Property: trust the numbers not the rumours

Yiannis Misirlis
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Property: trust the numbers not the rumours

I HAVE great interest in the views of esteemed economists like Mr Pissarides. Thus, I read his views on the Cyprus property market with great attention (Sunday Mail, January 13). I take the courage to say that this time he might have got it wrong. He says that “the property market is growing out of sync with fundamentals…”

There is no doubt that the housing market in our country was severely affected by the global financial crisis and our own banking debt crisis. The combination of depressed sales and excessive supply accumulation led to a sharp fall in property prices between 2008-2015.

However, the real estate market is cyclical and is currently at the recovery stage, where growing demand is slowly absorbing the existing supply. Gradually this will lead to stabilisation, and property prices shall continue to increase at the recent slow pace.

Eventually, the market will reach its long-term occupancy average, where growth is equal to inflation, and the market moves to the next phase. Cyprus’ sales activity rose greatly at around 29 per cent from 2015-2016 and around 20 per cent from 2016-2017. In fact, in 2018, this rate dropped to a healthy 6 per cent, indicating that the market will stabilise further in the coming years until it reaches equilibrium, that is healthy year-on-year levels.

So, looking at the last five to six years, the statement that the property market is out of sync with fundamentals is wrong. An assessment of a much shorter period (say, last six or 12 months) is not indicative and can lead to all sorts of false conclusions.

Mr Pissarides went a step further by mentioning that “the bubble”, as he referred to it, “will burst instantly if the CIP [citizenship-by-investment programme] scheme stops”. This statement is totally unfounded and I can only think that it is more likely to be based on market rumours rather than on solid economical and statistical data.

There is no doubt that the CIP scheme has had an impact on market growth and will continue to do so; but the key factor is, to what extent the market is dependent on this scheme.

According to the latest KPMG report on Cyprus Real Estate Insights (issued earlier this month), in 2018 the number of transactions related to high-end residential properties sold for over €1m amounted to just over 500, while the total number of property transactions nationwide for the same period was 9,242. This indicates that high-end residential developments – a property type which is often linked directly to the CIP scheme – account for only 5.5 per cent of the total overall.

Moreover, historical data (1999-2006) shows that Cyprus has always had a strong overseas market, which until 2013 was totally unrelated to any sort of CIP scheme whatsoever. Furthermore, the stable number of CIP applications (around 500 each year) and the number of transactions of high-end residential properties (also around 500 each year) indicate that these are not directly proportional to the increasing number of property transactions in the country, which have exceeded 9,000 this year.

Yiannis Misirlis is the founding director of the Imperio Group. He currently serves as the deputy chairman of the Cyprus Land and Building Developers Association (LBDA), and is a member of the board of the Cyprus Chamber of Commerce and Industry (CCCI) and chairman of the Real Estate Committee of CCCI.

EU citizenship schemes need full transparency

Editorial
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EU citizenship schemes need full transparency

BRUSSELS has deployed experts to establish fully transparent rules on the granting of EU citizenship by member states, in order to avoid tax evasion, money laundering or security threats, said European Commission Vice President Jyrki Katainen.

Katainen’s Cyprus visit comes in the wake of a Commission report that singled out countries like Cyprus for having a rather opaque invest citizenship scheme that offered little data on those who receive passports for a minimum €2 million investment.

Malta, Cyprus and Bulgaria are the only members of the 28-member bloc which run schemes selling citizenship, while 20 states, including those three, sell residence permits. Bulgaria has implied it will stop its passport scheme.

“I know the issue is very hot in some countries and some countries may find it disturbing that other member states or the Commission are talking about this issue,” Katainen told a media conference in Nicosia.

“I think that pragmatism is the best way to look at the issue.”

“Everyone knows that all European citizens have enormous opportunities. No matter what nationality you have, as long as you have an EU nationality, you have the right to do almost anything you want in our Union,” he added.

That is why, Katainen pointed out “we need to make sure that we know who the people in our Union are”.

He said that there have been incidents where providing citizenship to somebody has caused some security issues or encouraged tax evasion or had other negative implications.

“We have established an expert group to consider how to create fully transparent rules in order to know, who we are and who has the right to get a citizenship.”

Katainen said the EU cannot exist without security, trust or transparency and we are all against tax evasion, money laundering or security threats.

DISY President Averof Neophytou said Cyprus will cooperate with the European Commission “to find the way to improve our criteria in order on the one hand for investments to continue and on the other to have in practice such criteria that will make our friends in Europe feel comfortable with our scheme.”

“We want to make sure that whoever gets Cypriot citizenship is not someone who has committed money laundering,” he added.

Pissouri landslide MP plans after-dark visit

Bejay Browne
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Pissouri landslide MP plans after-dark visit

Pissouri landslide at Limnes undermining foundationsOWNERS of crumbling properties in the Limnes area of Pissouri and their lawyer have said they are bewildered as to why a senior government official is finally visiting them, but only after dark and without inspecting their severely damaged homes.

Demitris Syllouris, president of the House of Representatives, will visit Pissouri on Tuesday, January 29 at 6pm, and will hold a meeting at the local coffee shop, according to local homeowners.

Many properties, both houses and apartments, have been split apart, or have bowed walls and collapsed roofs. Gardens and pools have been destroyed. Roads have buckled and fissures in the land continue to appear all over the area. Four families have had to be evicted from their homes.

At issue is the responsibility for the destruction and therefore the cost. Homeowners insist that the developers, of which there were a number, are not at fault and that the problems are due to land slippage, which is a natural disaster and should be declared as such. By law, the government would then have to help the affected people. Despite promises over the years, the authorities have done nothing.

“We are all rather stunned that Mr Syllouris is not coming in daylight to see all of the problems for himself. It has got an awful lot worse in just two days,” said Peter Field who had to abandon his house along with his wife Kayt.

A buckled pathway that has only appeared recently as more houses become affected by the land slippage.

it’s horrific

“It’s getting worse every day, it’s horrific,” Kayt told the Sunday Mail.

Her husband added that although the affected residents are pleased at the prospect of Syllouris’ visit, they hope he will return in daylight in order to comprehend the magnitude of the destruction.

Syllouris confirmed to the Sunday Mail that he would be visiting Pissouri for what he described as a “preliminary meeting to see what they want”.

“I am visiting Pissouri at the request of some of the MPs. This is not my area. If I can help I will,” he said but would not comment on the timing or extent of his visit.

Elina Zoi, the lawyer for the Fields and a number of other owners including Aristo developers, told the Sunday Mail that the entire point of requesting MPs to come to Pissouri was so that they could understand first-hand the seriousness of the situation, not to sit in a coffee shop and discuss the issue.

The longer the government delays the more money it will have to pay

She warned that the longer the government delayed in taking action the more money it would have to pay out eventually.

“In 2012, it seemed that three houses and six apartments were affected, in 2018 the entire area above Kimonos Street is now affected, the hill could be in danger of collapse,” she said. “People are still living in homes which are dangerous and it is possible that the other side of the hill could be affected too.”

In 2015, some of the property owners formed the Pissouri Housing Initiative Group (PHIG).

PHIG has paid out thousands of euros for studies and papers from various renowned international experts and satellite imaging, at a cost of 25,000 euros, which measures the movement of the land. According to the study, the movement is up to 40 cm per year, which is a huge amount when pressing against a house.

Field noted that there are different types of landslide and the one in Pissouri is a slow one.

“In the last few days more problems have occurred, for example a number of houses and flats opposite us didn’t have any visible problems and now there is a 6-inch gap in the wall today,” he said.

Another house close by now has a 3 ft high gap at one end of the driveway and it’s worsening daily.

“It’s so frustrating. Our aim was to get the minister to visit the site. The government has to deal with it and we will keep going. Some people need to be rehoused and others given compensation.”

According to Zoi, one affected local family has already moved back to the UK.

“The wife is Cypriot and it was too much for her to cope with that her own government had turned their back on her. Their house was declared dangerous in 2017.”

Zoi described the area as an active landslide which is accelerating.

burying their head in the sand

“It seems as if the state is burying their head in the sand and believe if they avoid actually looking at the damage, It’s not their responsibility. In the last three and a half years, we have extended multiple invitations to the government to come to the area.”

Apart from a handful of officials including Green Party MP, George Perdikis, Giorgos Georgiou of Akel and Yiogos Lillikas of the Citizens Alliance, few have taken up on the invitation.

“It’s not about coming for show they (parliament) need to come and see the destruction and then be able to relay that they have seen for themselves.”

The British high Commissioner to Cyprus, Stephen Lillie, recently visited the site and said that the problems at the Limnes development have been well known for many years.

“As many of the residents are British I wanted to see the problem with my own eyes and to talk to those affected,” he said. “I saw houses, which in some cases are now uninhabitable, and others which soon will be, because the land is moving beneath them. What is impressive is the patience of those I talked to, some of whom are elderly and retired.”

He said that the High Commission had raised the issue with the Cypriot authorities in the past and will continue to do so.

“Like my predecessors I will continue to encourage a practical resolution by talking to the authorities here. What the residents I met were asking for is to be rehoused; they are not looking for somebody to blame.”

Zoi said that the situation had to be resolved eventually.

“I feel very responsible for these people. It’s not just a professional relationship, it’s very personal,” she said.

Lillie said that affected homeowners deserve better than living in places that could, “collapse at any given moment.”


[youtube= https://www.youtube.com/watch?v=f6K3iqFjaQY&w=470&rel=0]

EC closes infringement case on Limni project

Lizzy Ioannidou
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EC closes infringement case on Limni project

THE EUROPEAN Commission infringement case against Cyprus over the controversial Limni bay project was closed on Thursday, officially giving the green light for the development adjacent to one of the most important breeding sites in the Mediterranean for the endangered Loggerhead (Caretta Caretta) turtle.

The closing of the infringement case by the European Commission, as published on its website on Thursday, “means that it has decided not to intervene to defend EU protected biodiversity against a largescale tourism development on the protected Limni beach,” the environmental network Friends of the Earth said in an announcement.

It gave no justification for closing the case, though in an earlier letter sent to the NGO Friends of Akamas by the head of the environmental enforcement unit of the Commission, Paul Speight, it was reasoned that “the Commission engaged in in-depth discussions with the Cypriot authorities in order to help them modify the project so that it can be designed and implemented in a manner that would respect EU environmental standards and requirements”.

“The environmental terms of the project and the construction permits have now been revised in order to incorporate the various mitigation measures and thus give them clear legal validity and binding force,” Speight added, referring to measures to limit human pressure and lighting disturbance

The ambitious development project, part of which is in the EU-wide Natura 2000 network of nature protection areas established under the 1992 Habitats Directive, foresees the construction of two 18-hole golf courses, two clubhouses, a 160-room luxury hotel, 800 villas and other housing units, leisure facilities, bicycle routes and a museum.

Major sources of concern are rooted in the cumulative effects of building and development on the breeding of the endangered turtles, as development inevitably creates a lighting impact and human disturbance.

A prerequisite condition included in the Commission’s Reasoned Opinion sent on 29 April 2015 as well in the latest letter dated January 18, 2017, was a 500-metre no-build zone around the turtle-nesting beach, which would facilitate the implementation of the necessary mitigation measures.

However, in the closing of the case, the Commission has not clarified if this 500-metre no-build zone has been incorporated into the construction permits, nor what precautionary measures it will be taking to ensure that detrimental and possibly irreversible environmental damage will not occur in the future.

European and Cypriot NGOs had demanded that the Commission take Cyprus to court for failing to properly implement EU nature law in allowing tourism developments in close quarters to the turtle-nesting beach, the Friends of the Earth said.

The infringement case was open for around four and a half years after it was launched in mid-2014, due to Cyprus’ continued breaching of EU environmental legislation such as the carrying out of an inadequate Environmental Impact Assessment (EIA) and authorising the project without carrying out an Appropriate Assessment (AA).

In August 2018, while the infringement case was still open, the Town Planning and Housing Department granted a construction permit to the company that was then the owner of the project, the Limni Resorts and Golf Courses, part of the Shacolas Group, though any development before the closing of the case would risk referral of the matter to the Court of Justice.

With the closing of the case on the part of the Commission, and the construction permit already granted by the local authorities, the road has cleared to begin development, though with the Bank of Cyprus being the new owner of the land and the planned project, it is uncertain how the Limni bay project will proceed.

An on-the-spot appraisal by the Council of Europe’s Standing Committee concluded in 2016 that regarding the factor of human pressure, “even a much lower number of beach visitors than the 450 estimated by the company would represent a threat just for their walking. Repeated walking on a nest can damage it and therefore humans – instead of foxes – would become the primary reason of the need of caging all nests. This would make turtles even more dependent on active human protection, with no hope of liberation from this need in the future.”

Ayia Napa golf course plans rejected

Editorial
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Ayia Napa golf course plans rejected

ENVIRONMENTAL authorities have pulled the plug on plans to build a golf course in the resort town of Ayia Napa over habitat encroachment.

The €140 million project includes an 18-hole golf course which was set to be built in areas designated as Natura 2000, the network of nature protection areas in the territory of the European Union.

The proposed project concerns the construction and operation of a golf course and related infrastructure in the protected areas of the Natura 2000 Network of Cape Greco, including touristic developments (a five-star hotel and villas) adjacent to it.

After evaluating the project plans, the Environmental Department found that the construction and operation of a golf course within the protected area and related tourist developments will have significant, negative and irreversible effects on the conservation objectives, consistency, structure and operation of habitats of the Natura 2000, SCI and SPA areas, CPE Greco.

The department found that the construction of the golf course in the Natura 2000 will lead to the loss of 7.5% of the local bio habitat.

In addition, the department found that the project will bring about noise pollution, lead to the loss and fragmentation of the habitats used by a number of bird species, especially endemic, for nesting, feeding and resting.

The impact is mainly due to the nature and size of the project, which is entirely located within the protected area, an area of wild natural vegetation (mainly invisible), thus adversely affecting the natural environment and wildlife.

It is noted that the study will be reviewed by the Environmental Authority and at a meeting with Paralimni and Ayia Napa mayors on Wednesday

The consortium behind the project is made up of local hoteliers known as Ayia Napa Forest Golf Ltd. According to the consortium’s plans, construction was set to begin in 2019 with the first phase to be completed in 2021.

The first phase includes the construction of the golf course, a clubhouse, tourism and commercial development and 100 villas.

A second phase is to include another 188 villas and a five-star hotel and is planned to commence in 2021-22 and will take five years to complete.

Passport-for-sale schemes pose crime risks (Update)

George Psyllides
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Passport-for-sale schemes pose crime risks (Update)

Cyprus passport-for-sale schemes pose crime risksTHE EUROPEAN COMMISSION will warn that schemes in EU states to sell citizenship or residence to wealthy individuals could help foreign organised crime groups infiltrate the bloc and increase the risk of money laundering, corruption and tax evasion.

The warnings are included in a draft report, seen by Reuters, that is expected to be published on Wednesday by the European Union’s executive.

Although individuals who purchase citizenship and residence in EU states can do it for legitimate reasons, the commission said the schemes posed “risks of infiltration of non-EU organised crime groups in the economy, money laundering, corruption and tax evasion.”

Malta, Cyprus, and Bulgaria are the only members of the 28-nation EU which run schemes selling citizenship, while twenty states, including those three, sell residence permits.

In the three states rich foreigners can buy passports, which grant them unhindered access to most EU countries, for investments ranging between €1m and €2m.

The report said there were shortfalls among all three in checking the origins of wealth of individuals who purchased their citizenship.

The countries also did not allow easy identification of those who bought their passports.

They also circumvented EU rules that require “effective” residence in an EU state before granting citizenship.

The Commission said that EU states’ programmes to sell national residence to foreigners posed similar risks as citizenship schemes.

Twenty EU states currently sell residence permits to foreign citizens. Residence is sold against investments that range between less than €15,000 in Croatia to over €5m in Luxembourg and Slovakia, the report said.

The Cypriot government has been repeatedly criticised, domestically and overseas, for its citizenship-by-investment scheme.

A list of law companies and accounting firms acting on behalf of foreign nationals includes the president’s law firm and other prominent offices.

Close to 2,400 applications had been filed from May 2013 until August 2018.

Anastasiades maintains that since assuming office he has had nothing to do with the law firm and its business – although the main partners in the company are his daughters.

Foreign media outlets, including the Guardian, as well as certain quarters inside the EU have tried to put Cyprus’ feet to the fire over its investment scheme.

The matter also came up last early in December during a debate in the European Parliament in Strasbourg.

There, Victor Bostinaru, a Romanian politician and member of the Progressive Alliance of Socialists and Democrats, harangued Anastasiades over Cyprus’ programme.

Addressing Anastasiades, Bostinaru said: “And I think that, looking at the composition of the ones benefiting from this programme, you should work on lowering down [sic] and stop it. And this is not to intervene in any way in your internal decisions.”

In his answer, Anastasiades stated: “There is an intense targeting of Cyprus from certain quarters. The total citizenships granted via the scheme from 2013 to August 2018 did not exceed 4,700. This represents just 0.3 per cent of the total citizenships granted by other EU member states.”

He added: “I hear some saying that you [Cyprus] are allowing some people to acquire Cypriot citizenship at the expense – supposedly – of the security of the EU. But in Cyprus there has never been any act of terrorism. It is not in my country that acts of terrorism occur.

“It is not in my country where most football clubs belong to oligarchs of other countries, non-EU countries. Or that landmarks and large buildings and real estate have come into the hands of either Russian oligarchs or Arab oligarchs or others. Not that there is anything wrong with that.”

Update 23/01/2018

European Commission Press Release: “Commission reports on the risks of investor citizenship and residence schemes in the EU and outlines steps to address them”

European Commission Report (25 pages) “Investor Citizenship and Residence Schemes in the European Union“

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