Crystal Lagoon - Pernera, Cyprus

Updates:

April 2007:

Crystal Lagoon remains on track to complete two months early - circa May 2008 - which is just in time for the peak rental season. This should significantly boost the first year returns for investors.

The development is now fully 'out of the ground' and frameworks are all complete. Many of the villas are ready for rendering, and roofing has begun.

We picked up on several minor details with the developer which have been corrected. This kind of intervention needs to be regular so while there, we looked for a more regular mechanism to provide updates. To this end, we have secured a special deal with a 'property watch' service which will enable investors to regularly monitor progress on their individual villas with photographs and personalised status reports through completion for just CYP£250.

Nearby, the town centre is being paved and there is a major investment into new infrastructure following the election of a new Mayor. The Fishing Haven now has a delightful cafe and the bars and restaurants have improved with several refurbishments and new additions.

The supermarket opposite the Crystal Lagoon gates has been enlarged and modernised and now sells virtually everything from sun tan lotion to fresh bagels.

Overall, we believe Pernera is responding to the shift in clientele from package holiday to independent traveller and we expect to see continued value being added in the next several years.

Panorama of progress	Villas 16-21	Villas 22-27
Refurbished and extended supermarket	Villas 35-38	Pernera Fishing Haven earmarked for a marina (250m from plot)

Original pictures:

Artists impression - street level	Artists impression - helicopter view	Crystal Lagoon locator map
Fisheye view of plot (from top of hotel)	Overlay of plan on east edge of plot	Pernera Fishing Haven earmarked for a marina (250m from plot)
Plot plan	Ground floor plan	Upper floor plan
Golden Coast beach - 150m from the gates	Golden Coast beach - watersports	Pernera beach - 50m from Crystal Lagoon plot

 

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The ultimate specification villas in one of the best locations for rental plus the only 90% LTV mortgage deal in Southern Cyprus to date

This opportunity bypassed the web site launch due to the interest it generated in our pre-release information. It sold out in just a few weeks to the pre-reservation list.

Why was it so popular?

Three things:

1. An outstanding rental income potential - CYP £20,000 expected
2. 90% LTV finance with 5 years interest only - CYP £9,000 PA
3. It is in a superb location and appeals to lifestyle investors as much as pure investors on an island that has limited development land left.

Rental income opportunity: With an outstanding location 50m from one of the islands best beaches and a similar distance to the vibrant family oriented bars of Pernera, this development also features one of the best specifications in the region.

Features such as Italian designer kitchens, plasma screens, heated pools and high end British interior design have been bundled with electic gates at the head of the development. These villas are desirable and exclusive and will especially appeal to young families due to its proximity to the leisure facilites of Protaras. We believe it will be the first choice for independent holiday makers.

Current rentals of CYP £850 per week are common for lesser villas in the area. And with up to 32 weeks of peak / mid season available, the prospect of CYP £20,000 + is realistic.

Finance: This development also benefits from the best finance deal to date in Cyprus which is not likely to be repeated for some time due to Central Bank mandates. Investors in Crystal Lagoon have secured 90% loan to value (80% is the norm) and interest only for the first five years which means low outgoings against outstanding income projections - less than half the expected rental income!

Location: Right in the heart of Pernera and close to multiple gold sand beaches.

Our growth projections on this opportunity is 15% PA for the next 5-7 years. Growth drivers include:

• New Larnaca Airport: Opening in 2008, which will bring in up to 12m tourists PA. We see this driving a huge change in the Cyprus holiday market as pre-booked holiday packages are replaced with independent travelers who will want top quality rentals - driven by the budget airlines such as Ryanair who plan to add Larnaca to their routes.
• Golf Courses: There are two planned golf courses nearby which will extend the rental season and increase the regions profile.
  
• Lack of prime building plots: Cyprus is an island with a limited number of prime building plots available for development. Local developers estimate that development land will all be used within 5 years.
• Euro-zone finance: In 2009, Southern Cyprus will join the Euro. This will open the door to low cost finance, which in turn will drive prices as property will consequently be more affordable to a wider audience.

The long term prospects for investors in Crystal Lagoon are excellent - rentals in the area are rising at 10% PA, property in the vacinity is rising at 15% PA on average plus land is increasingly scarce at a time when tourist numbers are rising at 30% PA.

Crystal Lagoon is ideally situated in the family resort of Pernera and plots such as this, walking distance to the beaches and bars, are increasingly attracting a premium. On a recent inspection tour, we viewed several other developments in the area and came to the conclusion that Crystal Lagoon is actually undervalued.

To underline this, investors will be pleased to learn that their Crystal Lagoon villas are across the road from a rival development where a comparable 3 bed villa (Klio 26) is being sold at a 70% premium. And just as with the UK, prices are based on comparables - as this development sells, the price rises for Crystal Lagoon are assured.

Over-development in Cyprus is unlikely to be an issue as zoning prevents high rise development. Once all the existing land is developed, which is predicted to be within 5 years, the development stops - consequently prices in less desirable locations are rising as demand continues to build and prime locations are taken up. Already the major focus for development is 3km away - yet prices are in the same bracket without the proximity to beaches or facilities!

The Advantage Portfolio prospectus and analysis is available by request only. Check back for updates on the progress of this development here.