Domestic property sales on the up

Nigel Howarth
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Domestic property sales on the up

Property sales to the domestic market in Cyprus showed a marked improvement in June, although sales to the overseas market have yet to show any signs of making a recovery, according to official figures published by the Department of Lands and Surveys.

As we reported last Thursday, the Government’s decisions to ease the COVID-19 lockdown measures and subsidise housing loans has helped the island’s property market to show signs of recovering.

But further analyses of the number of property sales in June reveal that the Government’s decisions have had a very limited effect on the overseas (foreign) segment of the market.

Domestic property sales

Property sales to the domestic (Cypriot) market, which accounted for 70% of all sales in June, rose by 14% compared to June 2019.

Although domestic sales in Paphos fell by 74%, this wall was outweighed by gains in the remaining four districts. Sales in Famagusta rose by 72%, whiles sales in Larnaca, Nicosia and Limassol rose by 72%, 69% and 38% respectively.

Domestic Property Sale Contracts – 2019/2020 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2019 127 164 115 137 168 121 153 90 114 163 187 154
2020 178 155 124 29 83 167
Famagusta 2019 32 19 16 58 45 25 2 13 16 33 13 26
2020 10 18 16 6 8 43
Larnaca 2019 54 82 47 73 83 42 90 53 67 81 69 88
2020 76 64 56 13 28 71
Limassol 2019 166 152 192 291 329 138 177 134 176 144 210 212
2020 98 136 76 23 73 150
Paphos 2019 30 31 28 69 175 69 54 54 34 66 64 69
2020 55 29 26 21 31 18
Totals 2019 409 448 398 628 800 395 476 344 407 487 543 549
2020 417 402 298 92 223 449

During the first half of 2020 the damage to the domestic market due to COVID-19 has caused sales to reduce by 39% compared to the same period last year.

Overseas property sales

Unlike domestic sales, the Government’s decisions to ease COVID-19 lockdown measures and subsidise housing loans appears to have had minimal impact on property sales to the overseas market.

Total sales to the overseas market during June fell by 38% compared to June 2019, with sales falling in all districts.

In percentage terms, sales in Nicosia fell 54%, sales in Paphos fell 39%, sales in Larnaca fell 37%, while sales in Limassol and Famagusta fell 36% and 28% respectively.

Total Overseas Property Sale Contracts – 2019/2020 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2019 34 30 16 32 45 24 21 13 23 20 21 26
2020 19 23 15 9 17 11
Famagusta 2019 21 29 29 38 42 18 47 17 24 17 35 38
2020 40 29 25 4 20 13
Larnaca 2019 60 43 71 67 90 60 67 40 35 79 53 74
2020 71 54 50 11 31 38
Limassol 2019 85 104 95 137 217 81 109 62 64 84 86 72
2020 82 89 67 49 39 52
Paphos 2019 157 180 157 155 229 136 176 112 139 126 169 151
2020 113 142 55 51 89 83
Totals 2019 357 386 368 429 623 319 420 244 285 326 364 361
2020 325 337 212 124 196 197

During the first half of 2020, sales to the overseas market have fallen by 44% compared to the same period last year.

Overseas sales to EU citizens

Sales to the EU segment of the overseas market fell 54% compared with June 2019. Although sales in Famagusta rose by one (from 8 to 9), they fell in the remaining four districts.

Paphos reported a fall of 69%, Nicosia 56%, Larnaca 45%, Limassol 42% and Famagusta 13%.

Foreign (EU) Property Sale Contracts – 2019/2020 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2019 14 14 9 19 20 16 13 5 8 10 15 14
2020 9 12 9 3 10 7
Famagusta 2019 9 6 14 17 10 8 17 14 10 5 9 23
2020 6 14 10 3 4 9
Larnaca 2019 12 12 21 18 20 11 16 13 6 23 14 23
2020 21 13 11 0 3 6
Limassol 2019 16 25 20 21 28 26 27 17 25 30 26 25
2020 28 30 11 12 14 15
Paphos 2019 56 72 61 48 69 59 73 58 61 95 61 72
2020 40 60 25 24 21 18
Totals 2019 107 129 125 123 147 120 146 107 110 133 125 157
2020 104 129 66 42 52 55

During the first half of 2020, sales to the EU segment of the overseas market have fallen by 40% compared to the same period last year.

Overseas sales to non-EU citizens

Sales to the EU segment of the overseas market fell 29% compared to June 2019 with sales falling in all districts.

In percentage terms, sales in Famagusta fell 60% followed by Nicosia (down 50%), Larnaca (down 35%), Limassol (down 33%) and finally Paphos (down 29%).

Foreign (Non-EU) Property Sale Contracts – 2019/2020 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2019 20 17 7 13 25 8 8 8 15 10 6 12
2020 10 11 6 6 7 4
Famagusta 2019 12 23 15 21 32 10 30 3 14 12 26 15
2020 34 15 15 1 16 4
Larnaca 2019 48 31 50 49 70 49 51 27 29 56 39 51
2020 50 41 39 11 28 32
Limassol 2019 69 79 75 116 189 55 82 45 39 54 60 47
2020 54 59 56 37 25 37
Paphos 2019 101 108 96 107 160 77 103 54 78 61 108 79
2020 73 82 30 27 68 65
Totals 2019 250 257 243 306 476 199 274 137 175 193 239 204
2020 221 208 146 82 144 142

During the first half of 2020, sales to the non-EU segment of the overseas market have fallen by 46% compared to the same period last year.

What prospects for the future?

Credit rating agency Moody’s expects the major sectors of the Cypriot economy to recover within two or three quarters. In a credit rating report published last week, Moody’s says:

“Tourism-related construction activity will likely remain below pre-crisis levels over several quarters, while residential construction will be more resilient. We also expect the performance of the business services sector to be robust. As a result of these trends, we expect a gradual economic recovery in the second half of 2020 and in 2021.”

Analysis of property sales since 2000

Cyprus Property Sale Contracts 2000 – 2020

Year Overseas Sales Domestic Sales Percentage
Overseas Sales		 Total
Sales
2000 450 12,214 3.6% 12,664
2001 1,207 12,849 8.6% 14,056
2002 2,548 14,111 15.3% 16,659
2003 3,981 15,294 20.7% 19,275
2004 5,384 11,947 31.1% 17,331
2005 6,485 10,106 39.1% 16,591
2006 8,355 8,598 49.3% 16,953
2007 11,281 9,964 53.1% 21,245
2008 6,636 8,031 45.2% 14,667
2009 1,761 6,409 21.6% 8,170
2010 2,030 6,568 23.6% 8,598
2011 1,652 5,366 23.5% 7,018
2012 1,476 4,793 23.5% 6,269
2013 1,017 2,750 27.0% 3,767
2014 1,193 3,334 26.4% 4,527
2015 1,349 3,603 27.2% 4,952
2016
 1,813 5,250 25.7% 7,063
2017
 2,406 6,328 27.5% 8,734
20181 4,367 4,875 47.3% 9,242
2019
 4,482 5,884 43.2% 10,366
2020 (June)
 1,391 1,881 42.5% 3,272
Totals
 71,264 160,155 30.8% 231,419

1 The Department of Lands & Surveys has advised that overseas sales in 2018 and subsequent year should not be compared to sales in previous years due to changes in the methodology used to classify ‘Aliens’ (foreigners).

Commission approves Cyprus’ airlines incentive scheme

Nigel Howarth
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Commission approves Cyprus’ airlines incentive scheme

THE EUROPEAN Commission has approved a €6.3 million Cypriot incentive scheme towards airlines affected by the coronavirus outbreak.

The scheme was approved under the State aid Temporary Framework. Under the scheme, the support will take the form of direct grants of up to €800,000 per company and will be accessible in a transparent manner to all interested airlines operating routes to and from Cyprus.

The level of remuneration will depend on the aircraft’s load factor (that is, the number of passengers on board divided by the capacity of the aircraft in passenger numbers), starting from a load factor of 41% and up to a 70%, and it will be paid per each transported passenger.

The aim of the scheme is to incentivize airlines in order to re-establish air routes from/to Cyprus and thus enable the recovery of air connectivity and tourism and broadly support the general economy and development of the island by providing support to airlines in a comprehensive and non-discriminatory manner.

It is designed to support the air transport and tourism, sectors that have been particularly affected by the coronavirus outbreak.

The measure is expected to benefit approximately 60 airlines from inside and outside the European Economic Area. The Commission found that the Cypriot scheme is in line with the conditions set out in the Temporary Framework.

In particular, the aid will be granted before 31 December 2020 and will not exceed €800,000 per company. The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU (i.e “aid to promote the execution of an important project of common European interest or to remedy a serious disturbance in the economy of a Member State”) and the conditions set out in the Temporary Framework. On this basis, the Commission approved the measures under EU State aid rules.

More information on the Temporary Framework and other actions taken by the Commission to address the economic impact of the coronavirus pandemic can be found here. The non-confidential version of the decision will be made available under the case number SA.57691 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved.

Further reading

State aid: Commission approves €6.3 million Cypriot incentive scheme towards airlines affected by coronavirus outbreak.

Cyprus property sales recovering

Nigel Howarth
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1
Cyprus property sales recovering

Property sales in Cyprus showed signs of making a recovery in June following the Government’s easing of the COVID-19 lockdown measures and its decision to subsidise housing loans according to official figures from the Department of Lands and Surveys.

During June a total of 646 property sales contracts were deposited at Land Registry offices across the island compared to the 714 deposited in June last year. Although this represents a fall of 10%, it’s a significant improvement on the 80% fall in April and the 71% fall in May.

This recovery has been helped by the Government easing the COVID-19 lockdown measures and its decision to introduce an interest rate subsidy for new housing loans. The subsidy will benefit many to take advantage of cheap borrowing costs for four years. (Also, many properties are being offered for sale at a discount of up to 20%.)

During June, Famagusta reported a rise in property sales of 30%, followed by a rise of 23% in Nicosia and a rise of 7% in Larnaca compared to June last year.

However, these rises were outweighed by falls in the districts most popular with overseas buyers – Paphos, where sales fell by 51% and Limassol, where sales fell by 8%.

Total Property Sale Contracts – 2019/2020 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2019 161 194 131 169 213 145 174 103 137 183 208 180
2020 197 178 139 38 100 178
Famagusta 2019 53 48 45 96 87 43 49 30 40 50 48 64
2020 50 47 41 10 28 56
Larnaca 2019 114 125 118 140 173 102 157 93 102 160 122 162
2020 147 118 106 24 59 109
Limassol 2019 251 256 287 428 546 219 286 196 240 228 296 284
2020 180 225 143 72 112 202
Paphos 2019 187 211 185 224 404 205 230 166 173 192 233 220
2020 168 171 81 72 120 101
Totals 2019 766 834 766 1057 1423 714 896 588 662 813 907 910
2020 742 739 510 216 419 646

Total property sales – year to date

In the first half of 2020 property sales have fallen by 41% compared to 2019, with sales down in all districts.

Sales in Limassol have fallen by 53%, followed by Paphos, where sales are down 50%. Meanwhile, sales in Famagusta, Larnaca and Famagusta have fallen 38%, 27% and 18% respectively.

Cyprus tightens grip on ‘golden passport’ scheme

Editorial
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2
Cyprus tightens grip on ‘golden passport’ scheme

CYPRUS has not processed any passport applications of a foreign investor since January, after freezing procedures pending the approval of tougher criteria regulating the Citizenship for Investment Scheme.

The new regulatory framework was prepared by the government following bad publicity highlighting cases in which passports were granted to dubious investors.

Some 180 applications filed with authorities by foreign investors have been frozen pending the approval of the new framework by Parliament, making checks on applicants tighter.

A bill on tightening criteria and regulations which was tabled at the House in February.

Interior Minister Nicos Nouris told the House Interior Committee that his ministry is currently reviewing applications filed in 2019.

Following a four-month delay due to COVID-19, the House kicked-off a round of discussions on a government proposal codifying procedures for the Citizenship for Investment Scheme.

The scheme has brought in billions in investment, mostly through real estate, since it was introduced in 2012, it has come under scrutiny from the EU for being a potential money-laundering risk.

Regulations to be introduced, include sanctions for a Cyprus passport holder should they be found to have broken the law.

Under new proposals, the state can withdraw Cypriot citizenship from a foreign investor if within 10 years of the date of receiving a Cypriot passport they have either been convicted in Cyprus or another country for a serious criminal offence which entails a prison sentence of five years or more, or are wanted by Europol or Interpol for a serious criminal offence, or have been placed on a sanctions list.

“These regulations reinforce in the best possible way the credibility of the investment scheme, while the key provisions relate mostly to linking the scheme to anti-money laundering laws,” Nouris said.

Due diligence

The Minister noted that provisions to be introduced makes service providers assisting foreign nationals in filing their applications, more accountable as they will have to carry out stringent due diligence procedures.

“From now on, the due diligence procedure of applicants does not begin from the moment they file an application to the Interior Ministry, but rather from the moment they select their service provider.”

Nouris said there will be a register with which service providers will have to enrol.

He said they will be issued licenses renewable every year while firms will be held accountable should an issue arise with an applicant’s submission.

The minister conceded there are legal obstacles holding up procedures to revoke Cypriot nationality from 29 investors linked to criminal investigations overseas and financial scandals.

Commenting on changes made in May 2019, Nouris said: “The scheme is not directed solely at real estate, as Cyprus is a country which relies on its tourism industry and services sector”.

He also said applicants must invest a minimum of €2 million in Cyprus, of which €500,000 is for a residence.

Once an investor has acquired the passport, the investor must keep the residence for life.

In addition, successful applicants will contribute a €75,000 fee to the Cyprus Land Development Corporation, and another €75,000 to the Research and Innovation Foundation.

Some 4,000 Cypriot passports were issued to investors under the program, generating at least €7 billion since 2013.

Guide to residency in Cyprus

British High Commission
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Guide to residency in Cyprus

There will be changes to the way that UK nationals can live, travel and access services in Cyprus after 31 December 2020.

The below FAQs explain the importance of obtaining or updating your residency status, the benefits that residency gives you and the difference between temporary (MEU1) and permanent residency (MEU3).

Please visit the GOV.UK Living in Cyprus guide for further guidance on residence rights in Cyprus and follow our social media pages for further updates.

  1. Why do I need a residency document? I’ve lived here for years without one and experienced no problems.

The Withdrawal Agreement that the UK agreed with the EU in 2019, established a transition period until the end of December 2020, during which time UK nationals will continue to be treated in the same way as EU nationals in Cyprus.

In order to evidence your rights to live, work, study or access benefits in Cyprus after the end of 2020 you need to apply for residency. If you have been in Cyprus for less than 5 years you should apply for an MEU1 (temporary residency permit).

If you have been in Cyprus for over 5 years you should apply for an MEU3 (permanent residency). You will not be penalised if you have been living in Cyprus without residency documents.

You can find all the information on how to apply for your residency document on our Living in Cyprus page.

  1. When do I need to apply by?

You should apply before the end of the transition period on 31 December 2020. This is because UK nationals with residency documents will then be able to continue to travel freely into and out of Cyprus on the same basis as EU nationals from January 1 2021.

UK nationals who have regularised their residency will also be able to register with GESY – the Cypriot General Healthcare system and be entitled to lifelong healthcare rights for as long as they remain resident in Cyprus.

After 31 December 2020, the procedure for residency applications and residency documents is likely to change. The new procedures may be different and the new residency document will have a defined validity in years. The current MEU1 and MEU3 documents do not have an expiry date.

  1. Is it a legal requirement to have a residency document in Cyprus?

Yes, all UKNs who plan to stay in Cyprus longer than 90 days must register with the Civil Registry and Immigration Authorities and apply for an MEU residency document.

This includes UK nationals who have bought property in Cyprus and spend more than 90 days here, those who have lived in Cyprus for many years and never registered or have residency documents issued prior to 2004, those who work or study in Cyprus, and those who have retired and chosen to make Cyprus their permanent home.

  1. I have an older residency document do I have to apply for a MEU residency document?

Yes. Examples of outdated and invalid residency documents include: a brown residency booklet, a blue slip, a pink slip, an ARC, or an old residency stamp in a UK passport.

All these residency documents and stamps in passports, issued prior to 2004, became invalid when Cyprus entered the EU and initiated the MEU residency document procedures for all nationals of EU Member States living in Cyprus.

If you do not update your older residency documents you may experience difficulties re-entering Cyprus or accessing services after 31 December 2020.

  1. What is the financial criteria that I need to pass in order to be able to apply for my residency document?

According to the Minimum Guaranteed income funds as provided by the Ministry of Labour (EEE), you will need to be able to provide documentary evidence that you receive a minimum income or pension of over €480 per month.

  1. If I don’t have a residency document and remain in Cyprus for longer than 90 days will I have difficulties leaving or returning to Cyprus?

Yes. The rules on travel to and from the Republic of Cyprus will change after 31 December 2020. If you do not have a residency document then you cannot remain in Cyprus for longer than 90 days after this date.

If you exceed the 90 day limit, you could face difficulties and/or fines when travelling in and out of Cyprus. As per our Living in Cyprus guide, you are advised to carry your Cyprus-issued residency documents when travelling in/out of Cyprus.

  1. What help is there for UKNs who are elderly or vulnerable to register for residency?

UK National Support Fund

On 6 March 2020 the FCO announced funding for organisations to provide practical support to UK nationals who may find it harder to complete their residency applications.

These organisations will help individuals who may find it harder to complete the necessary paperwork to secure their residency rights, including pensioners, disabled people, those living in remote areas or who have mobility difficulties, and those who require help with language translation or interpretation.

In Cyprus, two organisations are providing this practical support: SSAFA (specifically for armed forces veterans) and Cyprus Residency Planning Group (CRPG). If you or someone you know may find it harder to complete the paperwork, you can contact them using the details below to discuss how they may be able to help you.

SSAFA: 800 77058 (freephone)

Mon – Fri 09.00-17.30

[email protected]

CRPG: 800 09009 (freephone)

Mon – Fri 09.00-13.00

[email protected]

  1. I applied for my MEU residency document months ago and still haven’t received it. What should I do?

We are aware that there are currently delays in the issuance of residency documents. It is important to keep the receipt that you receive when you submit your residency application, as this receipt will enable you to look into the progress of your application by referencing the application number as it appears on the receipt.

If you have not received your residency documents after several months, you can enquire into the status of your application through the SMS Service for Information Regarding Applications for Residence Permits by sending a free SMS message to 8999. Send a message with the word STATUS leave a space and add the number of your application.

  1. I have been in Cyprus for longer than 5 years and have an MEU1 document, why should I apply for MEU3 permanent residency status?

The MEU3 document allows immediate registration to Cyprus’ General Healthcare system known as GESY. You do not have to be an S1 holder or be contributing to the Cyprus Social Insurance Scheme to register with GESY if you have an MEU3.

If you plan to spend time both in the UK and in Cyprus during the year, an MEU1 allows you to be out of Cyprus for up to 6 months per year whereas, the MEU3 permanent residency status allows up to 5 years out of the country.

  1. I have an MEU1 can I register with GESY?

If you have an MEU1, you can only register with GESY if you are an S1 holder, or if you are contributing to Cyprus Social Insurance as an employee or company owner, or if you are voluntarily contributing to the Cyprus Social Insurance Scheme.

We advise you to have comprehensive healthcare cover if you are not entitled to register with GESY. There is more information about GESY on our Living in Cyprus page.

  1. I am an early retiree and do not yet have an S1 can I register with GESY if I have an MEU1?

As an MEU1 holder, you can’t register with GESY unless you are currently receiving a state pension as evidenced by the S1 document, or unless you are contributing to the Cyprus Social Insurance Scheme.

We advise you to have comprehensive healthcare cover if you are not entitled to register with GESY. More information about state pensions and social assistance benefits can be found on our Living in Cyprus page.

  1. If I have an MEU1 or MEU3 residence document can I apply for a Cyprus issued EHIC card?

You can apply for a Cyprus issued EHIC card only if you are contributing to the Cyprus Social Insurance Scheme. Having an MEU1 or MEU3 without contributing to Social Insurance does not entitle you to apply for a Cyprus issued EHIC card.

  1. If I have an MEU1 or MEU3 residency document can I apply for social assistance benefits?

Yes, both MEU1 and MEU3 holders are entitled to apply for social assistance and social welfare benefits. More information can be found on the Living in Cyprus Guide and the Department of Social Welfare Services website here.

If there are changes to residency registration processes, we will update this guidance as soon as information is available.

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Cyprus to revoke passports of foreign investors

Editorial
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0
Cyprus to revoke passports of foreign investors

NICOSIA is set to revoke Cyprus passports from at least 26 suspect investors as soon as the House of Representatives passes a law on tighter controls approved by cabinet earlier this week.

The cabinet on Wednesday approved tougher rules for its tarnished citizenship for investment scheme by tying it to anti-money laundering legislation.

The law amendment gives authorities the right to revoke citizenship, which is retrospective for up to 10 years, allowing them to re-evaluate whether naturalized foreign investors violated provisions included in the new legislation.

The decision to revoke citizenship from individuals was taken in November 2019, when a number of corruption scandals surfaced involving investors who had acquired Cyprus passports.

Foreign investors from countries including Russia, Cambodia, Malaysia and Iran were linked to authoritarian governments or were being sought by authorities over their involvement in large-scale money laundering.

The government had then decided that 26 investors would be stripped of their Cypriot nationality.

Malaysian multi-billionaire Jho Low was among them.

Jho Low was allegedly involved in a multi-billion-dollar scandal that broke in 2015 when he was managing an investment firm 1Malaysia Development Berhad headed by the then prime minister of Malaysia Najib Razak.

According to Bloomberg, Low allegedly created a series of shell companies through which he channelled hundreds of millions, many of which ended up in his accounts. He denies any wrongdoing.

Cypriot daily Politis said that as soon as the scandal broke, implicating 30 executives of the US investment firm Goldman Sacs, he submitted a request to become a Cypriot citizen in exchange for a EUR 5 million investment.

The government’s effort to revoke passports of some investors hit a legal snag regarding personal data.

Under the new bill, citizenship can be revoked if an investor is handed a jail sentence of more than five years in any country if they are wanted by Interpol or Europol if they do not comply with the criteria and additional preconditions set out, or subject to international sanctions.

The new rules approved by cabinet and sent to the House of Representatives for approval introduces additional checks throughout the citizenship process for investors.

A committee to supervise and check applicants will evolve from a unit currently operating under the Finance Ministry.

It will comprise of MPs from the House finance and justice committees and the general manager of Invest Cyprus.

However, even with this new regime, the procedure of revoking passports is not expected to be easy as a number of the affected individuals are preparing for a legal battle.

Penalties will also be applicable for managers and firms handling due diligence procedures of prospective investors.

Failure to comply will be subject to a fine of up to €350,000.

Passports to EU

Cyprus offers an EU passport for an investment of at least €2 million and purchase of a €500,000 residence plus tax.

It is one of the few member states to offer an EU passport for investment.

Last year the EU told member states to tighten checks on non-EU nationals seeking passports via investments.

Brussels is concerned that the so-called “golden passports” may be a backdoor into the EU for criminal gangs or government officials to launder huge sums or evade tax.

Under the new rules, investors will have a wider array of investment choices, like buying up stock in Cypriot companies.

Investors will also have to pay a €150,000 application fee with the money earmarked for housing and entrepreneurship schemes.

“The new regulations no longer leave the program open to ridicule, as some have done in the recent past, and leave no doubt as to its credibility,” Interior Minister Nicos Nouris said.

The number of citizenships issued in the scheme will be capped at 700 a year.

Some 4,000 Cypriot passports were issued to investors under the program, generating at least €7 billion since 2013.

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