Property sales up 14% in August

Cyprus property salesTHE NUMBER of property sales contracts deposited at Land Registry offices across the Republic of Cyprus during August 2018 rose 14 per cent compared to August 2017 according to official figures published by the Department of Lands and Surveys.

Property sales have been rising for 16 consecutive months and this August rise follows increases of 21% in July, 2% in June and 23% in May.

During August a total of 653 contracts for the sale of residential and commercial properties and land (building plots and fields) were deposited at Land Registry offices across Cyprus, compared with the 572 deposited in August 2017.

Of the 653 contracts deposited, 271 (41.5%) were for properties purchased by non-Cypriots.

The figures show a continuing improvement in the economic conditions, coupled with government measures such as the citizenship by investment scheme (aka ‘Passports for Cash’ scheme.)

(The figures include an unspecified number of properties acquired by banks as part of loan restructurings.)

Although sales in Paphos fell by 3% compared with August 2017, they rose in all the other districts. In percentage terms Limassol led the way with sales rising by 30% followed by Nicosia, where sales rose by 20% and Limassol. Sales in Larnaca and Famagusta rose by 7% and 6% respectively.

Total Property Sale Contracts – 2017/2018 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2017 72
73
79
80 118 162 124 76 87 117 170 306
2018 146 96
126
117
153
146
176
91
Famagusta 2017 21
19 40
29
38 46
59 47 57 51 52 169
2018 48 52
40
52 79
61
61
50
Larnaca 2017 102
100 113
69
119 96
103 88 107 111 151 181
2018 112 99
116
83 113
133
112
94
Limassol 2017 132
177 232
192
298 304
289 201 203 306 321 532
2018 225 256
314
246 282
338
314
262
Paphos 2017 96
87 162
136
183 235
184 160 148 183 212 349
2018 164 163
172
157 201
180
233
156
Totals 2017 423
456 626
506
756 843
739 572 602 768 906 1537
2018 695 666 768 655 828 858 896 653

Property sales – year to date

During the first eight months of 2018 the number of contracts for the sale of property deposited at Land Registry offices has risen 22% to 6,016 compared to the 4,921 deposited during corresponding period of last year.

In percentage terms Famagusta saw the highest increase in the number of sales – up by 48%, followed by Nicosia (the capital) with a 34% increase. Increases of 24%, 15% and 9% were recorded in Limassol, Paphos, and Larnaca respectively.

Overseas property sales

The Land Registry figures reveal that a total of 271 property sale contracts were deposited by non-Cypriots during August 2018. Of those 104 were deposited by EU citizens and the remaining 167 by non-EU citizens, but we cannot quantify the number of non-EU citizens who bought property with a view to applying for citizenship.

Paphos remained the most popular district with the overseas market with the number of property sales contracts deposited reaching 108. Limassol recorded 88, Larnaca 36, Famagusta 21 and Nicosia 7.

Overseas Property Sale Contracts – 2018

District Source Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia EU 10 8 9 10
9
8
11
5
Non-EU 10 4 13
14 9 15
10 2
Total 20 12 22 24 18 23 21 7
Famagusta EU 15 24 8
12 19 16 20 9
Non-EU 36 10 14
28 26 18 23 12
Total 51 34 22 40 45 34 43 21
Larnaca EU 9 9 9
6 9 20
15 11
Non-EU 43 46 40
36 49 52 56 36
Total 52 55 49 42 58 72 71 47
Limassol EU 15 17 32
17 19 22 25
24
Non-EU 103 87 83
67 94 109 95 64
Total 118 104 115 84 113 131 120 88
Paphos EU 41 58 55
49 70 60 79 55
Non-EU 105 97 74
87 88 65 92 53
Total 146 155 129 136 158 125 171 108
Totals EU 90 116 113
94 126 126 150 104
Non-EU 297 244 224
232 266 259 276 167
TOTAL 387 360 337 326 392 385 426 271

During the first eight months of 2018, a total of 2,884 sales contracts were deposited by overseas buyers, with 919 deposited by EU nationals and 1,965 by non-EU nationals.

Paphos maintains its position as the most popular spot for overseas buyers with sale contracts reaching 1,128, followed by Limassol with 873, Larnaca with 446, Famagusta with 290 and Nicosia with 147.

Limassol is the most popular place for non-EU citizens, while Paphos is favoured by the majority of EU citizens.

Cyprus Property Sale Contracts 2000 – 2018

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
2018 (Aug)
2,884 3,135 47.9% 6,019
Totals
63,908 150,650 29.8% 214,558

Bank of Cyprus confirms Apollo NPLs sale

Bank of Cyprus confirms Apollo NPL saleON TUESDAY, the Bank of Cyprus announced it had reached an agreement to sell more than 14,000 loans of €2.8 billion (of which €2.7 billion relate to NPLs) and secured by real estate collateral to Apollo Global Management for a gross cash consideration of some €1.4 billion.

The bank said the portfolio has a contractual balance of €5.7 billion.  The net book value of the assets being sold as at 30 June 2018 amounted to €1.5 billion before the impact of the transaction on the 2Q 2018 income statement.

Commenting on the agreement John Hourican, the Bank of Cyprus Group SEO, said: “This is a transformative sale for the Bank and is the first meaningful Corporate and SME NPL trade in Cyprus.

“Since 2014, we have focused on decreasing our stock of NPLs and improving the asset quality of the Bank, and today’s Transaction is a significant step forward on our journey of de-risking the balance sheet and enhancing our capital position.

“There is of course much more work to be done and we remain as focused as ever on continuing to seek solutions, both organic and inorganic, to further improve the Bank’s asset quality position.”

As Apollo is buying the loans, defaulting borrowers will owe money/loans to Apollo. Apollo will restructure the loans, enter into debt for asset agreements, foreclose, etc. in order to recover the contractual loan balance of €5.7 billion. The Bank is required by law to send borrowers a letter before their loan is transferred to Apollo.

Following the bank’s announcement Standard & Poor’s rating agency upgraded Bank of Cyprus’ long-term credit rating to B+ from B. In its statement the rating agency said “The upgrade reflects our belief that the agreed sale of NPEs and the pricing of an additional Tier 1 (AT1) instrument represent meaningful steps for BoC in reducing the inherent tail risks associated with holding a large stock of unproductive exposures. The sale and expected new issuance also contribute to strengthening the bank’s financial profile, namely its asset quality and capitalization.”

In a separate announcement the Bank of Cyprus said that appointment of John Hourican as Group’s CEO was being extended to 31st December 2020 and that Chairman, Josef Ackermann, intended to step down at the 2019 AGM.

Second letter to UK Nationals living in Cyprus

High Commissioner to Cyprus Stephen Lillie
High Commissioner to Cyprus Stephen Lillie

BRITISH HIGH COMMISSIONER Stephen Lillie publishes a letter to UK Nationals living in Cyprus about the UK´s departure from the EU and its implications.

I last wrote to you in May. Since then, I am pleased to have met some of you during my first months in Cyprus and look forward to meeting more members of our community as I travel further around the island in the autumn.

The autumn will be an important period in the ongoing Brexit negotiations, leading up to the European Council meeting on 18 October. I expect to be able to provide you with more clarity on the rights of UK nationals living in Cyprus as the negotiations progress.

Ahead of that, you will have seen that last week the Government published a series of technical notices on a range of areas, in the unlikely event of a ‘no deal’ Brexit in March 2019. More of these technical notices will be published over the coming weeks.

Let me be clear that the Government does not want or expect a no deal outcome in the negotiations.

However, a responsible government should prepare for all potential outcomes. As such, we are preparing options, as other EU countries and the Commission are doing, for an unlikely no deal scenario. The technical notices provide detailed sector-by-sector information on the actions citizens and businesses should take to sufficiently prepare for a no-deal scenario.

I know that many of you remain concerned by the ongoing uncertainty, but let me encourage you to be patient as the negotiations run their course.

Where to go for further information

We will continue to post important updates on Brexit on our UK in Cyprus Facebook and Twitter accounts. You can also sign up for Brexit related alerts to get the most important Brexit updates direct to your inbox.

In October and November, I will be visiting key towns and cities in Cyprus to meet representatives of British communities and exchange views on any issues of concern you have. More information on dates and locations will be posted on our social media channels soon, so keep following us!

We will also be using these channels to seek your views on issues you may still be confused about relating to Brexit, and how we can help to clarify the official information available.

More general information about living in or moving to Cyprus is available on our Living in Cyprus page.

As previously advised, we recommend that, if you have not already done so, you should register as a resident with the Cypriot authorities. All UK nationals who have been residing in Cyprus for more than 90 days and wish to continue to live here should legalise their status by registering. Further information on how to do this can be found here.

We are working closely with the government of Cyprus to ensure this process runs smoothly. I hope this is useful. I look forward to discussing these and many other issues with you in the autumn.

Stephen Lillie, High Commissioner

Swimming pool owners face court action

WE UNDERSTAND that the Paphos Municipality is taking the owners of more than 150 communal swimming pools to court as the pools they manage do not have a licence, a lifeguard or someone responsible for inspecting the pool on a daily basis to ensure it complies with health and safety regulations.

Letters have also been sent by a property management company contracted by Management Committees in the Paphos and Pegeia Municipalities advising that their management fees will increase.

The increase is due to the requirement to licence their swimming pools, analyse its water on a weekly basis and to employ a qualified lifeguard and certified first-aider for 8 hours a day/7 days a week for 6 months of the year. The management company anticipates that the cost of a lifeguard will be €672/week.

For a block of 10 apartments the additional management fees paid by each apartment to cover the cost of a lifeguard alone would be more than €1,700/annum. These fees, together with the other management fees for insurance, maintenance, repair, restoration, utilities and management of the rest of the complex, would bring the total fee for an owner in line with the management fees by someone living in a London apartment (which are £1,863 to £2,777 per annum according to figures published in 2016.)

Giving the many thousands of communal swimming pools in Cyprus it’s extremely unlikely there are sufficient qualified lifeguards and certified first-aiders to meet the potential demand.

Swimming pool regulations

As Cyprus Property News has reported many times over the years, these issues stem from the island’s antiquated regulations that consider communal swimming pools in private residential developments (apartment blocks, terrace/town houses and maisonettes) as public swimming pools, which are required to have life guards, toilets for the disabled, showers and other facilities:

Cyprus Law N.55(I)/92 states in paragraph 2 that the term ‘public swimming pool’ also includes the swimming pools of buildings which are used by the owners of the units or their tenants.

Regulation Number 368/96 states in paragraph 47 (1) that all the employees relating to the swimming pool have to obtain a health certificate, to be clean and to behave properly.

Paragraph 47(2) states that all the trained supervisors will be on duty during the operation and the use of the swimming pool. Their number is determined in accordance with the size of the swimming pool and the number of the persons usually using the swimming pool.

Paragraph 47 (2)(a)(i) states that for small swimming pools at least one trained supervisor is necessary to be appointed.

Part VII of the Regulations Paragraph 53 states that an annual license is needed for the operation of a swimming pool by applying to the relevant authority. The last decision is made by the Minister.

(Readers may click here to view the swimming pool regulations in Greek.)

Vacuous announcements

Over the years there have been the usual vacuous announcements from the Interior Ministry that we have come to expect:

In May 2007 the government was in the process of drafting a slight change to the law governing public swimming pools.

In August 2008 the government was looking into changes in the law.

In January 2015 the Interior Ministry proposed a draft a new law and sent it to Legal Services for scrutiny.

In December 2016 the Interior Ministry announced that the swimming pool laws and regulations would soon be revised as part of an overall package of measures. (Interior Ministry announcement – Greek.)

None of the vacuous announcements have resulted in any change.

Recommendations

Government

The Government must stop making vacuous announcements and take urgent and positive action to bring the swimming pool regulations into the 21st century and in line with their European partners.

For example there are two standards approved by the European Committee for Standardization relating to all types of swimming pools:

EN 15288-1: 2008 Swimming pools – Part 1: Safety Requirements for Swimming Pool Design (English)

EN 15288-2: 2008 Swimming pools – Part 2: Safety Requirements for Swimming Pool Operation (English)

These standards consider pools that are solely for the owner’s/proprietor’s/operator’s family and guests (including the use connected with renting houses for family use) as private pools.

Anyone wishing to petition the Minister of the Interior on this subject should write to:

Mr Constantinos Petrides
Minister of Interior of the Republic of Cyprus
Dimostheni Severi Avenue
1453 Nicosia
Cyprus

Management Committees

Management Committees should call a general meeting of owners to discuss the additional costs involved in operating swimming pools and decide what action they should take to manage the situation.

Potential investors

Anyone thinking of buying or investing in a property in Cyprus must consider the significant additional running costs involved if they buy a property on a complex with a swimming pool. These additional costs make buying a property in a complex with a shared swimming pool a much less attractive proposition.

Apollo close to buying Cyprus NPLs

Apollo buying Bank of Cyprus NPLsBLOOMBERG reports that the Bank of Cyprus and Apollo Global Management LLC are in talks in London to finalize details of the sale of a roughly €3 billion portion of the lender’s non-performing loans (NPLs), the people said, asking not to be identified because the information isn’t public. A spokesman for Apollo declined to comment.

Cypriot and European officials have been urging the Cyprus banks to reduce the amount of NPLs on their books, aiming to avoid a repeat of the island’s 2013 economic crisis. U.S. funds have been circling southern European banking assets, with Lone Star acquiring a multi-billion-euro Spanish property portfolio in June.

Despite Cyprus’ sharp economic recovery over the past five years, NPLs still weigh on banks’ profitability and have prevented significant improvement in the financial health of households and companies, the International Monetary Fund said in July. The European Commission and European Central Bank earlier this year called on the country’s banks to prioritize reducing bad loans.

Bank of Cyprus reported some progress in its first-quarter earnings, saying it had reduced bad-loan exposure for a 12th consecutive quarter.

With the NPL sale progressing, Bank of Cyprus said earlier Wed it would move the date for its second-quarter results to Aug. 27 from Aug. 23.

Limni golf resort is now down to EU

Cyprus: Limni golf resort awaits EU approvalTHE GREEN light granted to the controversial Limni Bay project in the form of a planning permit might not be enough just yet for the development to go ahead as the ongoing European Commission infringement case against it requires the permits comply with the environmental recommendations set out by the Commission.

A planning permit was issued by the Town Planning and Housing Department on August 3, giving the go-ahead for proposed construction plans in the Polis-Gialia area by the company Limni Resorts and Golf Courses, part of the Shacolas Group.

The environment department issued an amended Environmental Impact Assessment (EIA) authorisation in May this year, but despite recent advertisements and announcements by the development company regarding their full compliance with the Commission’s environmental recommendations, this has not been verified by the Commission itself, which has in fact yet to receive details of the new permits.

To provide full assurance of compliance with EU legislation, the Commission had asked the Cypriot authorities to update and incorporate the environmental recommendations into the terms and conditions for the relevant permits and to submit these to the Commission for confirmation.

It is only once these conditions and the updated permits are received by the Commission will it be possible for the Commission to conclude there are no pending obstacles and thereby allow the project to go ahead.

Director of the environment department Costas Hadjipanayiotou has said that while the Commission was already informed about the environmental department’s opinion that the project fully satisfies national and EU environmental legislation, and that they would receive the details of the issued planning permit in the coming days, no one can anticipate their response.

Also, the Commission’s response may take months, and any construction work undertaken before EU approval will be illegal under EU legislation, risking referral of the matter to the Court of Justice.

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 luxury hotel, villas and other housing units, leisure facilities, bicycle routes and a museum.

While implementation efforts by the company date back to 2008, the project has faced numerous obstacles from environmental groups and organisations, and most notably, from the Commission which launched an infringement case against Cyprus in 2014, following a complaint filed in light of the sea turtle nesting beaches of Chrysochous bay.

Limni bay is considered a major nesting site for the Mediterranean Loggerhead sea turtle (Caretta caretta), which is an endangered species, along with the Green Turtle (Chelonia mydas) which nests in the Lara/Toxeftra area of the Akamas Peninsula.

Major sources of concern are rooted in the cumulative effects of lighting impact and human disturbance, which are inevitable should development occur.

Spokesperson for the Initiative for the Preservation of Natural Coastline Klitos Papastylianou told the Cyprus Mail that “in terms of the number of turtle nests, the Limni area might not be the most important, especially with regards to the numbers of nests in Lara. It is, however, the most important in terms of density, since a small strip of just 300m amounts to 85 nests.”

The Limni project had been given the green light before, in 2013, with the issuing of two planning permits. The light soon turned red as the infringement procedure that began in 2014 following a complaint resulted in the Commission’s refusal one year later to allow construction to begin, demanding that the issued permits be cancelled.

A Commission spokesperson told the Cyprus Mail this week: “The Commission opened an infringement case against Cyprus for failing to comply with the commonly agreed EU rules on nature conservation, under the Habitats Directive. In particular, the Directive requires all projects likely to have a significant impact on a Natura 2000 site to undergo an assessment of their implications on the site”.

A document by the Council of Europe’s Standing Committee published in 2016 containing recommendations for the conservation of the Akamas Peninsula and the sea turtle nesting beaches of Chrysochou Bay requested that it be ensured “by an appropriate assessment that the golf project will not affect the Natura 2000 site “Periochi Polis-Gialia” and especially the exceptional nesting beach of Limni.

“In this context, avoid housing and establish a zero-lighting zone in an area of at least 200 metres south of the boundaries of the Natura 2000 site.”

The initial EIA authorisation issued by the Cyprus environmental department in 2016 was nevertheless inadequate, further prolonging the Commission’s open case against the development.

“The Commission had considered that the necessary environmental impact assessment had been incorrectly carried out, presenting a risk of major environmental damage to one of the most important nesting beaches for sea turtles in the Mediterranean,” said a Commission spokesperson.

An on-the-spot appraisal by the Standing Committee concluded in 2016 that “where present, anthropogenic threats are still at a medium/low level. They probably affect turtle reproduction, especially hatchling recruitment through disorientation from light pollution, and should not be allowed.”

The appraisal highlighted that while the EIA proposed light pollution mitigating measures, the reality is that the threat of light pollution is currently non-existent, and only becomes a potential threat if development plans go ahead.

Regarding the human factor, the appraisal stated that “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.”