Overseas property sales drop 15%

Nigel Howarth
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4
Overseas property sales drop 15%

THE FALL in sales of property to the overseas (non-Cypriot) reached 15% in November compared to November 2018.

Sales had been growing for several months until they peaked in May, immediately before Cyprus introduced stricter criteria for foreigners seeking to buy citizenship and passports under the governments ‘Citizenship by Investment’ scheme.

It is clear that a number of British as well as non-EU citizens have applied for citizenship. In an article ‘Exclusive: The Brits who won’t Brexit‘ published yesterday, Reuters named a number of UK Conservative donors who “quietly took steps to stay inside the European Union”. They include billionaire Alan Howard, one of Britain’s best-known hedge fund managers, and Jeremy Isaacs CBE, the former head of Lehman Brothers for Europe, the Middle East and Asia. Both ‘acquired’ Cypriot citizenship in 2018 according to government documents seen by Reuters.

We expect that many other Britons have applied for Cypriot citizenship to stay inside the European Union, but the government has consistently refused to release the names or nationalities of applicants although some have been leaked in the local press.

On November 7 in-cyprus reported that the Cyprus naturalisation scheme had reached its limit, with the number of applications apparently exceeding the annual limit of 700 for the remainder of 2019 and 2020; officials were considering suspending the scheme until 2021. But it was decided not to suspend the scheme at this stage. However, all new applications will be considered in 2021 unless a high number of pending applications are rejected.

In an unexpected development earlier this month, one of the three-members of the committee set up to review the individuals who obtained some 4,000 passports under the ‘Citizenship by Investment’ scheme resigned. Rea Georgiou, the Accountant General of the Republic, did not wish to comment on the reasons that led to her decision, but merely stated that ‘they are purely personal’.

Property sales

As we reported on 4th December, Cyprus saw a slight fall of 2% in the number of sales contracts deposited at Land Registry offices in November compared to November 2018.

Of the 907 contracts deposited, 543 (60%) were deposited by local (Cypriot) purchasers and the remaining 364 (40%) by foreign buyers of whom 125 were EU nationals and 239 non-EU nationals.

Domestic property sales

Sales to Cypriot purchasers rose 9% in November compared to November 2018. While sales in Larnaca and Famagusta fell by 16% and 7% respectively – and remained steady in Paphos, sales in Nicosia rose by 33% and in Limassol by 7%.

Between January and November 2019, sales to the domestic market have risen by 21% to reach 5,355 compared to 4,425 over the same period last year.

Domestic Property Sale Contracts – 2018/2019 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2018 126 84 104 93 135 123 155 84 97 126 141 108
2019 127 164 115 137 168 121 153 90 114 163 187
Famagusta 2018 -3 18 18 12 34 27 18 29 21 36 14 29
2019 32 19 16 58 45 25 2 13 16 33 13
Larnaca 2018 60 44 67 41 55 61 41 47 60 46 82 52
2019 54 82 47 73 83 42 90 53 67 81 69
Limassol 2018 107 152 199 162 169 207 194 174 175 176 196 201
2019 166 152 192 291 329 138 177 134 176 144 210
Paphos 2018 18 8 43 21 43 55 62 48 32 24 64 60
2019 30 31 28 69 175 69 54 54 34 66 64
Totals 2018 308 306 431 329 436 473 470 382 385 408 497 450
2019 409 448 398 628 800 395 476 344 407 487 543

(Note that some of these sales may have resulted from properties acquired by banks as part of loan restructuring agreements, debt for asset swaps, etc.)

Overseas property sales

As we headlined, sales to the overseas market dropped 15% in November compared to November 2018.

Although sales in Famagusta, Nicosia and Paphos rose 6%, 5% and 2% respectively, these rises were more than wiped out by falls of 42% in Limassol and 13% in Larnaca.

Between January and November, sales to the overseas market have risen by 3% to reach 4,121 compared to 4,017 over the same period last year.

Total Overseas Property Sale Contracts – 2018/2019 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2018 20 12 22 24 18 23 21 7 21 19 20 23
2019 34 30 16 32 45 24 21 13 23 20 21
Famagusta 2018 51 34 22 40 45 34 43 21 24 21 33 17
2019 21 29 29 38 42 18 47 17 24 17 35
Larnaca 2018 52 55 49 42 58 72 71 47 61 70 61 51
2019 60 43 71 67 90 60 67 40 35 79 53
Limassol 2018 118 104 115 84 113 131 120 88 76 113 148 89
2019 85 104 95 137 217 81 109 62 64 84 86
Paphos 2018 146 155 129 136 158 125 171 108 120 180 166 170
2019 157 180 157 155 229 136 176 112 139 126 169
Totals 2018 387 360 337 326 392 385 426 271 302 403 428 350
2019 357 386 368 429 623 319 420 244 285 326 364

Overseas sales (EU nationals)

Sales to EU Nationals fell 13% in November compared to November last year.

Although sales in Nicosia and Larnaca rose 114% and 27% respectively, there were falls of 32% in Limassol, 31% in Famagusta and 18% in Paphos.

Between January and November, sales to EU nationals have risen by 6% to reach 1,372 compared to 1,293 over the same period last year.

Foreign (EU) Property Sale Contracts – 2018/2019 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2018 10 8 8 10 9 8 11 5 10 8 7 15
2019 14 14 9 19 20 16 13 5 8 10 15
Famagusta 2018 15 24 8 12 19 16 20 9 0 7 13 6
2019 9 6 14 17 10 8 17 14 10 5 9
Larnaca 2018 9 9 9 6 9 20 15 11 15 13 11 19
2019 12 12 21 18 20 11 16 13 6 23 14
Limassol 2018 15 17 32 17 19 22 25 24 11 27 38 20
2019 16 25 20 21 28 26 27 17 25 30 26
Paphos 2018 41 58 55 49 70 60 79 55 49 91 74 73
2019 56 72 61 48 69 59 73 58 61 95 61
Totals 2018 90 116 113 94 126 126 150 104 85 146 143 135
2019 107 129 125 123 147 120 146 107 110 133 125

Overseas sales (non-EU nationals)

Property sales to non-EU nationals fell by 16% in November compared to November 2018.

Although there were rises of 30% in Famagusta and 17% in Paphos, there were falls of 54% in Nicosia, 45% in Limassol and 22% in Larnaca.

During the first 11 months of 2019, sales to non-EU nationals have risen by 1% to reach 2,749 compared to 2,724 over the same period last year.

Foreign (Non-EU) Property Sale Contracts – 2018/2019 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2018 10 4 13 14 9 15 10 2 11 11 13 8
2019 20 17 7 13 25 8 8 8 15 10 6
Famagusta 2018 36 10 14 28 26 18 23 12 24 14 20 9
2019 12 23 15 21 32 10 30 3 14 12 26
Larnaca 2018 43 46 40 36 49 52 56 36 46 57 50 32
2019 48 31 50 49 70 49 51 27 29 56 39
Limassol 2018 103 87 83 67 94 109 95 64 65 87 110 69
2019 69 79 75 116 189 55 82 45 39 54 60
Paphos 2018 105 97 74 87 88 65 92 53 71 89 92 97
2019 101 108 96 107 160 77 103 54 78 61 108
Totals 2018 297 244 224 232 266 259 276 167 217 257 285 215
2019 250 257 243 306 476 199 274 137 175 193 239

Analysis of property sales 2000-2019

Cyprus Property Sale Contracts 2000 – 2019

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 (Nov)
 4,121 5,335 43.6% 9,456
Totals
 69,512 157,725 30.6% 227,237

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).

Top ten Cyprus property stories in 2019

Nigel Howarth
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Top ten Cyprus property stories in 2019

CYPRUS Property News has attracted more than 750,000 visitors over the past year and as we approach the festive season. I expect this number would have been greater had it not been for the dDDOS attack we suffered in June.

Here are the top ten stories that have attracted the most interest from you, our readers, over the past 12 months:

Number 1: EC asks Cyprus to comply fully with EU law – In July, the European Commission decided to send an additional letter of formal notice to Cyprus because their national rules do not comply with EU law on unfair commercial practices (Directive 2005/29/EC) and unfair contract terms (Unfair Contract Terms Directive, Council Directive 93/13/EEC).

The Commission opened this infringement case in 2013 based on a series of complaints from EU citizens who bought real estate in Cyprus. Real estate developers, banks and lawyers had allegedly omitted to inform buyers about pre-existing mortgages when selling immovable properties.

As far as we are aware, Cyprus has yet to enact legislation to comply with EU law. It is absolutely essential that anyone considering buying property in Cyprus requests the Land Registry to carry out a Title Search, which will highlight mortgages and other debts attached to the property. And to be safe, if you must have a property in Cyprus, only buy one that has ‘clean’ Title Deed.

Number 2: Alpha Bank loses Swiss Franc loan court action – What at first appeared to be a positive news story that the Alpha Bank lost a case against a British national, turned sour.

The bank accused the defendant of failing to comply with the obligations of his Swiss Franc loan agreement. But following various legal arguments and rulings in related cases (one of which was a judgement of the European Court of Justice), the judge at the Larnaca court rejected the bank’s claim and awarded costs to the defendant.

Although he won the case and was awarded costs, the defendant remains more than €180,000 Euros out of pocket. A dozen visits to Cyprus for court hearings that never took place resulted in loss of earnings plus travel and accommodation costs. The deposit he paid the developer has not been refunded; neither has the money he paid to the Alpha Bank nor the money he paid his lawyer.

The closing words of his email to me were “Where is the justice in this country? Who can you trust?”

Number 3: Paphos marina may have cruise ship facilities – The long running and every popular Paphos marina pantomime took another turn in the year when the cabinet gave the go-ahead for a new study to  look into building cruise ship facilities as part of the marina.

Stalled by legal battles and bureaucracy for decades, some believe that by the time construction of the Paphos marina gets the go ahead, rising sea levels caused by climate change will force it into the pages of history.

Number 4: New criteria for passport scheme – Details of the more stringent conditions for individuals applying for citizenship and passports under the Government’s Citizenship by Investment scheme emerged following bad press and criticism from the European Commission and accusations of money laundering.

But this was like closing the stable door after the horse had bolted. In November, the Greek-language newspaper Politis revealed that fugitive Malaysian businessmen Low Taek Jho had obtained citizenship. A few days later Politis revealed the names of a further 25 investors who had bought citizenship and passports.

The government, allegedly, is in the process of revoking the citizenship of the 26 and the European Commission has asked Cyprus whether it will investigate “possible misconduct” in the matter.

(In a related story published today, Reuters has seen Cyprus Government documents showing that a number of Conservative Party donors have sought Cypriot citizenship since UK voted to leave the EU in 2016.)

Number 5: Cyprus banks awash with properties – News that the Cyprus Banks have acquired more than 14,000 properties comprising commercial, residential, tourist, small apartments, small shops, farmland and building plots from businesses and households through foreclosures and debt-to-asset swaps.

This number represents around 40% of the total number of properties sold in the past five years, based on the number of contracts deposited at Land Registry offices, which inflates the sales statistics published by the Department of Lands & Surveys, making it impossible to assess the true state of the property market.

Number 6: Alarm bells over house prices – The Central Bank of Cyprus sounded alarm bells over rising house prices, particularly in Limassol, due to the Invest Citizenship scheme and has highlighted the need for vigilance.

It said that prices of flats in Limassol recorded significant increases which are manifestly higher than other areas in Cyprus, while prices of apartments have accelerated faster than house prices – evident by the number of luxury towers going up along the coast.

The CBC noted that residential house prices in Famagusta and Paphos – where foreign demand has an effect – recorded significant increases compared with Nicosia, where price increases were subdued.

Number 7: Swimming pool laws set to hit tourism revenues – Another report concerning the problems caused by the laws and regulations dating back to 1992 that define swimming pools in building complexes as public pools, despite the fact they are in private ownership.

More vigilant inspections by the authorities identified a number of pools that were not licensed and which were closed by their complex Management Committees to avoid legal action.

Number 8: Affordable housing scheme starts next month – Seeking to assist vulnerable groups and gradually resolve the structural problems in the housing market, the government introduced an affordable housing scheme.

Cypriot and EU nationals living in Cyprus for more than 5 years may apply, but there are conditions.

Gross household income should not exceed €22,000 for a single person, €40,000 for a couple, €44,000 for a couple with one child, €48,000 for two children, €58,000 for three children, €68,000 for four, €70,000 for five, and €76,000 for six children.

The owners cannot sell the unit before 10 years had elapsed from the day it was acquired and it must be used for at least 10 years for permanent residency. Eligible individuals can only benefit from the housing scheme once.

Number 9: How will property values change in 2019? – The property portal Zyprus issued its forecast on how property prices would change over the year:

  • Limassol – apartments +6.63%, houses +2.77%.
  • Paphos – apartments +7.49%, houses +1.90%.
  • Larnaca – apartments +3.57%, houses +4.73%.
  • Famagusta – apartments +2.57%, houses +4.99%.
  • Nicosia – apartments +1.96%, houses +1.81%.

We’ll be able to gauge the accuracy of these predictions were when property price indexes are published in the new year.

Number 10: Cyprus property boom is not a bubble – The Finance Ministry insisted that the Cyprus property boom was not a bubble and considered such an eventuality as remote. But it acknowledged that a potential massive sell-off of properties acquired by commercial banks through debt-to-asset swaps, as well as large investment firms acquiring non-performing loans portfolios, could push prices down.

It also noted that the ongoing property market recovery, as well as the rise in construction activity, are factors helping to boost the banks’ balance sheets. Because they are increasing the total value of mortgage assets and improve the prospect of repayment of the construction sector’s ever high non-performing loans.

We’ll see if the Finance Ministry is correct over the next 12 to 18 months.

Music video of the year

When I’m not busy answering your questions and editing Cyprus Property News, I occasionally relax by watching YouTube music videos. This year I came across an American acapella group ‘Pentatonix’ and their reworking of the Simon & Garfunkel classic “The Sound of Silence”, which was written by Paul Simon in the aftermath of the 1963 assassination of John F. Kennedy. Turn up the volume and enjoy!

[youtube= https://www.youtube.com/watch?v=gdVjVtpr55M&w=470&rel=0]

 

May I take this opportunity to wish you a Merry Christmas and a Happy and Healthy 2020.

First auction of foreclosed properties

George Psyllides
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First auction of foreclosed properties

THE FIRST online auction of foreclosed real estate will take place on Wednesday morning with 16 properties, it was announced on Tuesday.

The first so called e-auction will include 14 plots belonging to Gordian Holdings Ltd. It will kick-off at 10am and will last two hours unless a one-hour extension is granted.

After that, if there are any bidders with a privileged status – the borrower or a first-degree relative – a second phase lasting 15 minutes will be launched involving the privileged bidders only.

The borrower is granted a privileged status in some cases and can buy back the property by matching the highest bid, as is the case in normal auctions.

Individuals and companies from anywhere in the world can register as bidders and take part in the auction without being physically present.

Chairman of the association for the protection of primary residence Stavros Papadouris said the e-auction was just another tool in the hands of the banks and investment funds but it did not take away any rights from the borrower apart from not being able to understand how the auction platform worked.

In contrast, interested buyers have the know-how and the way to start the process easily, he added.

Papadouris said the preferential status granted to the borrower in a normal auction related to their right or that of a first-degree relative to be present and buy the property at the value of the last bid.

Because there is no need of physical presence at an e-auction, a borrower must learn how to use the platform and five days before they must register and declare their legitimate interest to be able to exercise their right 15 minutes after the main auction ends, Papadouris said.

Asked why, if they have the money, borrowers don’t just go to the bank and offer to repay the loan, Papadouris said it was up to the lender to accept or try and get more money through an auction.

Cyprus: Surge in new home construction

Nigel Howarth
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Cyprus: Surge in new home construction

THE TOTAL number of building permits authorised in Cyprus during September 2019 stood at 622 compared with the 588 authorised during September 2018; an increase of 5.8% according to official figures published by the Cyprus Statistical Service.

The total value of these permits rose by 270.0% to €592.7 million, while their total area rose by 127.2% to reach 352.6 thousand square metres compared to September 2018.

These permits provided for the construction of 1,114 new homes, an increase of 93.4% compared to the 578 new homes in September 2018.

During September 2019, building permits were authorised for:

  • Residential buildings – 431 permits
  • Community residences – 1 permit
  • Non-residential buildings – 116 permits
  • Civil engineering projects – 22 permits
  • Division of plots of land – 41 permits
  • Road construction – 11 permits

Building permits for new homes

The 431 residential building permits authorised in September 2019 provided for the construction of 1,114 new homes (dwellings). These comprised 220 single houses, a fall of 8.7% compared to the 241 authorised in September 2018 – and 894 multiple housing units including apartments, semis, townhouses and other residential complexes; a surge of 166.9% compared to the 335 authorised in September 2018).

Building Permits Issued for the Construction of New Homes
(Number of Dwellings)

Month 2018 (Dwellings) 2019 (Dwellings) Increase/Decrease %age Change
January 476 548 72 15.1%
February
 431
 576 145 33.6%
March
 467
 615 148 31.7%
April
 418
 742
 324
 77.5%
May
 541
 907
 366
 67.7%
June
 506
 812
 306
 60.5%
July
 632
 1,028
 306
 62.7%
August
 453
 525
 72
 15.9%
September
 576
 1,114
 538
 93.4%
Totals 4,500 6,867 2,277 52.6%

Of those 1,114 new homes, 680 are destined for Limassol, 270 for Nicosia, 84 for Paphos, 72 for Larnaca and 8 for Famagusta.

Annual construction figures

A total of 5,201 building permits were authorised during the period January – September 2019, compared to 4,702 in the same period last year.  Their total value increased by 77.1% and their total area by 48.6%. The number of new homes authorised rose by 52.6%.

The 3,748 residential permits issued this year provided for the construction of 2,796 new homes in Limassol, 2,070 in Nicosia, 900 in Larnaca, 851 in Paphos and 250 in Famagusta.

According to the Cyprus Statistical Service, building permits constitute a leading indicator of future activity in the construction sector.

November saw slight fall in property sales

Nigel Howarth
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0
November saw slight fall in property sales

THE NUMBER of Cyprus property sales in November fell by 2% with the total number of contracts deposited falling to 907 compared with the 925 deposited in November 2018 according to the latest official figures published by the Department of Lands and Surveys.

As the Department has yet to publish a breakdown of sales by market segment, we cannot say whether the fall is due to reduction in sales to the local market or the overseas market (or both).

Property sales – November 2019

Although the number of sales in Nicosia, Famagusta and Paphos rose by 29%, 2% and 1% respectively, these gains were more than wiped out falls of 15% in Larnaca and 14% in Limassol.

Total Property Sale Contracts – 2018/2019 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2018 146 96 126 117 153 146 176 91 118 145 161 131
2019 161 194 131 169 213 145 174 103 137 183 208
Famagusta 2018 48 52 40 52 79 61 61 50 45 57 47 48
2019 53 48 45 96 87 43 49 30 40 50 48
Larnaca 2018 112 99 116 83 113 133 112 94 121 116 143 103
2019 114 125 118 140 173 102 157 93 102 160 122
Limassol 2018 225 256 314 246 282 338 314 262 251 289 344 290
2019 251 256 287 428 546 219 286 196 240 228 296
Paphos 2018 164 163 172 157 201 180 233 156 152 204 230 230
2019 187 211 185 224 404 205 230 166 173 192 233
Totals 2018 695 666 768 655 828 858 896 653 687 811 925 800
2019 766 834 766 1057 1423 714 896 588 662 813 907

Year to date sales

Despite the small fall in November, the total number of sales during the first eleven months of this year has risen 12% compared to the first eleven months of 2018.

In percentage terms, Nicosia leads the way with sales up 23%, followed by Paphos where sales have risen by 20%. Larnaca and Limassol sales are up 13% and 4% respectively. But, sales in Famagusta have fallen by 1%.

In terms of the total number of sales, Limassol leads the way with 3323 followed by Paphos with 2410. Sales in Nicosia (the capital) have reached 1818, Larnaca 1242 and Famagusta 589.

EC wants answers to risky citizenships

Nigel Howarth
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EC wants answers to risky citizenships

EC wants answers to risky citizenshipIN A LETTER seen by Reuters, the European Commission’s director-general for justice Tiina Astola sent a letter to Cyprus on Friday seeking clarification of a government decision in November to revoke the Cypriot citizenship of 26 individuals who were granted it under the country’s investor scheme.

Reuters said that a Cyprus government spokesman was not immediately available for comment.

In the letter, Astola asked Nicosia whether it would investigate “possible misconduct” in these cases and how it intended to prevent people with high-risk profiles from getting passports in the future. Astola’s letter asked for a response by 6th January.

Last month the government announced it was starting the process of revoking the Cypriot citizenship of 26 individuals; nine Russians, eight Cambodians, five Chinese, two Kenyans, one Iranian and one Malaysian.

Twenty five of the 26 investors have been named.

Investigative journalists from the Greek language newspaper broke the news that Malaysian businessman Low Taek Jho, described as ‘Malaysia’s most-wanted man’ was granted Cypriot citizenship and obtained a Cypriot passport through a well-known citizenship and passport broker in 2015.

Low Taek Jho is sought by the authorities of Malaysia, Singapore, and the US; Interpol issued a Red Notice (a request to law enforcement worldwide to locate and provisionally arrest a person pending extradition, surrender, or similar legal action) in 2016.

On 27th November Politis revealed the names of 25 of the 26 investors  whose citizenships the government was revoking.

In March last year, anti-corruption watchdog Transparency International said that schemes rewarding investors with residence permit and citizenship are vulnerable to abuse, undermine the fight against corruption in Europe and increase the risk of money laundering.

In March this year, the European Parliament urged EU member states to curb money-laundering in the bloc by ending programmes by several countries, including Cyprus, to sell visas and passports, a step the multi-billion-dollar industry said would cause economic damage.

The recommendation was part of a hard-hitting report released in April, which accused seven EU countries of acting as tax havens: Cyprus, Luxembourg, Ireland, Malta, Hungary, Belgium and the Netherlands.

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