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Cyprus still burdened by nearly €20bn in non-performing loans

Nigel Howarth
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Cyprus still burdened by nearly €20bn in non-performing loans

Confidential figures from the Central Bank of Cyprus reveal that Cyprus continues to face a major private debt problem, with almost €20bn in non-performing loans (NPLs) still weighing on the economy despite years of banking reforms.

The data, prepared in October 2025 and obtained by Economy Today, was released amid growing political debate over private debt, foreclosures and protections for vulnerable borrowers. It provides a clearer picture of the scale of bad debt both inside and outside the banking system.

During Cyprus’ banking clean-up, loan portfolios worth €24.23bn were transferred off bank balance sheets. Of that amount, €16.702bn was moved to vulture funds, while €7.528bn was transferred to KEDIPES. In total, more than 219,000 loans changed hands.

A key revelation is that private credit firms bought €16.702bn worth of loans for just €3.223bn – around 19% of their original value – effectively acquiring them at an 80% discount. KEDIPES, by contrast, did not purchase the loans but took over their management.

Recoveries have improved but debt remains highbad bank

By 30 June 2025, total recoveries had reached €5.707bn, including €2.319bn linked to KEDIPES.

Private credit firms recovered:

  • €3.597bn through cash repayments
  • €619m through auctions
  • €1.491bn through debt-for-property swaps

KEDIPES recovered:

  • €1.613bn in cash repayments
  • €706m through auctions and property exchanges

Despite these recoveries, the remaining loan balance still stood at €19.703bn by mid-2025 — a reduction of €4.527bn from the original transferred amount, but still a substantial burden.

Most of the remaining loans are still distressed

Of the €19.703bn still held outside banks, €18.534bn (94%) remains non-performing, while 87% of those loans have already been terminated.

Within KEDIPES, 88% of its €5.762bn portfolio remains non-performing.

Meanwhile, banks have significantly improved their balance sheets. As of June 2025, bank-held NPLs had fallen to €1.455bn, representing just 5.6% of total lending portfolios.

However, when combining bad loans held by banks, KEDIPES and vulture funds, Cyprus’ total non-performing debt stood at €19.989bn.

The International Monetary Fund, Moody’s and S&P Global Ratings have all acknowledged progress in reducing bank risk but continue to warn that high private debt remains a major economic vulnerability.

According to Economy Today, around one in three Cypriots has a negative credit profile as either a borrower or guarantor, which raises concerns about mortgage access, property investment and long-term economic growth.

DLGOs criticise handling of dangerous & jointly-owned buildings

Nigel Howarth
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0
DLGOs criticise handling of dangerous & jointly-owned buildings

District Local Government Organisations (DLGOs) in Cyprus have criticised how issues around buildings are being handled, especially when it comes to jointly-owned buildings such as apartment blocks and complexes.

In a joint statement, they said the approach taken by the authorities is inconsistent. This follows recent remarks by the Interior Minister, although the DLGOs note they had already submitted detailed concerns and suggestions to the Ministry on 11 March. They believe the matter needs a clear and balanced approach, but current policy does not reflect that.

Concerns over a “two-tier” approach

The DLGOs point out a difference in how dangerous buildings and jointly-owned buildings are treated. For dangerous buildings, authorities stress the need to enforce existing laws while reforms are being developed. However, for jointly-owned buildings, where legal changes are also being prepared, there seems to be less focus on applying current laws. This gives the impression of a “two-tier” system.

They stress that the law already clearly sets out responsibilities. The Director of the Department of Lands and Surveys is responsible for enforcing rules related to jointly-owned buildings. These include setting up management committees, following operating regulations, and stepping in when rules are not followed.

However, the DLGOs question why this department is still understaffed, saying this limits proper enforcement. They argue that with enough staff and resources, the department could carry out more inspections, ensure management committees are in place, keep accurate records, and improve oversight. In the long run, this could help prevent buildings from becoming dangerous through better maintenance.

While the DLGOs say they are willing to take on more responsibilities under planned reforms, they warn that poor preparation could lead to operational problems.

They are calling for proposed fees to better reflect real costs, approval of proper organisational structures, effective systems for enforcement and revenue collection, and full government funding to set up initial registries. They also highlight the need for modern digital systems, real-time data sharing, and a fully tested IT platform linked to “Ippodamos”.

Finally, the DLGOs support having a single, unified law covering both dangerous and jointly-owned buildings. They say this would bring Cyprus in line with modern European standards and improve how the sector is managed.

Jointly-owned building numbers

According to the Department of Lands and Surveys, Cyprus has a total of 20,919 jointly-owned buildings comprising 219,635 residential units.

Of these, 14,208 buildings are registered, accounting for 159,659 units (mainly apartments), while a further 6,711 buildings remain unregistered, involving 59,976 units.

Nicosia has the highest number of jointly-owned developments, with 4,927 registered buildings with 53,553 residential units. It also leads in unregistered stock, with 2,297 buildings and 19,688 units.

Larnaca has the smallest share, with 898 registered buildings (9,895 units) and 758 unregistered developments (6,865 units). Overall, Nicosia alone accounts for 7,224 jointly-owned buildings and 73,241 residential units, compared with Famagusta’s 1,832 buildings and 19,266 units.

Dangerous building numbers

According to the latest available figures:

  • Nicosia – 1,466.
  • Limassol – 36, approximately 15 – 20 of which have been declared “high risk”.
  • Larnaca – more than 500.
  • Paphos – 266.
  • Famagusta – 26.

Most recently, it’s been reported that ‘hundreds’ of buildings in Lefkara are in a dilapidated state, some of which are listed buildings.

There are more buildings that were abandoned by their Turkish Cypriot owners who fled to the occupied areas of the island following the 1974 Turkish invasion. Many of these will have fallen into disrepair, some of which may be in a dangerous condition.

Fatal collapse exposes property management failures

Nigel Howarth
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Fatal collapse exposes property management failures

The recent building collapse in Germasogeia, which claimed two lives, has highlighted the growing risks associated with poorly managed residential blocks across Cyprus. The tragedy has underscored what officials now describe as a widespread and systemic threat within the island’s property sector.

In a pointed intervention, Interior Minister Konstantinos Ioannou warned that thousands of jointly-owned buildings nationwide are operating without meaningful management or oversight – raising serious concerns about safety standards and their long-term structural integrity.

Widespread management failures

According to the minister, many developments lack functioning management committees altogether. Even where such bodies exist, they often lack the authority or resources to enforce basic obligations among residents.

The consequences are increasingly visible in daily life. Disputes between residents are common, communal charges frequently go unpaid, and enforcement of existing legislation remains inconsistent. Maintenance is often neglected, accelerating the physical decline of buildings and, in some cases, creating hazardous living conditions.

Ioannou argues that the current legal framework is ill-equipped to deal with these challenges, offering neither effective enforcement tools nor sufficient oversight mechanisms.

New legal framework

With nearly half the population residing in jointly-owned buildings, modernising the regulatory framework is now seen as critical. A comprehensive bill, submitted in August 2023, seeks to overhaul the system and introduce a more structured, enforceable approach to property management.

Key provisions include:

  • Clear definition of rights and obligations for owners and tenants
  • Creation of a dedicated maintenance fund for each building
  • Strengthening the authority of management committees
  • Mandatory insurance for buildings and individual units
  • Requirement for a clearance certificate before property transfers

The legislation also introduces a formal system for monitoring and registering buildings, to be overseen by local district authorities.

Delays persist despite mounting safety concerns

The proposal has undergone extensive consultation and was reviewed by House of Representatives in October 2025. However, concerns have been raised by local authorities, particularly regarding staffing requirements and the financial burden of implementing a new supervisory system.

A study by the Department of Lands and Surveys suggests these concerns may be overstated, estimating that no more than 30 staff would be required nationwide, with costs covered through proposed fees.

Despite this, progress has stalled amid calls for further revisions and consultations.

Ioannou has cautioned that continued delays risk worsening an already critical situation. Considering the recent fatalities, he stressed that further delays exacerbates the problem and urged lawmakers to act decisively.

Safety & quality of life at stake

The minister concluded by emphasising that the issue extends far beyond property administration. At its core, it concerns public safety and the quality of life for thousands of residents.

The Interior Ministry has signalled its readiness to work with all political parties and relevant stakeholders to expedite the reform process and establish a modern, effective framework for managing jointly-owned buildings.

Larnaca port & marina vision back on track

Nigel Howarth
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Larnaca port & marina vision back on track

A period of tension between Cyprus’ Transport Ministry and local authorities in Larnaca has eased, paving the way for renewed progress on the long-debated redevelopment of the city’s port and marina.

Officials have now committed to moving the project forward with a focus on transparency and public engagement.

Following a key meeting led by Transport Minister Alexis Vafeades, participants agreed that no development scenario has been ruled out. Options range from maintaining the marina with targeted upgrades to transforming it into a major tourism and investment hub.

Development options and public consultation

Speaking after the meeting, Mr Vafeades emphasised a “unifying atmosphere” and the importance of allowing sufficient time to avoid uncertainty or renewed friction. A critical next step will be the submission of a study by the Greek Superfund, expected by the end of the month, which will outline the scale of land available for large-scale development.

Once received, authorities plan to present detailed spatial proposals to residents of Larnaca, clarifying where and how development could take place. A second phase will then define the types of projects permitted, subject to agreement with local authorities.

Costing, tenders and investment models

A comprehensive financial assessment will underpin the next stage. Each proposed project, whether hospitality, retail or mixed-use, will undergo detailed costing before being presented publicly within two months.

The Cyprus Ports Authority is expected to play a central delivery role. Mr Vafeades confirmed that all works will proceed through formal tender processes, regardless of whether private sector partnerships are involved.

Crucially, all financing routes remain under consideration. These include fully state-funded development or hybrid models involving private investors, with authorities stressing that the long-term interests of Larnaca – and Cyprus more broadly – will guide final decisions.

Participant alignment signals progress

The meeting brought together key figures from local government and national agencies, including Mayor Andreas Vyras and municipal and port authority representatives. Their alignment signals a turning point for a project widely seen as critical to boosting regional growth, tourism and real estate investment.

With feasibility studies, public consultation and funding structures now moving forward together, Larnaca’s waterfront redevelopment appears to be entering a more positive phase.

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Meaningful action on dangerous buildings in Cyprus needed now!

Nigel Howarth
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0
Meaningful action on dangerous buildings in Cyprus needed now!

The fatal collapse of a building in Germasogeia has brought Cyprus’ growing building safety crisis into sharp focus, exposing long-standing concerns over ageing buildings, weak enforcement, and the absence of mandatory structural inspections.

Experts warn that without urgent reforms, including stricter oversight and faster intervention, unsafe buildings across the island will continue to pose a serious risk to public safety.

Across the island, structurally compromised buildings continue to stand with some visibly decaying and others silently deteriorating, while authorities struggle, or fail, to act with urgency.

This is not a problem born overnight. It is the cumulative result of years of regulatory gaps, fragmented oversight, and a culture of delayed enforcement that has allowed risk to compound unchecked.

Only now, after a building collapse in Germasogeia claimed two lives, has there been any real sense of urgency. It should not take loss of life to trigger action.

Visible risks unmistakable

Walk through older parts of Limassol, Nicosia, Larnaca or Paphos and the signs are unmistakable: cracked facades, exposed rebar, sagging balconies. These are not merely aesthetic issues – they are the warning signs of structural fatigue and potential collapse.

For years, engineers and property specialists have raised the alarm about Cyprus’ ageing concrete buildings. Combined with heat, humidity, and seismic exposure, deterioration is not just likely – it’s accelerating. Yet even when the danger is obvious, intervention is rare and often comes too late.

Bureaucratic paralysis

If the risks are widely known, why does action lag so far behind?

Responsibility for identifying and addressing dangerous buildings is scattered across multiple authorities, with little coordination between central and local government. The result is paralysis: cases stall, decisions are delayed, and dangerous buildings remain untouched for years.

Ownership issues deepen the problem. Many buildings have several owners – some absent, others unwilling or financially unable to contribute to repairs. Legal mechanisms to force action are slow and ineffective, leaving hazardous buildings in a state of indefinite limbo.

Meanwhile, people continue to live and work in conditions that would be deemed unacceptable in any properly regulated system.

Warnings ignored, enforcement absent

Even when buildings are officially declared dangerous, enforcement is inconsistent at best. Repair or demolition orders are issued, then quietly ignored. Deadlines pass without consequence. Risk is documented, but not reduced.

Political hesitation only compounds the problem. Demolitions and evacuations carry social and economic costs, and authorities appear reluctant to act decisively where public backlash is likely. But this caution comes at a far higher price: human lives.

System failure, not isolated incidents

This is not a maintenance problem – it is a systemic failure.

Efforts such as ETEK’s proposed digital register of unsafe buildings are a step in the right direction, but data alone will not fix the problem.

Unless ETEK’s efforts are backed up by proactive inspection regimes, and strictly enforceable timelines for action, their efforts will have been in vain, and the problems will only worsen.

Experts have called for:

  • Clearer legal frameworks to streamline enforcement
  • Financial assistance schemes for necessary repairs
  • Stronger penalties for non-compliance
  • A unified authority to oversee building safety

Until such reforms are implemented, the cycle of neglect and delay will continue.

The cost of doing nothing

Behind every deteriorating building is a human story with families living with uncertainty, businesses operating under risk, communities shaped by neglect.

Reform should not be reactive. It should not follow tragedy – it should prevent it. Yet meaningful action is (allegedly) only coming after lives have been lost.

Cyprus is at a tipping point. The risks are visible. The warnings have been issued. The only question left is whether those in power will act before the next collapse makes the consequences impossible to ignore.

Cyprus to map dangerous buildings with new digital platform

Nigel Howarth
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0
Cyprus to map dangerous buildings with new digital platform

A nationwide digital platform to record and classify unsafe buildings is being prepared by the Cyprus Scientific and Technical Chamber (ETEK), in a bid to bring clarity and consistency to building safety across the island.

The initiative follows the fatal collapse of a dangerous building in Limassol, which has intensified scrutiny of ageing housing stock and regulatory oversight. Speaking to the Cyprus News Agency, ETEK president Constanti Constantinos outlined plans for a centralised system that will digitally catalogue buildings deemed hazardous, alongside key structural data.

A unified digital identity for all buildings

At the core of the proposal is the creation of an electronic “building identity register”, designed to standardise how information is recorded, assessed and shared. The platform will provide clear, evidence-based classifications on the safety of each property, addressing a long-standing gap in reliable national data.

Users will be able to determine whether a building is fully or partially habitable, as well as its level of risk. Categories will include structures requiring minor reinforcement, partial interventions, such as the removal of unsafe elements, or full demolition in severe cases.

According to Mr Constantinos, the goal is to establish “a common language” across the sector, supported by structured visual inspection templates already developed by ETEK.

Real-time mapping and risk transparency

A key feature will be geolocation functionality, enabling authorities and the public to identify at-risk buildings at the click of a button. The system will distinguish between risks affecting residents internally and those posing broader dangers to neighbouring properties or public spaces.

Further classifications will highlight:

  • Buildings unsafe only for occupants
  • Structures posing wider public risk
  • Properties requiring balcony or façade support
  • Fully derelict or imminently dangerous developments

This level of granularity is intended to improve both policy response and market transparency, particularly in urban areas with mixed-condition housing stock.

Funding, delivery and next steps

The platform is expected to be developed by ETEK with financial backing from the Ministry of Interior. Work is already under way to define technical specifications, data structures and evaluation methodologies.

Discussions are also ongoing with the Department of Lands and Surveys, which operates a related digital system that could provide a foundation for the new platform. Collaboration with Cyprus’s Deputy Ministry of Research, Innovation and Digital Policy remains under consideration.

Mr Constantinos emphasised speed as a priority, signalling that the Chamber intends to avoid delays associated with lengthy procurement or design processes. The objective is to deliver a functional platform as swiftly as possible, with continuous data updates forming a central requirement.

A stakeholder meeting with local authorities is scheduled in the coming week to determine how data will be uploaded, maintained and verified – an essential step in ensuring the system’s long-term credibility and usefulness.

(Translated and summarised from an article published by the Cyprus News Agency)

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