PWC’S CYPRUS Real Estate Market for the first half of 2019 reports that the value of property transactions (sale contracts and transfers) over the period rose by 25% to reach €2.5 billion compared to the same period last year.
The number of properties transacted over the period also rose to reach 7,900.
PwC reports that the significant growth “appears to have been fuelled by a surging flow of foreign capital in the residential property” and that the clear slowdown in growth during Q3 2019 “should be monitored.”
Limassol had the lions share of transactions; 44% of the transaction value and 33% of the number of properties sold.
Paphos, which is predominantly driven by overseas buyers, came in second with 25% of the transaction value and 22% of the properties sold.
Nicosia had 15% of the transaction value and 21% of the properties sold.
Larnaca had 10% of the transaction value and 18% of the properties sold.
Famagusta had 6% of the transaction value and 6% of the properties sold.
April had the strongest month with the value of transactions reaching approximately €600 million; a quarter of the total.
Transactions by property type:
Apartments – 3,600 sold value €1.1 billion.
Houses – 1,900 sold value €0.9 billion.
Land – 2,000 sold value €0.4 billion.
Commercial – 300 sold value €0.1 billion.
Other – 100 sold value €0.05 billion.
Sales to overseas buyers
The first half of 2019 saw the number of properties acquired by overseas buyers reaching 2,482. Approximately 70% of those buyers were nationals of non-EU countries.
In terms of value, non-EU buyers accounted for approximately 45% of total transactions during the first half of 2019.
AN AMBITIOUS plan publicized by the Cyprus Ministry of Finance as the perfect cure for the non-performing loans malaise of the banks is probably falling flat on its face, inside sources quoted by local financial news outlet Stockwatch said last week.
The ministry had said that “Estia” (Home) plan could help up to 10,000 owners of non-performing loans to repay their dues to the banks by subsiding their monthly instalment, and at the same time could unburden the banks of 3.5 billion euros (about 3.86 billion U.S. dollars) worth of bad loans.
Applicants to the scheme would safeguard their mortgaged primary resident against bank foreclosure.
However, with the normal time limit for applications to be submitted ending on Friday, Nov. 15, only about 200 loan owners had applied for relief and the government has extended application time to the end of the year.
Lawmakers who examined the trickle of applications said it was probably due to the complexity of the application process.
Applicants must fill 30 pages with family income and property details and at the same time append 40 to 50 different types of documentation, which requires a great deal of time and effort.
However, ministry sources said the reason for the low number of applications is most probably the fact that applicants are not eligible as their income and property value is over the criteria set for eligibility.
The applicants, the sources said, are wary of disclosing information about other assets or income, which might lead to capital or tax audits.
The program applies only to loans secured by a mortgage which were deemed non-performing as of Sept. 30, 2017. Loans designated as non-performing after that date are not eligible.
Estia applies to the first mortgage on a residence and covers loans or credit facilities regardless of currency.
Loans of eligible applicants will be written down to the market value of the primary residence and then the borrower will have to pay two-thirds of the monthly instalment of the rescheduled loan every month.
The state will subsidize the instalment by one-third, with the state making a direct payment to the banks once a year until the loan is completely paid off.
CYPRUS is adamant on following a roadmap to reform a sluggish justice system that is befitting of an EU member state while also trying to restore confidence among quality investors turned-off by the legal labyrinth.
Justice Minister George Savvides said the government has taken its decisions and is going ahead with sweeping changes no matter what the cost.
In comments to ANT1 TV, Savvides said the revamp will do away with lengthy delays in the justice system which is costing the country dearly as cases languish in the courts for years.
He said the justice system is in a for a total overhaul as the government plans to introduce specialised courts while creating a second Supreme Court to help speed up the resolution of cases before the body.
“We will split the supreme court into two, creating, essentially, two supreme courts. One will be the Supreme court and the constitutional court,” said Savvides.
“These courts will not be second instance as they are today, they will be third instance courts, while we will create a new second instance court to deal with appeals consisting of 16 new judges to be appointed and who will preside over all appeals of decisions issued by first instance courts,” he added.
The government has already approved the hiring of 32 district judges to handle the backlog of cases, as well as the creation of new courts in all towns.
Among the new courts to be created are specialised courts such a commercial and shipping court to speed up the island’s notoriously slow justice system, especially for business disputes.
The commercial court to preside over business disputes in which claims exceeded the amount of €2 million is expected to speed up the resolution of such cases.
Savvides said the shipping court is expected to effectively establish fast-track procedures for specific cases while facilitating efforts by the Deputy Ministry of Shipping to promote Cyprus as a shipping service centre.
“There are plans to create a state-of-the-art courthouse to host the Nicosia District Court which is expected to be built by 2024 costing the state some €70 million.”
In the meantime, the state will commission the premises of the former Filoxenia Hotel to temporarily set up the appeal court and the commercial and shipping courts.
Savvides said the government will proceed with the reforms no matter how high the cost, as there is an urgent need for swift democratic procedures in Cyprus.
not fit for purpose
Former MP and head of Frederick University’s Law Department Christos Clerides argued reforms in the justice system should be carried out the soonest possible.
He believes the current justice system is not fit for its purpose, noting that adjudication is delayed to such an extent that there is a fundamental breach of justice.
“Delivering justice with a serious delay is like not delivering justice at all,” Clerides told the Financial Mirror.
Ten years for justice served
According to the European Commission’s “2019 EU Justice Scoreboard,” the time needed to resolve civil, commercial and other cases in Cyprus has skyrocketed from just under 600 days in 2010 – to almost 1200 days in 2017.
“In fact, we are at the top of the list in Europe in terms of delays. From my experience, a case could take 4-5 years, plus another 6 years in case of an appeal. That is, a total of about 10 years,” said Clerides.
poor quality rulings
What is more alarming, said the law professor, is the quality of judicial rulings delivered over the past years is not of the standard one would expect.
“This also has to do with a large number of backlogged cases, the delays, the pressure judges are under means they do not study cases thoroughly.” Clerides argued it is also a matter of the quality of those appointed, noting that Cyprus lacks a system of selecting the best candidates for the job.
“Recently we have seen publications referring to cases in which the presiding judges had a conflict of interest, undermining public confidence in the institution of justice.”
huge backlog
Clerides said the reforms it will go a long way in clearing the backlog. It is estimated that there are currently 4,000 delayed appeals pending before the Supreme Court.
The Supreme Court, operating since 1964 as a single appellate court, will be replaced by a third instance five-member constitutional court and a five-member supreme court.
But at the heart of the judicial system and will be a new 16-member Court of Appeals where all cases of appeal will go.
Clerides said it will take a few years before the reforms start paying off, with some problems regarding specialisation remaining unresolved.
He said the lack of judges with specialised knowledge will be an obstacle to improving the quality of justice and the speed with which it is delivered.
Reforms have taken so long to be implemented due to the Supreme Court and the Justice Ministry not taking action earlier, said Clerides.
President of the Fiscal Council Demetris Georgiades said that the state needs to proceed with adopting measures to reform the justice system making it more trustworthy to outsiders, especially investors.
lack of transparency
He argued that the lack of transparency coupled with a cumbersome justice system is putting off quality investors from eyeing Cyprus as an investment destination.
“An investor could spend years lost in the labyrinth of the state bureaucracy, as they have to issue an unnecessarily large number of permits, which in many cases overlap,” said Georgiades.
But the biggest turn-off for investors is the lack of transparency and the delays in the justice system.
“The be-all for setting up a business-friendly environment is a country’s justice system,” said Georgiades.
Although Cyprus is considered to be an attractive investment destination, “when the call for tenders was made for the casino, we had only one bidder”.
He said investors want to feel safe, knowing that deals and contracts signed with local counterparts will be kept, but what they see is a slow justice system which takes years to deliver a verdict on disputes.
THE CABINET has given the go ahead for a new study that will look into building cruise ship facilities as part of the proposed Paphos marina at Kissonerga Potima Bay.
Following the meeting, Deputy Tourism Minister Savvas Perdios said the official announcement for the tender to prepare the study would be made in the next two to three weeks.
The first part of the study will focus on whether the development of the marina should be combined with cruise ship facilities or whether only the marina should be constructed.
After this is completed, the results will be presented to the cabinet, Perdios said.
The second part will be about defining the terms of reference for the construction of the project.
The government has over many years invited and rejected tenders for the construction of the project.
Paphos marina: background
Since an initial study was carried out more than 30 years ago, the Paphos marina project has been stalled by bureaucracy and legal battles.
Eventually, in May 2016, the marina contract was awarded to the Poseidon consortium following a legal battle. Although the consortium secured a letter from the Bank of Cyprus in which the bank guaranteed to fund the entire project, Poseidon was unable to demonstrate that it had €122 million or 60 per cent of the total project cost of €215 million.
In 2017 Pafilia Developers, which was next on the list of tenders, was invited to tender for the marina’s construction and operation.
THE TOTAL number of building permits authorised in Cyprus during August 2019 stood at 443 compared with the 415 authorised during August 2018; an increase of 6.7% according to official figures published by the Cyprus Statistical Service.
The total value of these permits fell by 55.0% to €157.3 million, while their total area rose by 5.0% to reach 155.5 thousand square metres compared to August 2018.
These permits provided for the construction of 525 new homes, an increase of just 15.9% compared to the 453 new homes in August 2018.
During August 2019, building permits were authorised for:
Residential buildings – 319 permits
Community residences – 1 permit
Non-residential buildings – 68 permits
Civil engineering projects – 24 permits
Division of plots of land – 16 permits
Road construction – 15 permits
Building permits for new homes
The 319 residential building permits authorised in August 2019 provided for the construction of 525 new homes (dwellings). These comprised 246 single houses (compared with 226 in August 2018) and 73 multiple housing units including apartments, semis, townhouses and other residential complexes (compared with 59 in August 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%
Totals
3,924
5,753
1,739
46.6%
Of those 525 new homes, 183 are destined for Limassol, 165 for Nicosia, 110 for Paphos, 64 for Larnaca and just 3 for Famagusta.
Annual construction figures
During the period January – August 2019, a total of 5,579 building permits were authorised compared to 4,114 in the same period last year. Their total value increased by 54.9% and their total area by 37.5%. The number of new homes authorised rose by 46.6%.
The 3,316 residential permits issued this year provided for the construction of 2,116 new homes in Limassol, 1,800 in Nicosia, 828 in Larnaca, 767 in Paphos and 242 in Famagusta.
According to the Cyprus Statistical Service, building permits constitute a leading indicator of future activity in the construction sector.
FIGURES released by the Department of Lands & Surveys reveal that while property sales to the local market in October rose by 19% compared to October 2018, sales to the overseas market fell by 19%.
Of the 813 contracts for the sale of property deposited at Land Registry offices, 487 (60%) were deposited by domestic (Cypriot) purchasers and the remaining 327 (40%) by foreign buyers of whom 133 were EU nationals and 193 non-EU nationals.
Domestic property sales
Sales to Cypriot purchasers rose 19% in October compared to the same month last year. With the exception of Limassol and Famagusta, where sales fell 18% and 8% respectively, they rose in the remaining three districts. Sales in Paphos rose 175%, while the number of sales in Larnaca and Nicosia rose by 76% and 29% respectively.
During the first ten months of 2019, local sales have risen 22% compared to 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
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
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
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
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
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
(Note that an unrecorded number of these local sales may have resulted from properties acquired by banks as part of loan restructuring agreements, etc.)
Overseas property sales
Total property sales to the overseas (non-Cypriot) market during October fell 19% compared to October 2018.
Although sales in Larnaca and Nicosia rose by 13% and 5% respectively, they fell in the remaining three districts.
Sales in Paphos fell by 30%, sales in Limassol fell by 26%, while sales in Famagusta fell by 19%.
During the first ten months of 2019, overseas sales have risen 5% compared to 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
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
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
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
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
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
Overseas sales (EU nationals)
Property sales to EU nationals fell 9% in October compared to October 2018. Although sales in Larnaca, Nicosia and Limassol rose by 77%, 25% and 11% respectively, they fell in both Paphos and Famagusta by 29%.
During the first ten months of 2019, sales to EU nationals have risen 8% compared to the same period last year.
Foreign (EU) Property Sale Contracts – 2018/2019 Comparison
Sales fell in all districts. Limassol was hardest hit with sales falling 30%, followed by Paphos, where they fell 31%, while sales in Famagusta, Nicosia and Larnaca fell 14%, 9% and 2% respectively.
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
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
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
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
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
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
Analysis of property sales since 2000
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 (Oct)
3,757
4,792
43.9%
8,549
Totals
69,148
157,182
30.6%
226,330
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).