Real Estate Investor Magazine South Africa June 2013 | Page 61

OFFSHORE
riots, there was no malicious destruction of
property and no run on the banks when they
opened. Even the Archbishop of the Greek
Church of Cyprus offered all of the church’s
assets to be bonded in favour of raising much
needed capital.
What happened to Cyprus with the bail-in
is NOT bankruptcy of the country as the
current predicament is the reality of 2 banks
being affected by Cyprus’ involvement in
assisting other European countries in their
bailout requirements. And with the bailout
requirements being f inalised and the f irst
tranche of the bailout expected in May, this
crisis is already on the road to recovery.
Is this cause for major panic?
Categorically no.
There are many opportunities for investment
in various fields, such as shipping, tourism,
large infrastructure projects, research and
innovation, and of course the energy sector – all
which will accelerate economic growth.
The newly elected president has announced
that the country is embarking on numerous
employment efforts eg building casinos and
also expediting the issuance of golf course and
marina licenses – resulting in stimulating the
construction, finance and real estate markets.
He has also passed a number of initiatives
to br ing dow n publ ic e x pend it u res to
sustainable levels which all adds up to a positive
environment for investors.
What will the implications for investors who
have invested in the country already?
Bricks and mortar investors have enjoyed
peaceful nights as there is still a high demand
for property in Cyprus : as long as there is cold
winter in Europe, there will ALWAYS be
a demand for property there. Investors who
have business interest are also secure in the
knowledge that it’s back to business as usual
in Cyprus. The lesson that many people have
learnt is that to invest your money in a bank is
not a sure-fail guarantee that your money is safe.
In Europe, depositor savings up to €100,000 are
guaranteed to be secure should the institution
fail/collapse; and because of this, most seasoned
investors diversify their risk and have multiple
bank accounts where these limits are assured.
Out of interest, in South Africa, our banks do
not offer this insurance, so should one of our
banks collapse, all depositors will be at risk of
losing all their savings.

www.reimag.co.za

What can investors do to protect their
assets?
The old adage of location, location, location
has always been and will always be the true
identifier that will test any cyclical bear and
bull market in the real estate industry. Cyprus’
recent bank exposure and depositor insurance
(or lack thereof ) has raised the alarm that
it’s better to diversify your risk in multiple
institutions/accounts/plans rather than in one
institution.
What are the fundamental effects to them
if any?
Using a reputable and credible company from
the onset is a guarantee that an investment will
be solid. And by doing the upfront homework
in researching historical performance/returns

coupled with actual credential checking of any
service provider should be assurance enough
that you are dealing with the right individuals.
It pays to take your time in any investment
decision.
Are banks still in a position to offer investors
finance?
Right now the banks in Cyprus are very
cautious with their lending and require a higher
deposit especially from non-EU clients. The
minimum deposit is now 50%; and the banks
in Cyprus require extensive proof of income,
expenses and exposure to both South African
and offshore debt.

RESOURCES
Cypriot Realty
June 2013 SA Real Estate Investor

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