DURING the height of Cyprus real estate boom in 2007 overseas buyers purchased more than 11,000 properties on the island, accounting for more than half of all the properties sold that year.
But the collapse of the market in 2008 left the once popular tourist hot spots littered with thousands of unsold and unfinished holiday homes, many of which were targeted at British investors and which are unsuitable for permanent living.
Some of these will not be sold for many years as they suffer from poor build quality and will deteriorate rapidly or they have legal and other problems preventing their sale, such as the lack of a ‘promised’ golf course and other facilities promoted in their sales brochures.
The reasons for the collapse are well known. The financial turmoil that engulfed the world coupled with the nefarious practices of property developers, lawyers and bankers, the lack of Title Deeds, inadequate laws that left buyers with little or no protection and an ineffective system of justice all combined to stop the market dead in its tracks.
A number of UK-based companies jumped on the property gravy train acting as estate agents, investment specialists and exacerbated the many problems. Others wanting a slice of the action set themselves up as property developers, often leaving disasters in their wake after fleeing the island.
It didn’t take long for Cyprus good name to be dragged through the mud. Disaster stories started to appear in the UK media and investigative TV and newspaper journalists visited the island to find out for themselves the level of deceit and corruption in the property industry. As a consequence of the bad publicity these reports generated, Brits with money started looking at safer places to invest, turning their backs on Cyprus.
The Cyprus Property Action Group (CPAG) have been very effective in raising awareness of the problems with the British public and the European Union. Some changes to the law were implemented in 2011 to help improve consumer protection. But further changes are necessary to restore investor confidence.
Property developers are now tapping into new markets as witnessed by the increased number of sales in November and December. However the total number of properties sold to overseas buyers throughout the whole of last year (1,475) was the lowest for more than a decade.
Buyers from as far away as China are now being ‘encouraged’ to buy property on the island. But it will not be very long before they too turn their backs on Cyprus.
We have already heard from two independent sources that a number of Chinese buyers have complained of being cheated by at least two developers operating in the Paphos area. Will they never learn?