Construction material price hikes continues

Nigel Howarth
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Construction material price hikes continues

The price of construction materials continued to surge in September as the global economy picks up in the wake of the COVID-19 pandemic causing global demand to increase.

The Cyprus Statistical Service reports that, compared to September 2020, the Construction material price index recorded an increase of 14.92%.

Compared to September 2020, increases were recorded in:

  • Metallic products (30.64%) including iron and steel (46.29%)
  • Wood, insulation materials, chemicals and plastics (15.71%)
  • Electromechanical products (11.37%)
  • Minerals (2.21%) including Cements (4.52%)
  • Mineral products (1.50%)

The Cyprus Statistical Service notes that “Prices of materials used in construction are collected on a monthly basis based on a sample of products and suppliers. The reference date for the prices collected is the 15th each month. Prices are valued excluding VAT. The data collection is carried out by telephone, fax or e-mail. Prices of materials are based on actual prices rather than list prices.”

Price index construction materials chart

ING expects that “will take at least until the summer of 2022 before we expect the price of some building materials, notably concrete, bricks and cement, to drop. Construction firms’ suppliers first need to improve their historically low levels of inventories. The price of timber and steel will probably settle down earlier.

“The building materials’ price hikes have put building companies’ profit margins under pressure. This can easily lead to loss-making projects as profit margins are thin in the construction sector, generally about 2 to 4%. The development of output prices of construction projects and input prices of building materials are in general closely related. However, from 2018 until the end of 2020, contractors’ output prices increased faster than the input prices which could have resulted in higher profits. Yet, due to the higher building material costs input prices are catching up quickly and saw their biggest increase in the first quarter of 2021 since 2004 and this puts pressure on those margins.”

Construction material costs – further reading

Press release: Price Index of Construction Materials: September 2021

People suffering at the hands of the Land Registry

Nigel Howarth
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People suffering at the hands of the Land Registry

The state of affairs at the Cyprus Land Registry is appalling, with people waiting many years to have their applications processed.

In its article “Golgotha of suffering for citizens in the Land Registry”, the Greek-language Phileleftheros summarises the findings of an investigation undertaken by the Internal Audit Committee.

The Audit Committee outlined the “labyrinthine procedures” and the large number of cases that have built up over many years. In particular:

  • A huge number of outstanding cases, which on 31/12/2019 stood at 42,590.
  • Long delays in completing cases. One case examined by the Audit Committee took 8.8 years to complete; 47.5% of the cases completed by the Nicosia Land Registry Office during the first 10 months of 2019 were submitted between 2001 and 2010 (processing time 9-18 years.)
  • Based on processing rate of applications, the Audit Committee estimated that it will take the Land Registry 39 years to complete them if it continues to use its existing procedures.

The investigation placed great emphasis on the mind-numbing bureaucracy that prevails in this part of government:

  • It identified 36 processes and 429 stages set out in the Department of Lands and Surveys’ Procedures Manual (ISO).
  • One case examined passed through the hands of 18 officials, 4 branches and 13 internal departments.

Not surprisingly, the Audit Committee Supervisor concluded that the Audit Service considered that simplifying and redesigning the Land Registry’s procedures would lead to substantial benefits in terms of efficiency and effectiveness.

Back in March 2018, staff of the European Commission and the European Central Bank “encouraged the authorities and other stakeholders to step up progress in other essential areas, including the implementation of the national healthcare system in a fiscally-sustainable way, the on-going reform of the electricity market, and the establishment of an efficient title deeds issuance and transfer system.”

It would appear that little (if any) progress has been made.

Maybe a new Director of the Department of Lands and Surveys could clear up the mess?

By an amazing coincidence, the position of Director is currently being advertised as the present incumbent is expected to retire on 1st November. The position carries a salary of €89,161. (The new director will have a massive job on his hands to get the mess sorted out.)

House prices fall, apartment values rise

Editorial
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House prices fall, apartment values rise

A slowdown in the residential Cyprus property price indices has been recorded in the second quarter of 2021 due to a small decrease in house prices and an increase in apartment values.

According to the Residential Property Price Index (RPPI) report for Q2 published by the Cyprus Central Bank, a quarterly increase of 0.3% was recorded from 0.5% in Q1 2021.

It recorded an increase of 0.2% from 0.9% in the previous quarter on an annual basis.

“The price of houses presents a different picture from the price of apartments, with the first recording a decrease, compared to the prices of apartments which record an increase”, the report notes.

According to the Central Bank, the price of houses dropped both quarterly and on an annual basis to 0.3% and 1%, respectively.

On the contrary, apartment prices increased by 1.3% quarterly and by 3% annually.

This trend was seen in all districts except Limassol, which recorded a rise in house prices, while in Paphos, there was an annual drop in the price of apartments.

The Central Bank said the uptick in apartment prices reflects the continued demand by local buyers and investors for flats compared to houses in most districts.

It said Cypriots invest more in smaller houses and apartments. It is attributed to the fact that savings are geared for purchasing property either as an investment or to live in.

Moreover, the increase in construction material cost has played a key role in maintaining the price levels.

According to the sales documents, the Central Bank said demand for property by investors has stabilised due to the promotion of investments and the government’s programme for foreigners to obtain permanent residence permits in Cyprus.

Cyprus to revoke 45 golden passports

Editorial
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Cyprus to revoke 45 golden passports

The government has decided to revoke the citizenship of 45 dubious investors who obtained a Cyprus passport through the disgraced citizenship by investment scheme, which collapsed under corruption scandals.

The decision was announced on Friday by government spokesperson Marios Pelekanos.

He said the cabinet based its decision on an independent inquiry into the programme, which recommended looking into the possibility of rescinding citizenships and other actions in 102 cases.

“The cabinet decided to launch the revocation process for 39 investors and six members of their families and to cancel a previous cabinet decision to naturalise an investor and a dependant family member,” Pelekanos said.

He also said the cabinet would be examining a further six cases and monitoring another 47.

An inquiry into the issuing of so-called ‘golden passports’ between 2007 and 2020 was conducted by an independent committee headed by former supreme court judge Myron Nikolatos.

The probe found there was “criminal and political” responsibility.

“It is obvious the Cyprus Investment Programme operated between 2007 and 2020 with gaps and deficiencies, an inadequate legislative framework and almost no regulatory framework,” Nikolatos told reporters in June.

A damning report said that over half (53%) of the 6,779 passports granted were done so illegally, encouraged by a due diligence vacuum or insufficient background checks.

Last November, the Mediterranean island dropped the passport scheme after Al Jazeera aired a documentary showing reporters posing as fixers for a Chinese businessman seeking a Cypriot passport despite having a criminal record.

Parliament speaker Demetris Syllouris and an opposition MP were secretly filmed allegedly trying to facilitate a passport for the fugitive investor.

They later resigned, although both insisted they were innocent of any wrongdoing.

Al Jazeera reported that dozens of those who applied were under criminal investigation, international sanctions or even serving prison sentences.

Nicosia had long faced pressure from Brussels to reform the scheme over concerns it may have helped organised crime gangs infiltrate the European Union.

Cyprus argued it had attracted necessary investment following the island’s 2013 economic meltdown.

Nicosia issued thousands of passports under the scheme, allowing investors to acquire one in exchange for an investment of €2.5 million, netting over seven billion euros for state coffers over the years.

The European Commission warned Nicosia over its golden passport scheme, launching a legal procedure against Cyprus, which is still ongoing.

Much to the chagrin of Brussels, the scheme attracted wealthy foreign investors because a passport from EU member Cyprus allowed free travel and residence within the 27-member bloc.

Al Jazeera Cyprus Papers awarded bronze

Nigel Howarth
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0
Al Jazeera Cyprus Papers awarded bronze

The investigative report ‘The Cyprus Papers’ earnt Al Jazerra a bronze at the New York TV & Film Awards, while Al Jazeera English’s coverage of international issues and universal themes earned the network the prestigious title of Broadcaster of the Year.

The Cyprus Papers are a batch of leaked documents obtained exclusively by Al Jazeera’s Investigative Unit, containing more than 1,400 approved applications for the Cyprus Investment Programme (CIP) run by the Republic of Cyprus, some of which showed that passports were sold to criminals and fugitives.

A few days after the news broke, the Interior Minister called Al Jazeera’s ‘probe’ a smear campaign, implying that the ‘old enemy’ Turkey was involved in an attempt to wrongly discredit Cyprus.

After the Al Jazeera investigation was released, the Cypriot government announced an end to the Cyprus Investment Programme (CIP). Attorney General George Savvides launched a full investigation into the evidence provided by the documentary. Demetris Syllouris, President of the House of Representatives, is abstaining from duties until investigations are completed. Christakis Giovani resigned from his position as member of parliament and from all his positions within the AKEL party.

In an article published by Aljazeera on Wednesday, their undercover reporter recounts how, during their four days in Cyprus, they were shown the sites – from the undersea caves and rock structures of Cape Greco to the party scenes of Nissi Beach and the people they met and interviewed during their time on the island.

 

KPMG in Cyprus announces partnership with RICS

Press Release
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KPMG in Cyprus announces partnership with RICS

KPMG in Cyprus and RICS have signed a collaboration agreement for the provision of services for the issue of the quarterly “RICS Cyprus Property Price Index, with KPMG in Cyprus”.

The two organizations will collaborate closely for the production and distribution of the Index, which has been published since 2009, based on a methodology developed specifically by the University of Reading, UK.

The Index monitors four main property sectors (Residential, Retail, Offices and Industrial), across Cyprus’ urban areas: Lefkosia, Lemesos, Larnaca, Paphos and Famagusta. The Index is sponsored by the Cyprus Association of Quantity Surveyors and supported by the Cyprus Association of Valuers and Property Consultants.

Through the years, the Index has become one of the main barometers of property values in Cyprus and is followed by professionals and key stakeholders of the Real Estate Industry as well as other sectors both in Cyprus and internationally.

On behalf of RICS, Simon Rubinsohn, RICS Chief Economist, commented:

“The Cyprus Property Index provides a timely guide to developments in the Cypriot commercial and residential real estate markets. It is not only helpful in identifying key trends but also enabling a better understanding of risk in the sector. This new partnership will help put this product on a more sustainable footing, something I very much welcome.”

Commenting on the collaboration, Dr. Thomas Dimopoulos, MRICS, Chairman of RICS Cyprus and Managing Partner of AXIA Chartered Surveyors, commented:

“The new partnership with KPMG in Cyprus is a significant effort in the continuation of the publication of the RICS Cyprus Property Index. The existence of various property indices for the Cypriot market enhances transparency and information.

“Their usage extends to market analysis relating to measuring property prices, rents, yields, and also acts as a scientific tool for studying property cycles, forecasting etc. The RICS index, which began in 2009, provides a basis for understanding and analysing market drivers and trends for rents and sale prices.

“It benefits market analysts and participants as a useful indicator of changing market conditions and its continued development and publication is an important tool for understanding the Cyprus property market.”

On behalf of KPMG in Cyprus, Mr Christophoros Anayiotos, Head of Real Estate Sector stated:

“We are delighted to engage with RICS to ensure the provision of timely and relevant information to a crucial sector of the Cyprus economy, through this established Index.

“It is without a doubt that the Index will continue to serve as a benchmark for real estate analysis and information, just like it has served for the past 12 years, providing transparency and necessary tools to real estate professionals, analysts, and relevant stakeholders.”

KPMG

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