Greetings from Cyprus where the temperature under my pergola is a hot 30C and it’s only midday!

I was invited to speak at the annual Royal Institution of Chartered Surveyors (RICS) Real Estate Conference in Nicosia yesterday. The underlying theme was the impact of the global credit crunch, but also the wider issues of sustainable development and green issues in property development. The mood of the fellows and members was positive and upbeat and I enjoyed the day immensely.

Speaking with members and other developers, it was widely agreed that the future of property in Cyprus lies in 5* star schemes with services and facilities, such as The Grove Spa Resort and The Palm Spa Resort. These are the properties sought by higher disposable income buyers and renters who, in the main, will ride out any recession in sales and rental markets.

As for the property market here in Cyprus, it was reported yesterday in the press that property prices rose by 1% in September adding to a solid market where prices have risen by 9% over the year. This is good news for investors.

The economy is predicted to grow by 3% next year, inflation to fall and employment remains high. The banks do not appear to have exposure to sub-prime “toxic debt” and are still willing to lend, raising a large proportion of their funds through deposits and bonds. There have been recent funds inflows from Eastern Europe and Russia looking for a safe haven for cash, which presently negates the need for Cypriot banks to seek funds from wholesale money markets.

The warnings I have given about investing (solely) in some Eastern European countries over the past few years are unfortunately being realised. Economies with huge imbalances are always potentially vulnerable to an “economic shock.” Reliance on Foreign Direct Investment (FDI), foreign currency debt, large current account deficits and a narrow industrial base leave such economies at the mercy of the market. We will see further weakness in some currencies, the severe restriction of lending, particularly to foreign nationals and also in foreign currencies, and falling property prices and rents.

LIBOR and EUROBOR rates have started to ease which is a tentative sign that the combined action by governments and central banks is starting to pay off. Stock markets around the globe appear to have shifted their worries to the global economic outlook and hence shares are taking a hammering.

My view, as always, is that there is no better asset class than property in all market conditions. Presently, investors should seek opportunities and also look at increasing their net yield on properties already tenanted by reducing costs where they can.

Those who take action over the next couple of years will see the benefit over the long-term.