Market Commentary as of 1st Quarter 2009

General Macroeconomic Indicators for the Cypriot Economy

It is now a well-known fact that the Eurozone economy has entered recession as a result of the banking sector exposure to the sub-prime mortgage market in the United States and the subsequent credit crunch.

The impact of the global downturn on the Cypriot Economy is obvious in the predictions of the Ministry of Finance for the main macroeconomic indicators for year-end 2009:

Macroeconomic Predictions for Year End 2009
Details	Percentage
Gross Domestic Product Inflation Rate Unemployment Rate Source: Ministry of Finance	0.3% - 1.0% 2.5% - 3.0% 4.1%

Cypriot Real Estate Market

Based on statistical information provided the overall negative economic climate has affected both demand and supply in the real estate sector. The towns which were affected the most were the coastal areas of Famagusta and Larnaca.

Cypriot Real Esstate Market
Details	Percentage Reduction
Property Registrations (Oct '07-Oct '08) ¹ Sales in Coastal Areas ¹ Planning Permission Applications ² Property Sale Contracts (Jan-Nov '08) ²	↓ 24% ↓ 40% ↓ 10% ↓ 27.9 %
Sources 1. Cyprus Property Valuers Association and the Real Estate Agents Association. 2. Department of Lands & Surveys

Cypriot Government

In terms of Government Revenue received from the construction sector there was a substantial reduction during the first nine months of 2008. In more detail the following decreases were noted:

Percentage Reduction in Government Revenue Received from the Real Estate Sector
Details	Percentage
Transfer Fees Stamp Duties Capital Gains Tax Source: Ministry of Finance	↓ 6% ↓ 2% ↓ 22%

This has been a wake up call to the Cypriot Government and like many governments around the world, the Cypriot government has committed €350 million to accelerate the growth of the local economy and keep unemployment down in the face of global economic downturn. €200 million of the €350 will be invested in the real estate sector.

 

_{This report is intended for general information purposes only. Information herein has been obtained from sources believed reliable. While every effort has been made to ensure its accuracy and completeness,we cannot offer any warranty that factual errors may not have occurred. GVA Emirah accepts no responsibility for any damage or loss suffered by reason of inaccuracy or incorrectness of this report.}