Tender process launched for Larnaca marina

Angelos Anastasiou
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Tender process launched for Larnaca marina
Larnaca marina (picture from Bouygues Bâtiment International)
Larnaca marina (picture from Bouygues Bâtiment International)

THE LARGEST marina in Cyprus, hosting up to 1,000 boats, is envisioned in the terms of a tender process for the development of the Larnaca marina and port, opened earlier this week.

The first phase of the process calls for submissions of interest by prospective investors.

According to the terms, submissions may be filed until February 3, 2017.

A month later, the Transport ministry will notify those deemed eligible, who will then be asked to submit bids.

The successful bidder is expected to be selected by August 2017.

The area to be developed has a total 510,000 square metres, which includes the Larnaca marina and port, as well as the undeveloped surrounding area.

The new marina could have a capacity of 1,000 berths (the current marina can hold 350 boats), while the land around it has been estimated at 98,000 sq.m., with a building coefficient of 40 per cent.

According to the terms of the process, the port area is split into two.

The northern part will be slated exclusively for port operations, while the southern part will cover an area of 185,000 sq.m., with a building coefficient of 120 per cent.

General terms for the development allow for construction over 260,000 sq.m., up to 15-story structures.

Investors will have the option to build residences, shopping areas, offices, restaurants, recreational or sports venues.

Interested investors who make it to the next stage will be required to submit a detailed business plan, which should include a development plan, a masterplan, adequate funding commitments, and a binding offer for the concession of the area.

Eligibility criteria include minimum annual revenues of €30m over the last three years, before-tax profitability, debt repayment for two of the last three years, and €50m worth of net assets for the last financial year.

Technical criteria requirements call for interested parties to prove having participated by at least 45 per cent in the operation of a marina hosting at least 300 boats, evidence of the operation of a container terminal with capacity of at least 350,000 tons, and evidence that they have led the development and commercialisation of a project worth at least €75m and a construction area of at least 20,000 sq.m.

ECB argues ‘bad banks’ could reduce NPLs

Reuters News Agency
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ECB argues ‘bad banks’ could reduce NPLs

ECB argues 'bad banks' could reduce NPLsTHE EUROPEAN Central Bank is trying to bring down the amount of non-performing loans at the 127 large banks it supervises, handing out targets to the worst offenders, such as Italy’s Monte Paschi, and setting best practices for the rest.

But the market for bad debt is struggling to take off. The problem is the gap between the price at which banks can afford to sell and what buyers such as private equity funds are prepared to pay.

This is partly because buyers discount the time and cost of working out a bad loan, especially in countries where the judicial system is slow, such as Greece and Italy, and it is sometimes hard for them to value collateral.

Setting up asset-management companies (AMC) – bad banks like those created in Spain and Ireland during the 2008-2012 banking crisis – to buy some of those loans can help ease the pressure on banks and ignite the market, the ECB said.

“Many of the impediments to the creation of secondary NPL markets … can be alleviated by the establishment of a well-designed AMC,” the ECB said in a feature of its Financial Stability Review.

“A further argument for the establishment of an AMC relates to its ability to act as a market reservoir, which can soak up excess NPL stocks while impediments to NPL resolution are being addressed.”

The study echoes comments by ECB President Mario Draghi last summer — when the Italian government was negotiating a solution for Monte Paschi with the Commission — which have so far fallen on deaf ears.

In the study, the ECB argued such bad banks would not fall foul of EU rules against taxpayer bailouts so long as they bought loans at a “long-term economic value” set by national authorities and approved by the European Commission.

Such vehicles could also inject capital into a bank if it would have a capital shortfall in an “adverse scenario”, such as an economic downturn or market crash, as determined by its supervisor in a stress test.

Private investors would still have to bear the brunt of the “expected loss”, that is the difference between a loan’s value on a bank’s books and the price at which it was sold.

The ECB cautioned the solution would work best where loans are large and collateral easy to value, as in the case of mortgages, while it might be a poor fit for corporate loans, which are typically heterogeneous and smaller.

(Reporting by Francesco Canepa, editing by Larry King)

Slump in Brits buying homes in Europe

Reuters News Agency
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Slump in Brits buying homes in Europe

Brits buying homes slumpsTHE NUMBER of Britons buying homes abroad has slumped since June’s vote to leave the European Union and there are signs that thousands of families will react to the fall in the value of sterling by holidaying at home next summer.

Mark Horgan, chief executive of Moneycorp, which runs airport exchange booths and consumer and corporate money transfer services, said foreign house purchases had fallen by a quarter compared to a year ago.

He said there had also been a surge in sales of houses in Europe due to uncertainty over what rights UK citizens will have there in future and fear that the pound, down roughly 20 percent in the last year, could weaken further.

With more than 40,000 clients, Moneycorp says it has more than 10 percent of the market in transferring funds for British people buying properties abroad, who now number an estimated 380,000 separate investors.

“There has definitely been a big trend back in from euro to sterling,” Horgan told Reuters. “For us that is bad news because it probably means its people selling up and exiting the market.

“New completions are off by about a quarter year on year. You can understand why that would be the case. You clearly have hesitancy from Brits who are unsure of their status after Brexit. The question is whether those are lost purchases or delayed purchases.”

The volatility in currency markets since the Brexit vote has driven Moneycorp’s overall volumes 55 percent higher since July 1. But private client transfers from pounds to euros, are down 30 percent, while transfers from euros back to the UK are up 80 percent.

Horgan, who runs the currency sales desks at two of London’s big package-holiday heavy airports, Gatwick and Stansted, said that he had seen signs of possible falls in passenger volumes next year.

Europe’s biggest airline, Ryanair, said in the aftermath of June’s vote to leave the EU that it would fly 2 million fewer seats from a total planned 23 million from Britain next year, cutting 600,000 seats from a planned 9 million at Stansted this winter.

Rival airline easyJet, facing the fallout of Brexit both for consumers and its own corporate infrastructure, reported a 28 percent drop this week in annual pretax profit, its first decline since 2009.

Both Gatwick and Stansted say they expect the robust growth of recent years to continue, while admitting that they are watching the impact of Brexit on UK holidaymakers closely.

“We are quite clearly seeing that staycations are likely to be on the rise in 2017,” Horgan said. “There has been a slowdown in growth in recent months.”

(Writing by Patrick Graham; Editing by Jamie McGeever and Robin Pomeroy)

How far have Cyprus property prices fallen?

Fiona Mullen
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How far have Cyprus property prices fallen?

How far have Cyprus property prices fallen?THIS WEEK, the Central Bank of Cyprus published its residential property price index for the second quarter of 2016. Prices dropped by a comparatively mild 0.5% over the previous period and by 1.7% compared with the second quarter of 2015.

If you own an apartment in Paphos, the news was even better, as it was the only region that saw a year-on-year rise. Apartment prices rose by 3.3% over the same period of the previous year, although they slipped by 0.9% compared with the previous quarter. House prices in Paphos were also up 0.4% year on year.

We may, therefore, have reached the bottom of the Cyprus property-price collapse. How far have we fallen?

After rising by 21.8% in 2007, property prices reached their peak in the third quarter of 2008, right before the collapse of US financial giant Lehman Brothers. Since then, property prices have tumbled on average by 31.5%, according to the Central Bank index.

Prices in Famagusta, the smallest district, dropped by 40.6%. Larnaca fared second worst, with a decline of 34.7%. Nicosia was next, with a slide of 30.7%, then Limassol (27%) and finally Paphos (26.6%).

The index for Cyprus as a whole (73.2) is exactly where it was in the second quarter of 2006. In other words, prices have slipped back a whole decade.

Actual property prices

The Central Bank of Cyprus uses a ‘hedonic‘ index. This, the Central Bank says, “is able to disentangle that part of the price variation which is: a) due to changes in the mix of characteristics of the property; and b) caused by inflationary factors and market conditions”.

If we want an idea of actual prices, we need to look at the data published by the Royal Institute of Chartered Surveyors (RICS).

For most quarters, the RICS prices show a steeper fall than the Central Bank of Cyprus. Since the fourth quarter of 2009, they have fallen by 39.9%. Unfortunately, the RICS record does not go back any further.

However, comparing the RICS and the Central Bank of Cyprus price changes, I estimate that RICS apartment prices have fallen by 45.3% since their 2008 peak.

What has happened to actual prices? According to RICS, the average price of a standard, two-bedroomed apartment in Cyprus fell to €101,327 in the second quarter of 2016, compared with €168,466 when the records began in late 2009.

The cheapest place to buy an apartment was Famagusta, where the average price was €83,626, while the most expensive was Larnaca, with a price of €115,936. Limassol was €104,575, Nicosia €106,607 and Paphos €95,888.

The high price of Larnaca apartments is puzzling. It has the main airport and the beach, but it is a smaller town in terms of tourism. One reason could be that a number of people, including well paid public-sector workers, commute daily to Nicosia, so the higher prices could reflect their larger disposable incomes. Nevertheless, after Famagusta, Larnaca was hardest hit by the price falls.

Fiona Mullen – Director, Sapienta Economics Ltd

(This article was first published by incyprus)

Cyprus urged to implement mortgage directive

Nigel Howarth
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Cyprus urged to implement mortgage directive

Cyprus urged to implement mortgage directiveCYPRUS along with eight other EU member states has been given two months to fully transpose the Mortgage Credit Directive (Directive 2014/17/EU) into national law if it wants to avoid going to court.

Following many years of ‘devious’ practices by banks and intermediaries throughout EU member states, the Directive sets out common standards to enhance the protection of consumers taking out loans to buy residential property.

Member States were required to transpose the directive into national law by 21 March 2016. But having missed the original deadline Cyprus and eight other EU Member States were sent letters of formal notice in May 2016 requiring them to implement the rules within six months.

Yesterday’s request takes the form of a reasoned opinion. If Cyprus fails to act within two months, it may be referred to the European Court of Justice.

The law will guarantee that citizens of EU member states have “clearer and understandable information” on mortgages thanks to the introduction of a ‘European standardised information sheet’ (ESIS), which will allow borrowers to “understand better the risks” associated with their mortgage agreement as well as “compare offers and shop around for the best product to suit their needs at the best price”.

Fundamental planning reforms

Nigel Howarth
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Fundamental planning reforms

FUNDAMENTAL reforms are planned to Cyprus’ time consuming and complex procedures involved with the licensing and control of building development, according to a recent announcement by the Interior Ministry.

The Ministry is working with the Austrian Finance Ministry to develop proposals and recommendations based on best international practices, which are expected to be completed by the end of July 2017. These will rationalise: Planning and Building Permits, Certificates of Approval, the enforcement of building control, the issuance of Title Deeds; they will also include the oversight of projects and take into account environmental considerations.

Earlier this month experts from overseas held intensive talks with government agencies and stakeholders including: the Public Administration Reform, Department of Planning and Housing, Department of Lands and Surveys, Department of Environment, Water Development Department, Fire Department, CTO, Energy Service, Labour Inspection Department, Union of Municipalities, ETEK, Associations scientists engineers, Federation of Building Contractors Associations of Cyprus, Planning Authorities, Building Authorities, Cyprus Land and Building Developers Association, CCCI, OEB, Water Boards, Sewerage Boards, etc.

The present discrete systems for obtaining planning permission and building buildings will be rationalised into a new simplified system to be operated by a single authority in each of the island’s districts.

The ministry acknowledges that these fundamental reforms will be difficult and complex, but vital for the future development of the island. If it succeeds, the ministry considers that the reforms will help boost the economy as building permissions will probably increase.

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