Land Registry values down while prices rise

Nigel Howarth
-
5
Land Registry values down while prices rise

RECENTLY, the Cyprus Land Registry has come under attack over its valuation of state-owned land in Nicosia.

One piece of prime real estate in central Nicosia, which was valued at €70 million in 2014, was recently re-valued at €5 million.

Another plot in Nicosia, which was set to be sold to Qatari interests in 2012 but the deal fell through, was valued at €143 million in 2010. In 2013 the Land Registry valued the same plot at €92.5 million and €70 million in 2014 and finally €5.3 million earlier this year. AKEL MP Irini Charalambidou asked a surveyor to value the plot; he came back with a valuation of at least €40 million.

However, the Land Registry subsequently admitted it may have made a ‘mistake’ in its valuation of the land that was set to be sold to Qatari interests.

It also notes that its valuations, which are used for taxation purposes and fees, do not reflect a property’s market value. It has also said that properties were valued in collaboration with private surveyors with sales in recent years being taken into account in the assessment.

Not isolated cases

But these ‘strange valuations’ are not isolated cases. When the Land Registry re-assessed the value of 1,634,946 parcels of land and dwellings in 2013, they were valued at €202.6 billion around €24 million. But when it revalued the properties again in 2018 they were valued at €178.7 billion; a fall of around €24 million.

Indeed, the value of my house fell 30% in 2018, from its value in 2013.

Unfortunately, as the Land Registry has not published the methodology it employs for assessing property values.

Prices rising

While (according to the Land Registry) property values have been fallen since 2013, the Cyprus Central Bank, the Cyprus Statistical Service, RICS Cyprus and Eurostat all report that real estate prices have generally been rising annually since the end of 2013.

Where does this leave Joe public?

Mystified, bemused, bewildered, frustrated and angry; particularly as the Land Registry invariably calculates Property Transfer Fees higher than the purchaser actually paid for the property, when by its own assessment, property values have fallen.

Land Registry failings come under scrutiny

Evie Andreou
-
1
Land Registry failings come under scrutiny
Paphos Land Registry office
Paphos Land Registry office

AUDITOR-GENERAL Odysseas Michaelides on Wednesday likened some Land Registry officials to representatives of Saint Peter on earth, deciding who will go to heaven or hell when it comes to property issues.

He was commenting on the way the head of the Department of Lands and Surveys (DLS),  Andreas Socratous, had presented the work of his service to the House ethics committee, urging MPs to look at the general issues the DLS dealt with and not only referring to isolated, negative cases and thus tarnishing the service.

Michaelides, other officials and MPs however cited a series of problems faced by those in need of land registry services. The committee heard that around 100,000 cases are pending.

The auditor-general told the committee applications for land evaluations go back 10 years while other problems have gone on for years.

“Some land registry employees believe they represent Saint Peter on earth,” he said.

An official from the ombudswoman’s office, told MPs that complaints for delays by the land registry had been reduced compared with 2007, 2009 and 2010, as surveys were now assigned to the private sector.

But despite improvements, the land registry does not live up to public expectations, said committee chair, Zacharias Zachariou.

“The big picture is the positive offer to the Cypriot citizen and the small picture is that there are 100,000 pending cases.”

He added that personnel assigned to handle these cases were trying to put things in order but the service needed to be modernised.

Socratous mentioned all the work the DLS departments carry out daily such as management of state property, valuation, cartography and hydrography.

He also said they have digitised all maps which are available online for property owners to easily find their plots and all relevant details.

All these are being carried out while there is lack of staff, he said, adding that during the last nine years the organisation has been operating with around 300 fewer employees.

Zachariou said that procedures needed to be simplified, adding that the problem of under-staffing was obvious and hoped parliament could help improve this.

A major issue is the introduction of e-signature, which will contribute to the effective implementation of e-government, he said.

Referring to the issue raised concerning property estimates, whereby the land registry officials estimated the value of state land at much lower rates than in the past, Zachariou said that it was logical to make mistakes on such a large project. “The electronic system had to detect the error immediately, however,” he said.

The Greens’ chairman Giorgos Perdikis said that at least once per month, the committee deals with complaints concerning the DLS.

He added that the auditor-general had raised the question of the credibility of the estimates and that in recent years several disciplinary cases have been investigated, including the firing of three officials because they facilitated the illegal transfer of property in the north.

Perdikis said that next month, the committee would be dealing with another case concerning the DLS.

Chinese investors in €30 million property deal

Annie Charalambous
-
2
Chinese investors in €30 million property deal

Chinese investors in €30 million property dealPROPERTY in Tsiflikoudia area of Limassol is now in the hands of Chinese investors following a €30 million deal with Bank of Cyprus’ REMU (Real Estate Management Unit). The specific property was taken over by REMU during the restructuring of Laiko Group’s loans and is actually LOEL’s former facilities there.

The transaction involves four adjoining pieces of land totalling 32,271 sq. metres. Most of the property (31,171 sq. metres) falls within a residential zone area while a smaller portion (1,100 sq. metres) is within a commercial zone area. This rectangular piece of land starts from Franklin Roosevelt Avenue (near Lidl supermarket) and stretches almost as far as the sea in Karnagio area.

Most of LOEL’s operations are now carried out at its new industrial facilities in Agios Silas area. REMU had initially set a €33m sale price for the property taken over by the Chinese who seem to have plans for a huge multiple-use development there. It will include three multi-storey towers – 35 floors – of commercial and leisure development. The sold property was registered under the vehicle-company set up by REMU called Nasebia Properties.

With development in the eastern side of the Karnagio area having reached its limits, investment activity now seems to be directed towards the one taken over by the  Chinese investors and not only. Leptos Group has already announced the launch of construction work for the Limassol Blu Marine project which is to also include three multi-storey towers. In addition, a big piece of land in that area is now available for sale by Lanitis Brothers.

The area between Limassol’s marina and the new port also has several other industrial sites sitting on prime location land that may soon change hands if and when investment interest continues. The revised city centre town plan which is currently being drawn up by the Municipal Council will play a crucial role in the development of this area as it includes the Karnagio area through which the city will be linked to the new development in western Limassol.

© 2019 In-Cyprus.com

Rise in new homes building permits

Nigel Howarth
-
1
Rise in new homes building permits

Rise in Cyprus new homes building permitsTHE TOTAL number of building permits authorised in Cyprus during June 2019 stood at 573 compared with the 514 authorised during June 2018; an increase of 11.5% according to official figures published by the Cyprus Statistical Service.

The total value of these permits more than doubled to reach €208.7 million and their total area rose 44.1% to reach 189.1 thousand square metres compared to June 2018.

These permits provided for the construction of 812 new homes, an increase of 11.5% compared to the 541 new homes in June 2018.

During June 2019, building permits were authorised for:

  • Residential buildings – 409 permits
  • Non-residential buildings – 86 permits
  • Community residences – 1 permit
  • Civil engineering projects – 15 permits
  • Division of plots of land – 40 permits
  • Road construction – 22 permits

Building permits for new homes

The 409 residential building permits authorised in June 2019 provided for the construction of 812 new homes (dwellings). These comprised 333 single houses (compared with 193 in June 2018) and 479 multiple housing units including apartments, semis, townhouses and other residential complexes (compared with 313 in June 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%
Totals 2,839 4,200 1,361 47.9%

Of those 812 new homes, 316 are destined for Nicosia, 216 for Limassol, 125 for Paphos, 105 for Larnaca and 50 for Famagusta.

Annual construction figures

During the period January – June 2019, 2,820 building permits were authorised compared to 2,596 in the same period last year.  Their total value increased by 128.2% and their total area by 53.8%. The number of new homes authorised rose by 45.2%.

The 3,393 permits issued this year provided for the construction of 1,479 new homes in Limassol, 1,361 in Nicosia, 652 in Larnaca, 549 in Paphos and 159 in Famagusta.

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

August property sales fell 10 per cent

Nigel Howarth
-
1
August property sales fell 10 per cent

Cyprus: August property sales fell 10 per centAUGUST saw a 10% decline in property sales compared to August 2018 with sales falling in all market segments with the exception of sales to EU citizens, which rose by 3% according to official figures published by the Department of Lands and Surveys.

During August, the total number of contracts deposited for the sale of commercial property, residential property, building plots and land reached 588; a fall of 10% compared with the 653 contracts deposited August 2018.

Of those 588 contracts, 344 (59%) were deposited on behalf of Cypriots and the remaining 244 (41%) on behalf of non-Cypriots of whom 44% were EU citizens and 56% were non-EU citizens.

Although property sales in Nicosia and Paphos rose by 13% and 6% respectively, these rises were wiped out by falls of 40% in Famagusta, 25% in Limassol and 1% in Larnaca.

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
Famagusta 2018 48 52 40 52 79 61 61 50 45 57 47 48
2019 53 48 45 96 87 43 49 30
Larnaca 2018 112 99 116 83 113 133 112 94 121 116 143 103
2019 114 125 118 140 173 102 157 93
Limassol 2018 225 256 314 246 282 338 314 262 251 289 344 290
2019 251 256 287 428 546 219 286 196
Paphos 2018 164 163 172 157 201 180 233 156 152 204 230 230
2019 187 211 185 224 404 205 230 166
Totals 2018 695 666 768 655 828 858 896 653 687 811 925 800
2019 766 834 766 1057 1423 714 896 588

Property sales – year to date

During the first eight months of 2019, the number of sales has increased by 17% to reach 7,044 compared to 6,016 in the corresponding period last year.

In percentage terms, sales in Paphos have risen by 27% and sales in Nicosia have risen by 23%. Meanwhile sales in sales in Larnaca have risen 19%, sales in Limassol have risen 10% and sales in Famagusta have risen by 2%. However, in terms of the total number of sales Limassol leads the way with 2,273 with Paphos in second place with 1,812 sales.

Domestic property sales

Sales to the Cypriot market fell 10% in August compared to August 2018.

While sales in both Limassol and Larnaca rose by 10% and by 7% in Nicosia, they fell by 55% and 23% in Famagusta and Limassol respectively

During the first eight months of 2019, domestic sales rose by 24% compared with 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
Famagusta 2018 -3 18 18 12 34 27 18 29 21 36 14 29
2019 32 19 16 58 45 25 2 13
Larnaca 2018 60 44 67 41 55 61 41 47 60 46 82 52
2019 54 82 47 73 83 42 90 53
Limassol 2018 107 152 199 162 169 207 194 174 175 176 196 201
2019 166 152 192 291 329 138 177 134
Paphos 2018 18 8 43 21 43 55 62 48 32 24 64 60
2019 30 31 28 69 175 69 54 54
Totals 2018 308 306 431 329 436 473 470 382 385 408 497 450
2019 409 448 398 628 800 395 476 344

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

Overseas property sales

Property sales to the overseas (non-Cypriot) market during August 2019 also fell by 10% with 344 contracts of sale deposited compared with 382 in August 2018.

While sales in Nicosia and Paphos rose by 86% and 4% respectively, they fell in the remaining three districts.

Limassol saw a 30% drop in sales, while sales in Famagusta and Larnaca fell 19% and 15% respectively.

During the first eight months of 2019, sales to the overseas rose by 9% compared with 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
Famagusta 2018 51 34 22 40 45 34 43 21 24 21 33 17
2019 21 29 29 38 42 18 47 17
Larnaca 2018 52 55 49 42 58 72 71 47 61 70 61 51
2019 60 43 71 67 90 60 67 40
Limassol 2018 118 104 115 84 113 131 120 88 76 113 148 89
2019 85 104 95 137 217 81 109 62
Paphos 2018 146 155 129 136 158 125 171 108 120 180 166 170
2019 157 180 157 155 229 136 176 112
Totals 2018 387 360 337 326 392 385 426 271 302 403 428 350
2019 357 386 368 429 623 319 420 244

Overseas sales (EU nationals)

Property sales to EU nationals rose 3% in August compared with August 2018.

Although sales in Limassol fell 29% and sales in Nicosia remained steady, they rose 56% in Famagusta, 18% in Larnaca and 5% in Paphos.

During the first eight months of 2019, sales to EU nationals rose by 9% compared with the same period last year. The only district where they fell was Famagusta; down 23%.

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
Famagusta 2018 15 24 8 12 19 16 20 9 0 7 13 6
2019 9 6 14 17 10 8 17 14
Larnaca 2018 9 9 9 6 9 20 15 11 15 13 11 19
2019 12 12 21 18 20 11 16 13
Limassol 2018 15 17 32 17 19 22 25 24 11 27 38 20
2019 16 25 20 21 28 26 27 17
Paphos 2018 41 58 55 49 70 60 79 55 49 91 74 73
2019 56 72 61 48 69 59 73 58
Totals 2018 90 116 113 94 126 126 150 104 85 146 143 135
2019 107 129 125 123 147 120 146 107

Overseas sales (non-EU nationals)

Sales to non-EU nationals took a bit of a bashing, falling by 18% in August compared with the same month last year.

Although sales rose by 300% in Nicosia and by 2% in Paphos, they fell in the other three districts.

Sales in Famagusta fell 75%, while sales in Limassol and Larnaca fell by 30% and 25% respectively.

During the first eight months of 2019, property sales to non-EU nationals rose by 9% compared with the same period last year. Once again, the only district where they fell was Famagusta; down 13%

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
Famagusta 2018 36 10 14 28 26 18 23 12 24 14 20 9
2019 12 23 15 21 32 10 30 3
Larnaca 2018 43 46 40 36 49 52 56 36 46 57 50 32
2019 48 31 50 49 70 49 51 27
Limassol 2018 103 87 83 67 94 109 95 64 65 87 110 69
2019 69 79 75 116 189 55 82 45
Paphos 2018 105 97 74 87 88 65 92 53 71 89 92 97
2019 101 108 96 107 160 77 103 54
Totals 2018 297 244 224 232 266 259 276 167 217 257 285 215
2019 250 257 243 306 476 199 274 137

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 (Aug)
 3,146 3,898 44.7% 7,044
Totals
 68,537 156,288 30.48% 224,825

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).

Developers seek to self-finance projects

Editorial
-
1
Developers seek to self-finance projects

PROPERTY Developers of big projects try to avoid financing from Cyprus banks which have tightened their purse strings, preferring to back schemes with their cash or from investors and presales.

This trend seems to be confirmed by a sharp drop in new loans over EUR 1 million, which are primarily given to large building projects.

The total amount of new loans given by Cypriot banks declined 26.5% or by €90 million in July compared to June, according to Central Bank of Cyprus (CBC) data.

The main reason behind the abrupt drop in new loans is the decline in the total amount of cash lent out to big projects.  New loans to non-financial corporations for amounts over €1 million fell to €72.8 million from €190.2 million in June, of which €5.6 million were renegotiated.

The Federation of Cyprus Building Constructors Associations (OSEOK) say that developers are looking for ways to raise the money needed for their projects without having to turn to local banks which they find to be applying strict criteria.

OSEOK’s manager Frangos Prokopa told the Financial Mirror that local banks under pressure from the Central Bank of Cyprus are enforcing tighter controls which at the end of the day are hindering big business and investments.

“We feel that CBC is severe in its interpretation of directives issued by the European Central Bank and as a result, it’s putting excess pressure on local banks, who then apply stricter criteria for loan applications for big projects,” said Prokopa.

Similarly, foreign investors having prior knowledge of obstacles they may come across when applying for financing from a local bank, prefer to obtain loans from banks in their own countries.

“Foreign investors also prefer to avoid banks altogether when it comes to construction projects as they fear possible complications with title deeds due to the bank’s involvement,” said Prokopa.

He explained that the ownership status is not always clear when projects are mortgaged thus hindering sales.

With close to zero, and in some cases, negative interest rates on large deposits, developers and investors with money accumulated from previous projects prefer to reinvest their cash rather than borrow like in the past.

CIIM Professor George Theocharides said that after the banking crisis in 2013, banks are naturally more selective and cautious when giving out loans, especially when they amount to over a million euros.

“Banks are now taking into consideration not only the viability of the project but also the profitability, taking a closer look at the project’s business plans and feasibility studies,” said Theocharides.

He commented that the drop in loans of over €1 million could be an indication that there aren’t many profitable large projects out there, except for a few big construction plans.

Theocharides said that it is hard for developers to find money from other financing sources, as there are no alternative ways of financing in Cyprus such as equity funding.

Sustainable growth

He argued that banks are looking for profitable and viable projects to finance as they have a surplus of liquidity which is not good for their overall business.

Andreas Assiots, head of Hellenic Bank’s Economic Research Department, agreed that banks are holding a tighter leash on loans after the 2013 financial crisis, but that does not mean that they are not looking to finance sustainable projects.

Banks granting unsecured loans is seen as one of the key factors to the crisis that decimated the banking system.

Noting that banks are issuing more loans than the previous years, Assiotis stressed that one must not jump to conclusions over what a monthly drop, no matter how big, in large loans may mean.

“It may simply be a coincidence, and all big projects in need of financing may have submitted their applications in earlier months, leaving none to be looked into in July.”

New loans for consumption increased to €17.3 million, compared with €14.2 million in June, some €0.5 million were loans that have been renegotiated.

New loans for house purchases rose to €87.8 million from €71.3 million of which €3.7 million were loans that were restructured.

New loans to non-financial corporations for amounts up to €1 million increased to €41.6 million, compared with €39.4 million in the previous month, €4.9 million were renegotiated loans.

“One must look at the year-to-date performance, before sounding the alarm over whether lending is actually declining.”

The year-to-date data reveal an increase in loans of over 1 million issued compared to the same period last year.

A total of €1.268 billion worth of loans over 1 million were issued in the seven months to June 2019 compared to 1.1 billion in the same period last year.

Assiotis said that banks are trying to increase lending in parallel with the nominal growth of the relative industry and the overall economy, stressing that the economy is in motion once more due to lending from banking institutions.

“That is why we are looking to invest in income-generating projects while diversifying our portfolio. One of the principles banks are following is to have a diversified portfolio, so as not to be exposed in case of a mishap in one sector. We want to hedge the risk by putting our eggs in many baskets.”

Assiotis said that despite the developers’ efforts to bring down NPLs created during the last construction crisis, 50% of loans issued to the industry are still classified as non-performing, which makes banks want to hedge the risk of their portfolio by diversifying it.

1...233234235...697Page 234 of 697