Skyscrapers are not mushrooming says minister

Cyprus skyscrapers are not mushrooming says minister
Midtown Manhattan Skyscrapers

INTERIOR Minister Constantinos Petrides pledged on Thursday that Cyprus would not be turned into Manhattan during House discussions on his ministry’s budget when the topic turned to skyscrapers, and migration.

The budget for 2020 provides for expenditures of €569m. Petrides spoke of the cost of asylum seekers to the state, reiterating some comments he made on Tuesday, and stressed that “throwing money at the problem” would not solve it.

On the construction sector, he defended it against criticism that it was overheating the economy, driving up rents, as a result of the controversial citizenship-by-investment scheme.

The conversation turned to the high-rises cropping up across the island, particularly in Limassol and Nicosia.

To date, Petrides said, only 20 buildings of more than 20 storeys have been issued permits.

“Skyscrapers are not mushrooming…Cyprus won’t turn into a Manhattan,” he remarked.

Nor are fears of rising residential density warranted. In areas where the building coefficient is normally set at 60 to 70 per cent, the coefficient is reduced to 30 per cent when it comes to high-rises.

In addition, criteria are in place to ensure that green spaces and public-use spaces are created around skyscrapers.

Chiming in, town planning director Kyriacos Koundouros said authorities are meantime taking steps to keep to a minimum environmental pollution from skyscrapers, which often straddle the seafront and could affect marine life.

He said environmental studies were completed last month concerning the seafronts in Limassol, Larnaca and Paphos. The documents were handed over to the Department of the Environment and will be used as guidelines to assess environmental impacts on a case-by-case basis.

Koundouros also rejected claims that the citizenship-by-investment programme might lead to fiscal derailment.

Public finances are burdened whenever expenditures occur, he explained. But in the case of the citizenship-by-investment scheme, there are no state expenditures; to the contrary, revenues are being generated.

One beneficiary is the Land Development Corporation.

Back in February, and following criticism from overseas, the government introduced a series of changes to the citizenship-by-investment scheme, in a stated bid to make it more credible.

The tweaks included a €75,000 contribution from the proceeds to research and development and an equal amount to the Land Development Corporation (KOAG) to fund affordable housing schemes.

The funds are diverted to KOAG once an application for Cypriot citizenship is approved.

Migration

Reiterating his stance on migration during that part of the discussion, Petrides said the influx of asylum seekers and migrants into Cyprus will continue unabated in coming years, requiring ever more welfare spending, but throwing money at the problem alone won’t solve it.

“When it comes to migrant flows, solidarity [from the EU] should go beyond funds,” the minister told MPs.

The comments came after another 28 migrants entered Cyprus on Thursday.

“Neither the housing market, nor the labour market, nor society can cope with these increased inflows,” Petrides said. “There is a need to amend the Dublin Regulation so that, at the very least, the management of migrants may be distributed across the European Union, rather than being restricted to first-line countries like Cyprus, Greece or Malta.”

Petrides has asked for the resettlement of some 5,000 migrants to the European continent.

Cyprus has taken in 15,000 asylum seekers, of whom 10,000 have been granted refugee status.

The minister pointed out that in 11 EU countries, migrants account for less than 0.1 per cent of the local populations; but in Cyprus migrants comprise 3 per cent, perhaps as many as 3.5 per cent.

“In the past, when Cyprus was not subject to migrant flows, we had agreed to a distribution from Italy of some asylum seekers from Africa.

“Cyprus is now the only first-line country where no such redistribution has occurred. We are not asking, we are demanding that the EU show its solidarity to us.”

Eviction of non-paying tenants to be made easier

Cyprus: Eviction of non-paying tenants to be made easierPARLIAMENT is set to pass an amendment to the rent control law next month that would make it easier for landlords to evict tenants who fall into arrears or deliberately don’t pay.

Landlords will no longer be obliged to provide evidence that tenants are inconsistent towards their rent obligations, which made eviction of occupants, a near-impossible task and encouraged people not to pay up.

The amendment, which essentially shifts the burden of proof on to the tenant, will be put to the vote on 22 November with a majority in agreement with the new law.

MPs appeared to back a draft tabled by a group of ruling DISY MPs “aimed at tackling problems created by problem tenants”.

Speaking on behalf of the group, DISY MP Nicos Nouris said they finished a discussion of the proposal that provides that any tenant who failed to pay their rent could be served a written warning. The tenant will then have 21 days to meet their obligations.

If they fail to do so, the owner can launch the eviction process by filing an application with the court registrar.

As of that moment, the tenant will have 14 days to present the payment receipts or face eviction within three months of their failure to do so if the case concerns a commercial property.

In the case of a residence, the process is expected to take up to six months.

Nouris said the amendment expedites the process before the courts and shifts the burden of proof on the tenants who would have to present the invoices before the court registrar.

He said the excuse that a tenant was withholding the rent because the landlord had not carried out necessary repairs will not constitute a defence.

Nouris added the law foresees for other procedures the tenant could follow in such cases, but they could not “hold landlords hostage”.

Main opposition party AKEL MP Aristos Damianou admitted that the current state of affairs was problematic, and the amendment would constitute an improvement to the law, however, the proposal could also prove to have issues.

He said putting the power into the hands of the court registrar restricted the tenants’ right to a proper defence and took away the court’s authority.

DIKO MP Christiana Erotokritou said the current state of affairs allows people to live on someone else’s property without paying their dues.

It will also compel tenants to ask for receipts, thus contributing to the fight against tax evasion. Erotokritou welcomed the fact that the new law will foresee eviction notices being delivered electronically.

New homes building permits on the rise

New homes building permits on the riseTHE TOTAL number of building permits authorised in Cyprus during July 2019 stood at 743 compared with the 589 authorised during July 2018; an increase of 26.1% according to official figures published by the Cyprus Statistical Service.

The total value of these permits rose 16.6% to reach €208.7 million and their total area by 9.1% to reach 236.8 thousand square metres compared to July 2018.

These permits provided for the construction of 1,028 new homes, an increase of 62.7% compared to the 632 new homes in July 2018.

During July 2019, building permits were authorised for:

  • Residential buildings – 517 permits
  • Community residences – 2 permits
  • Non-residential buildings – 119 permits
  • Community residences – 2 permits
  • Civil engineering projects – 29 permits
  • Division of plots of land – 53 permits
  • Road construction – 23 permits

Building permits for new homes

The 517 residential building permits authorised in July 2019 provided for the construction of 1,028 new homes (dwellings). These comprised 328 single houses (compared with 365 in July 2018) and 700 multiple housing units including apartments, semis, townhouses and other residential complexes (compared with 267 in July 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%
Totals 3,471 5,228 1,667 50.6%

Of those 1,028 new homes, 454 are destined for Limassol, 274 for Nicosia, 112 for Larnaca, 108 for Paphos and 80 for Famagusta.

Annual construction figures

During the period January – July 2019, a total of 4,136 building permits were authorised compared to 3,699 in the same period last year.  Their total value increased by 91.8% and their total area by 42.5%. The number of new homes authorised rose by 50.6%.

The 2,996 residential permits issued this year provided for the construction of 1,993 new homes in Limassol, 1,635 in Nicosia, 764 in Larnaca, 657 in Paphos and 239 in Famagusta.

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

Income tax statements mandatory for all

EVERY Cyprus resident with an income of any size is soon to be obliged by law to submit an annual income tax statement, said Finance Minister Harris Georgiades.

Speaking to reporters, the Minister said that a bill has been approved by the cabinet which foresees that everyone is obliged to submit an income tax statement to enhance the state’s capacity to “exercise effective tax control”.

The amendment means every citizen is legally obliged to submit a tax statement whether their annual income is under the taxable threshold of €19,500 or not.

“This is a procedure that takes only a few minutes and can be done online. The changes will give the government a complete picture of the tax base and to identify tax evaders effectively.”

A second provision of the draft bill will see all businesses required to accept plastic money as payment.

“Customers will not be obliged to pay by card, but if the consumer so wishes, businesses are obligated to accept a credit card. This measure will encourage electronic payments and enhance tax control,” said Georgiades.

Failure to pay income tax a criminal offence

The new legislation will also make the failure to pay income tax a criminal offence, in line with VAT provisions.

The Minister was also asked about where things stand with civil servants’ salaries and the court case brought against the government before an Administrative Court, which ruled civil service salary cuts in 2012 unconstitutional.

Georgiades said that he did not wish to comment on the issue, as a Supreme Court decision is pending on the matter.

Cyprus property boom is not a bubble

Cyprus property boom is not a bubbleTHE PROPERTY boom in Cyprus is not a bubble, according to a Finance Ministry report which also considers such an eventuality as remote.

However, it does acknowledge 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.

Phileleftheros reported that Finance Minister Harris Georgiades will present on Tuesday the 2019 economic developments and prospects for the period 2020-2022 report to the House Finance Committee.

This also indicates that based on Central Bank of Cyprus figures the development sector as well as Cyprus’ GDP have recovered, however, property prices are moderately rising with the exception of areas affected by specific factors.

“Due to their significant impact on growth, developments in property prices are always closely monitored, especially in view of the fact that price pressures could have a negative impact.  To start with, an unsustainable surge in demand can push prices upwards with the risk of a bubble, even though data, so far, has this scenario as being remote,” says the report.

The Ministry also notes that the ongoing property market recovery, as well as the rise in construction activity, are factors helping the boost of 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.

© 2019 In-Cyprus.com

Citizenship scheme reaching saturation point

CYPRUS’ Citizenship for Investment scheme, which has fuelled economic growth, may soon be hitting a saturation point with developers and stakeholders beginning to worry over the future of construction.

Despite applications from foreign investors eyeing a Cyprus passport closing in on a new record this year, interest has slowed after the introduction of a stricter set of criteria, leaving developers concerned as a large number of high-rise projects have either kicked-off or in the planning.

As of 15 May, stricter criteria included an investment of €2.5 million and a €75,000 contribution to the state Land Corporation and another €75,000 to the Innovation Fund and tighter due diligence procedures which are expected to exclude many investors.

Developers fear that tens of towers and thousands of luxury apartments will flood the market as demand sharply drops, leaving these flats unsold, and them facing losses in the millions of euros.

Stakeholders are even more concerned now the scheme has been tarnished following reports that members of the Cambodian elite obtained Cypriot passports without proper checks.

Combined with the fact that Greece is set to launch its own CIS scheme, pressure on the industry is expected to increase.

Chairman of the Association of Land Development and Construction Businessmen and Leptos Estates managing director Pantelis Leptos told Stockwatch there is already a stockpile of unsold luxury properties.

“More or less, developers have managed to sell apartments in older projects. However, I don’t believe that developers of newer projects have sold any flats,” he said.

Leptos expressed moderate optimism about the future of the programme, stressing that if there was no demand there would be no supply.

The Chairman of the Association of Land Development and Construction Businesses also said, “some luxury apartments can be sold to locals or to foreign businessmen who simply wish to acquire a modern apartment with a beautiful sea view”.

More concerned than Leptos over the introduction of tighter criteria in May is the chairman of the Association of Property Valuers, Polis Kourousides.

“We are barely able to sell one passport a month”.

He said since the introduction of the new criteria, sales have dropped dramatically and believes the Cypriot investment scheme will struggle as investors turn towards Greece and its citizenship programme.

Kourousides also predicts that sales will drop sharply in the coming years and as a result, a large number of apartments, especially in Limassol, will remain unsold affecting property values in other areas.

He disagreed that these luxury apartments could be bought by business people looking for a luxury apartment or put on the local market, noting that “these cases, if any, would be but a handful”.

Chairman of the Cyprus Property Owners Association, George Mouskides said the situation could take on dramatic proportions as the number of investors eyeing a citizenship scheme is dropping internationally.

Vice-President of the Valuers Association Andis Telemachou said: “We are one step away from seeing the saturation of citizenship for investment.”

“This comes as a result of the stricter measures imposed by the government, as well as fierce competition, in particular from Greece, while interest in the Cyprus investment program seems to be diminishing.”

He said that stakeholders are sceptical over the future of the market, especially in Limassol where luxury apartments have been left unsold.

Telemachou said problems will arise further down the road due to what he called a ‘time-lag’ between the time when a project is submitted to the authorities and the time developers can begin building.

Due to red tape developers need to wait at least one year before they obtain the necessary permits.

“When the crisis hits, developers will not have time to react as they would have already bought the land and materials and could have already started building.”