THOUGH MASS foreclosures are a new phenomenon in Cyprus, seeking out bargains off the backs of those who have lost their properties to the bank, might appear callous, even though primary homes are not a target, Bank of Cyprus insists.

The complex issue was highlighted a week ago when the bank was forced to suspend an eviction order of a woman in Limassol, who reportedly owed them around €80,000. Representatives of the movement against foreclosures, single parent families, and politicians, gathered outside the house in Ayios Tychonas in Limassol to protest the bank’s intention to take the house.

The Bank of Cyprus (BoC) was planning to put the property, reportedly worth over €300,000, up for sale. It came to light later that the woman reportedly only uses the two-storey villa with a swimming pool for a few months every year and that she spends the rest of the time in Romania, her home country.

Bank sources said the bank was not even aware that someone lived in the house. The bailiff had to post the eviction order on the door because there was no one to receive it. The house was acquired by the husband with a loan from BoC, which has not been serviced since 2009. With interest, it had reached €94,000.

So, with a sort of clear conscience, it seemed safe enough morally to at least peruse the website of the bank’s real estate management unit (Remu).

One of the first featured offerings that hits the house hunter on the website is a staggering €9.7m price tag for a big but bland home in Limassol. You can actually buy an entire island with three villas for less than that in Belize. How about a €5.1m house in Strovolos, Nicosia? Umm, no, not as long as a castle in France costs €1.2m.

To be fair, the Remu website has a wide variety of residential and commercial properties, and plots around the island, many under €100,000. In the Nicosia district alone Remu manages 120-odd properties of which 33 are residential, 26 commercial and 64 are plots. These include finished and unfinished apartments, houses and businesses strewn across the city and outlying villages.

The question is, however, with the market improving but still depressed, who is going to buy an unfinished property, or indeed a shopping mall for €34m?

Remu is about to release its 2016 year-end report on February 28 and no one from the organisation was able to speak the Sunday Mail before then, so we turned to property expert Nigel Howarth who runs the Cyprus Property News website.

He believes one of the biggest problems BoC faces is offloading the unfinished properties, especially the commercial developments. Asked who he thought might buy a €9.7m home in Limassol, Howarth said: “A property is worth whatever someone is willing to pay for it… but to be honest, I can’t imagine.” He also mentioned the shopping mall. “Who is going to buy that?” he said, though added that the bank must offer the properties at 80 per cent of the value in the first instance and cannot lower the prices for a year.

According to the latest figures from Remu, via the BoC website, during the first nine months of 2016, the unit acquired €894m in assets via the execution of debt for property swaps.

During those nine months, the bank completed the disposal of real estate assets amounting to €110m. As of September 30 2016, Remu was managing properties with a total value of €1.3bn and was servicing either completed or in progress properties for over 650 assets.

Last June, properties worth €201m in the unit’s possession were located abroad, mainly in Greece.

Howarth said much of this could have been avoided if during the ‘good times’, the bank had gone after developers who had not paid their mortgages.

“They never chased them and now they have to foreclose,” he said. “They are going to have a problem to unload large properties. They may have to sell to other companies just to get rid of the debt as they can only have the properties on their books for three years.”

Howarth also said that not only were so many of the properties unfinished as they were foreclosed from developers but those – even the finished ones – as long as they remained on the market, would cost the bank money in maintenance. “It’s a bit of a ridiculous situation,” he added. “Banks are not real-estate agents.”

There appeared to be some light at the end of the tunnel during the week when Moody’s Investors Service said that the recovery of property prices, reported by the Central Bank of Cyprus, would improve the asset quality of Cypriot banks, which was a “credit positive”.

“Recovering property prices would support the construction industry, incentivise mortgage repayments from strategic defaulters who have the capacity but are unwilling to repay and allow banks to offload real estate taken on their balance sheet through debt-to-asset swaps,” Moody’s said.

Through loan restructurings involving debt-to-asset swaps, Moody’s said BoC, whose property now makes up 6 per cent of its total assets, would be facilitated by a gradually recovering property market, which would reduce the likelihood of the bank recording losses.

The real estate market showed signs of recovery last year partly on incentives given by the government to property buyers and partly on an increase in loan restructurings involving debt-to-asset swaps. Total property transactions rose 43 per cent last year to 7,063. Residential property prices rose marginally in the third quarter of 2016 compared to the previous quarter.