent pension in our retirements. If you keep your head this is a fantastic time to rectify the situation, but what is clear is that personal action is key rather than sitting back passively and relying on fund managers (who have repeatedly failed us) to make your situation better. One thing is for sure they will look after themselves first!

You all know that QIS believes property should be a significant proportion of one’s investment portfolio. In times of turmoil investors have historically turned to property as a safe investment. We expect the same to happen again this time. However one thing is for sure you can’t just invest in any property anywhere. Even ill-informed investors can make money in a Bull market but in a Bear market the ill-informed are more likely to lose money. Due diligence is the key, backed with a basic understanding of the demand drivers that sit behind good investment opportunities. Put simply, where supply exceeds demand value exists. This has been relevant to us as we have presented our opportunities in Larnaca, Cyprus over the last few months to many of you This is a great example of an investment opportunity that is backed by solid fundamentals and where there has been and continues to be a regular positive news flow.

The economy is global and so too are property investment opportunities. They are also dynamic and will alter over time. Most of you will be familiar with our 4 stage QIS StEP due diligence model. The first step of this (the country dynamics) is more important than ever (witness the recent events in Iceland). This is what led us to Abu Dhabi many weeks before the events of last week.

We saw enough during our trip to excite us sufficiently to spend the next few weeks deeply examining the market using our QIS StEP approach. If it still excites us at the end of this process we’ll bring the opportunities to you.

Remember we are in truly exciting times!

Firstly, these are truly historic times that will be taught to our grandchildren, provide many students with the perfect material for their theses, and truly change the way that we take responsibility for our own financial security in the future.

Consider these startling observations:

• Who would have believed that having ‘money in the bank’ would be something to be concerned about!
• Who would have believed that developed world countries could go bankrupt!
• Who would have believed that central banks would be powerless to stop the endemic rot that is gripping financial markets, despite the greatest concerted effort by all the major powers around the world!
• Who would have believed that governments would be forced to nationalise the very pillars of the capitalist marketplace, the banks!
• Of course fear is the greatest driver in these times, and no asset class is left untouched by the carnage, whether good or bad. But as rational investors, we must look at the facts, and see if the underlying circumstances have been altered before we arrive at our own assessment.

In truth supply and demand factors that existed previously have to be reanalysed and reassessed. Let’s take the example of a global commodity oil, that has been very much in the headlines over the last few months:

As we are all aware crude oil prices are approximately 40% lower than the peak reached earlier this year, currently trading at around $85. However it is only two months ago that I read a note from the oil specialist at my stock broking firm that prices could hit $200 per barrel this winter as demand placed huge pressures on the supply chain for oil! Now, of course, this level may still be reached, but it is highly unlikely with the more likely course being a softening of prices as world demand slows down for oil amidst the current recession conditions being faced around the globe. This example throws up two interesting points:

1. The so called specialist could have lost me a lot of money. So one must start to question how aware these people are and how much of your money they should be controlling. I have huge sympathy for the current plight these people and their families are in, but many people have expressed the view that if they could not see this coming then what were they actually being paid those huge sums for.
2. On a long term basis, the view of the analyst above is probably correct, and if you are a long term investor, then to buy at the current time maybe very profitable in the long run. In fact, I know some major investors who are doing exactly this! It is very difficult to call the bottom of any market, but the supply versus demand curve points to major pressures on supply in the future as demand grows from emerging economies and continued population growth. So a long term investor views the current situation as an opportunity.

So this example highlights not only how any asset class can be affected by the current turmoil, but also how this maybe distorting the long term trend for that class. The truth is, as I have said many times before, that nothing ever moves in straight lines all the time. There are always corrections that set the base level for the next move, and that is where we are now. But the long term investor is not interested in a short term snapshot in isolation, but how to view it from a long term perspective. So we remove fear from the equation and use rational thought to construct a plan for our way ahead.

As a class, property is more secure now than ever, as highlighted by many commentators. However, like all classes, it has been affected by the current conditions and there are some fantastic opportunities that are arising everyday. Now is not the time to go into these opportunities in detail, but location, strength of covenant, and thorough due diligence have never been more important.

Finally, a thought and quote from the greatest private investor ever, Warren Buffett:

‘When all around you are being greedy then be very fearful, but when all around you are being fearful then be very greedy’

As a long term investor, he has followed his words with actions already without trying to predict the bottom of the market – I know I will be doing the same in the near future.