THE CYPRUS real estate sector will take a significant hit from the COVID-19 pandemic, as in times of uncertainty investors tend to minimise property transactions, experts argue.
With the novel coronavirus threatening to usher another recession, just 12 years after the last one, investors generally tend to be more sceptical and less willing to jump into agreements especially regarding real estate.
Nikolas Ioannou, from the Property Studies & Valuations Dept of Danos / BNPRE Groups, said: “This will result in a significant slowdown of the market in Cyprus, especially now that it has officially recorded coronavirus cases”.
He told the Financial Mirror that this could be devastating for the Cyprus Real Estate market, which is mainly supported by foreign investment and demand, a decent percentage of which comes from the Chinese market.
This compounds the devastating effects to the property market on a continuous downtrend since the implementation of stricter criteria on the ‘Cyprus passport scheme‘ introduced in May 2019.
Already the market has started to record a significant drop in sales at the start of the year.
“Add to that the massive volume of new supply that has either just entered or is expected to enter the local market in the coming months as well as the thousands of properties the banks have repossessed and need to dispose of,” he added.
Ioannou said the short-term rental market, such as Airbnb, with thousands of properties, is expected to suffer from wholesale cancellations if the outbreak continues. Already cancellations have started to come in.
Real estate rents may drop
This could have a positive impact on real estate rents, as owners of Airbnb properties will be tempted to put them on the long-term rental market, pushing rents downwards.
All these factors, combined with the fact that the Cyprus economy is strongly supported by tourism, an industry which is expected to suffer the biggest losses.
“There are strong ingredients for a new recession, which is now more possible than ever, despite the fact we are in uncharted territory,” said Ioannou.
Chairman of the Cyprus Property Owners Association, George Mouskides told the Financial Mirror that the situation with coronavirus will definitely hurt high-end sales as apart from uncertainty prevailing in the markets, investors in some cases cannot physically travel to the island to see the properties first-hand.
“This could mean that a large number of sales may be put on hold.”
Mouskides noted that local buyers will also be affected, as Cypriots wanting to buy a home for their family will delay as they will be more concerned on protecting them, rather than making future house plans.
He argued that ultimately, it will all come down to how long the crisis will last.
“If authorities are able to contain the spread of the virus soon, we will probably be looking at a two-month market freeze. However, if this goes on longer, then the summer months may be affected too”.
He said it would need a few weeks before being able to make to clear estimates.
“We will have to take into to account the general damage that will be brought about to the economy”.
A GREEK-LANGUAGE newspaper in Cyprus has demanded €2,000 from the Pissouri Community Council to publish a letter correcting the fake news it reported on Saturday 7 March in connection with the landslide in Pissouri.
This particular journal continues to regurgitate fake news stories pointing the finger of blame for the damage caused by the landslide at the numerous contractors who built the properties more than 20 years ago. These fake news statements include:
The existence of large quantities of water in the subsoil.
Poor ground conditions were not taken into account at the design and construction stages of the properties.
Poor construction practices.
Poor estimation of soil profile – the soil on the ground is loose and with reduced strength to a great depth.
One third of the dwellings were sold by a well-known property developer.
These statements are totally untrue and we wonder why this newspaper, which knows better, continues to regurgitate this fake news?
Angered by these continuous fake news reports, the Pissouri Community held an emergency meeting on Sunday 8 March to consider their response. It resolved to write to the newspaper.
What sort of disgraceful outfit is this – demanding payment to correct the fake news they’ve been promulgating!
(A couple of years ago when the paper started publishing the litany of lies, I contacted the journalist who wrote the article inviting him to visit Pissouri to see the damage for himself. He didn’t show me the courtesy of replying.)
Pissouri Community’s letter
There follows an English translation of the Pissouri Community’s letter:
“In response to published articles, the Technical Advisor of the Pissouri Community on the matters related to the landside, Associate Professor NTUA Konstantinos Loupasakis, points out the following:
1) The study of the drilling profiles of the Geotechnical Drilling of the Geological Survey Department does not reveal the presence of made ground in the area of the Limnes. Specifically, in the Limnes area, from 2013 to 2018, 14 geotechnical boreholes have been drilled by the Geological Survey Department. These drillings reach depths of 18.0 to 67.5 m.
Of all the above boreholes only one reports the presence of 2.5m thickness of backfill. This borehole (EG2013 / 024) has been drilled on the slope of the stream running south of the Limnes area and at a distance of 50m from the nearest residence. These materials are most likely to come from the foundation excavations of adjacent houses. The distribution of Boreholes is shown in Figure 1 and it is clear that they cover most of the area. Therefore, according to the Geological Survey Department, there is no substantiated claim that the area of Limnes was located on backfill / made ground.
2) If the houses were built on uncompacted made ground deposits (debris) then deformations would only be found to the extent occupied by the houses and not in their wider surrounding area or in the public and private spaces surrounding them (road network, paved areas and open spaces).
As can be seen from the distribution of cracks in the land mass in the Limnes area (Figure 2), the affected houses are undermined by the above cracks spanning a series of buildings and open land. Therefore, cracks in the land mass and damage to homes cannot be related to the individual foundations in the area of a house. On the contrary, the mass distribution of tension cracks indicate that there is extensive landslide in the Limnes area, the boundaries of which are clearly distinguished from their distribution.
3) From the Geotechnical Survey Department’s boreholes, it is shown that the maximum thickness of the designated ” landslide mass ” reaches up to 18.5 m while soft and disturbed (apparently by landslide) debris reach depths of up to 40 m ( eg EG2013 / 024). Also, from the borehole descriptions there are clear traces of sliding surfaces up to depths of up to 39m. Meaning, that according to the data from the boreholes, the land has failed up to 39m in depth historically and has potential to continue to do so.
Given this, no economically viable foundation technique can be applied to two-storey or three-storey houses in order to make them unaffected by such a large and deep landslide. It is therefore not a question of the wrong choice of foundation for construction.
4) Regarding the quality of the construction, it is noted that, although not the subject of this expert opinion, many structures were found during the study, which, while undergoing extensive displacement, were subject to minimal to zero damage. That is, there are houses which whilst rotating or deviating from the vertical, are intact. This confirms their high quality of construction. Obviously elongated constructions that are interspersed by a series of tension cracks in the soil, regardless of their quality cannot be left unaffected. Undoubtedly, in constructions with these characteristics, a high level of damage is recorded.
In conclusion, it is noted that a large and deep landslide is taking place in the Limnes area, which is impossible to resist by any standard methods of construction. There is also a landslide movement that was impossible to identify in the context of a geotechnical study for the foundation of a two to three story construction. A geological suitability study should have been carried out in the area prior to its designation as a residential area.
At this stage and given that a special study is being carried out to stop the landslide movements, the only measure that can be applied with immediate effect is the drainage of the area from groundwater. This action will increase the shear strength of the landslide materials and slow down ongoing movements. The study will then outline the further steps to be taken.
It is noted that the development of landslide movements not only affects the smaller area of Limnes but also threatens the stability of the slopes surrounding the landslide and built up areas.
Further details on the landslide movements in the Limnes area, the stability of the surrounding slopes and all the proposed measures can be found in the expert report drawn up in the Rep. NTUA Professor Konstantinos Loupasaki.”
To date, no humanitarian aid has been deposited into any the landslide victims accounts.
The survey of the Greek Company (Omikron Kapa Meletitiki) continues; the lawyer who is acting on behalf of the residents affected contacted them after the article was published.
The company advised that they are working to a schedule and their report will be finished and delivered to the Ministry at the end of April. Currently they are digging more boreholes in the area, installing inclinometers and investigating the landslide.
THE FLAGSHIP Ayia Napa Marina project is in the final phase of its construction, gearing up for the start of operations, with the main infrastructure building works nearing completion.
This marks a milestone for the iconic project, promoting development and projecting the power of Cypriot entrepreneurship, which will, upon completion, contribute significantly to showcasing Cyprus’ high tourism profile.
Administration offices, buildings housing government services (port, police, customs, medical services, veterinary services), maintenance facilities, as well as boat storage, have already been delivered, having obtained the required certifications from the Cyprus Electricity Authority.
Coastal works have been completed; most importantly, the breakwater, which acts as the main defence mechanism for the marina’s protection, as well as its residential and commercial areas.
The floating docks are also ready, with their assembly completed, as well as the bridge leading to the Island Villas, while works relating to the provision of boat services are progressing rapidly.
Roadworks are ongoing on the west and north side of the development, with the vast majority completed, with only the final asphalt pending.
Works on the multilevel parking have reached 95% completion, with lift installation and aluminium constructions underway.
In the Ayia Napa Marina’s Commercial Village, work is continuing at a fast pace, including the completion of electromechanical installations, plasterboard work and exterior stone cladding.
In the East Tower, reinforcement works on the ground floor continue, alongside foundation works in the West Tower.
Development and landscaping of the surrounding area are also at an advanced stage.
“At the pace with which works are proceeding, Ayia Napa Marina will soon become a reality for both residents and visitors, promoting an upgraded and modern way of life close to the sea, combined with functionality, comfort and luxury.
We are proud to see construction works underway at such a fast pace, as our vision becomes reality, day by day,” said M.M Makronisos Marina Ltd CEO, Stavros Caramondanis.
“We are sure that this development will substantially contribute to the revitalization of Ayia Napa, transforming it into a jewel of the Eastern Mediterranean.”
The entrance and berthing of the first boat on January 27 marked the beginning of the marina’s pilot operations.
A SECOND disappointing month for the Cyprus property market saw sales falling by 11% in February compared with February 2019 with sales falling in all of the island’s five districts according to the Department of Lands & Surveys.
Paphos was hardest hit with the number of sales contracts deposited at the District Lands Office dropping by 19%, while Limassol suffered a fall of 12%. Meanwhile, the number of contracts deposited in Nicosia, Larnaca and Famagusta fell by 8%, 6% and 2% respectively.
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
Famagusta
2019
53
48
45
96
87
43
49
30
40
50
48
64
2020
50
47
Larnaca
2019
114
125
118
140
173
102
157
93
102
160
122
162
2020
147
118
Limassol
2019
251
256
287
428
546
219
286
196
240
228
296
284
2020
180
225
Paphos
2019
187
211
185
224
404
205
230
166
173
192
233
220
2020
168
171
Totals
2019
766
834
766
1057
1423
714
896
588
662
813
907
910
2020
742
739
In the first two months of the year, Limassol remains the most popular with those buying property followed by Nicosia (the capital), Paphos, Larnaca and Famagusta. The only district to record a rise in sales during the first two months is Larnaca.
Domestic property sales
Property sales to the domestic market (which accounted for 54% of all sales in the month) fell by 10% compared to February 2019 with sales falling in all districts.
Larnaca saw the biggest fall, down 22% compared to the same month last year. Sales in Limassol fell 11%, sales in Paphos fell 6% and sales in both Nicosia and Famagusta fell by 5%.
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
Famagusta
2019
32
19
16
58
45
25
2
13
16
33
13
26
2020
10
18
Larnaca
2019
54
82
47
73
83
42
90
53
67
81
69
88
2020
76
64
Limassol
2019
166
152
192
291
329
138
177
134
176
144
210
212
2020
98
136
Paphos
2019
30
31
28
69
175
69
54
54
34
66
64
69
2020
55
29
Totals
2019
409
448
398
628
800
395
476
344
407
487
543
549
2020
417
402
In the first two months of 2019, sales to the domestic market have fallen by 4%. Although sales in Paphos, Nicosia and Larnaca have risen by 38%, 14% and 3% respectively, falls of 45% in Famagusta and 26% in Limassol have more than wiped out the rises in the other three districts.
Overseas property sales
Property sales to the overseas market fell by 13% compared to February 2019 with sales falling in three of the island’s five districts.
While sales in Larnaca rose by 26% and sales in Famagusta remained steady, they fell 23% in Nicosia, 21% in Paphos and 14% in Limassol.
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
Famagusta
2019
21
29
29
38
42
18
47
17
24
17
35
38
2020
40
29
Larnaca
2019
60
43
71
67
90
60
67
40
35
79
53
74
2020
71
54
Limassol
2019
85
104
95
137
217
81
109
62
64
84
86
72
2020
82
89
Paphos
2019
157
180
157
155
229
136
176
112
139
126
169
151
2020
113
142
Totals
2019
357
386
368
429
623
319
420
244
285
326
364
361
2020
325
337
In the first two months of 2019 sales to the overseas market have fallen 11% compared to the same period last year.
Although sales in the coastal town of Famagusta and Larnaca, the lower priced areas of Cyprus for buying property, have risen by 38% and 21% respectively, sales in Nicosia are down 34%, sales in Paphos are down 24% and sales in Limassol are down 10%
Sales to EU citizens
Sales to EU citizens remained steady compared to February 2019 with sales rising in three of the island’s five districts.
While property sales in Famagusta, Limassol and Larnaca rose by 133%, 20% and 8% respectively, they fell by 17% in Paphos and by 14% in Nicosia.
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
Famagusta
2019
9
6
14
17
10
8
17
14
10
5
9
23
2020
6
14
Larnaca
2019
12
12
21
18
20
11
16
13
6
23
14
23
2020
21
13
Limassol
2019
16
25
20
21
28
26
27
17
25
30
26
25
2020
28
30
Paphos
2019
56
72
61
48
69
59
73
58
61
95
61
72
2020
40
60
Totals
2019
107
129
125
123
147
120
146
107
110
133
125
157
2020
104
129
In the first two months of 2020 sales to EU citizens have fallen 1% compared to the same period last year.
Although sales in Larnaca, Limassol and Famagusta have risen by 42%, 41% and 33% respectively, they have fallen by 25% in Nicosia and 22% in Paphos.
Sales to non-EU citizens
Sales to non-EU citizens fell 19% compared to February 2019 with sales falling in all districts with the exception of Larnaca where the rose 32%.
Property sales in Famagusta fell 35%, while sales in Nicosia fell 31%. Meanwhile sales in Limassol and Paphos fell by 25% and 24% respectively.
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
Famagusta
2019
12
23
15
21
32
10
30
3
14
12
26
15
2020
34
15
Larnaca
2019
48
31
50
49
70
49
51
27
29
56
39
51
2020
50
41
Limassol
2019
69
79
75
116
189
55
82
45
39
54
60
47
2020
54
59
Paphos
2019
101
108
96
107
160
77
103
54
78
61
108
79
2020
73
82
Totals
2019
250
257
243
306
476
199
274
137
175
193
239
204
2020
221
208
In the first two months of 2020 sales to non-EU citizens have fallen 15% compared to the same period last year.
Although sales in Famagusta and Larnaca have risen by 40% and 15% respectively, they’ve fallen 42% in Nicosia, 26% in Paphos and 24% in Limassol.
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 (Feb)
662
819
44.7%
1,481
Totals
70,535
159,093
30.7%
229,628
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).
The report says that the registration of contracts for property sales considerably decelerated during the second half of 2019, 0.7% year-on-year, compared to 24.4% in the first half.
Adding that this possibly reflects the slowdown of applications for the investor citizenship scheme pointing to a modest expansion of the sector in the near term as there is only a slight upturn in domestic demand.
Foreign demand for housing
Foreign demand for high-end new residences has been the key driver of the housing market’s recovery in the aftermath of the crisis. From 2014 to 2017, sales of properties rose in double digits. In 2019 and 2018, sales of properties increased by 12.2% and 5.8%, respectively. Foreigners, predominately non-EU nationals, accounted for almost 50% of the total properties sold since 2014.
Sales were concentrated in the coastal areas and concern mainly luxury apartments and villas. In the first half of 2019, a spike of sales was observed reflecting the surge of applications to the investor citizenship scheme following the announcement in May 2019 of revisions to the scheme.
The compulsory purchase by a resident of a property worth at least €500,000 under the scheme coupled with the traditional foreign demand for second homes in a holiday destination are the main drivers of the housing market’s recovery after the crisis.
Residential property prices are picking up, but so far remain contained. Housing prices increased for a fourth year in a row, but remain below the pre-crisis levels.
The rise is greater for new residences, with foreign demand leading to substantial price differences among regions.
A possible slowdown in foreign demand and re-sale of properties acquired through the investor citizenship scheme after the compulsory holding period, as well as rising sales of collaterals by banks and by credit acquiring companies should also curb housing prices rises in the medium term.
Rental prices
Rental prices are increasing and the market is highly segmented. Rental prices increased by 3.4% in 2019. The rental market consists of two categories of properties and two sets of rules:
Properties that were built before 2000 are subject to a rental control law that cap rental increases. Initially, the law allowed for a rental increase of up to 14% every two years, but since the crisis, any increase in rent is prohibited.
For properties built from 2000 onwards, rental conditions are defined by the market.
The increasing housing cost, mainly in coastal areas stemming from the investor citizenship scheme has put pressure on the government to announce policies for affordable housing and to increase rent allowances for vulnerable groups of the population.
JUST 16 working days after the Supreme Court heard British man Conor O’Dwyer’s appeal against the 2012 ruling of the case filed by property development company Christoforos Karayiannas and Son Ltd in 2006, he was in Court this morning to hear from the judge that his appeal had been rejected.
Given the complexity of the case and the volume of evidence to be reviewed, which dates back over more than a decade, it was considered that it would take the judge much longer to arrive at a decision. The judicial system in Cyprus is notoriously slow.
During this morning’s brief court hearing the judge delivered the verdict and handed the 35-page judgement to Mr O’Dwyer’s lawyer; the full judgement was not read to those present in court.
Mr O’Dwyer will continue his fight for justice and plans to take his case to the European Court of Human Rights (ECHR).
I spoke with Mr O’Dwyer’s lawyer, Yiannos Georgiades, for his thoughts on the ruling of the Supreme Court. He said that he was very disappointed with the handling of the case; he believes there are grounds for proceeding with the ECHR for the infringements of Conor’s right to a fair trial and his right to freedom of speech. (These rights are guaranteed by Article 6 and Article 10 of the European Convention on Human Rights.)
The people who are clearly in the wrong have been rewarded for their wrong-doings. They were convicted of assault (twice) but haven’t gone to prison, despite selling his house unlawfully they’ve been allowed to keep Conor’s money. But the court failed to compensate Conor the full amount because they awarded the other side damages of €60,000 by penalising him for defamation because he dared to call the wrong-doers ‘liars’ and ‘crooks’ on his website.
It’s appalling. It’s as if they were rewarding the wrong-doers!
Mr Georgiades explained the ECHR has ruled that consumers should be free to express their opinion and complain about the way they’ve been treated by a company, even if they use strong and insulting words. The right to protect one’s reputation gives way to one’s right to free of speech as it’s in the public interest for an individual to freely express their opinion about the way they’ve been treated.
What message is this giving to people who come to our country to buy property or invest? If they’re unlucky enough to have a dispute, it will drag on for 14 years – and if they dare to complain about what’s happened to them, they will run the risk of being penalised and end up paying a fortune to the people who wronged them!
