Revised citizenship scheme approved

Staff Reporter
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Revised citizenship scheme approved

cyprus citizenship by investmentTHE COUNCIL of Ministers approved on Tuesday the revised scheme for granting Cypriot citizenship to non-Cypriot entrepreneurs/investors.

In statements to the press on Wednesday, Minister of Finance Harris noted that the revision of the scheme aims to encourage real investments that would benefit the economy.

The government, he said, wants to attract investors who will chose Cyprus as their basis of residence and economic activity.

Investments should be kept for three years and companies in which investments are made should employ at least five Cypriot citizens.

The most important change, Georgiades said, is that the revised scheme abolishes the provision for collective investment of €12 million which is being replaced by an individual investment of €2 million and the purchase of a residence worth at least €500,000.

The new scheme terminates the provisions for the granting of citizenship to those with bank deposits worth €5 million, to persons whose deposits have been impaired due to the measures implemented after the 15th March 2013 and those who purchased bonds worth €2.5 million.

Court bans banks foreclosing

Stelios Orphanides
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Court bans banks foreclosing

Cyprus court bans banks foreclosingA DECISION of the Larnaca district court banning banks from foreclosing collateralised properties for which courts gave the green light before the new foreclosure law came in effect last year, is upsetting the banks’ plans to tackle non-performing loans.

The ruling which concerns a mortgage deal signed in 1997, for which Bank of Cyprus had a court ruling issued in 2006 ordering the foreclosure of the property, said that the lender was not entitled to send a “type I” notice notification to the borrower informing the latter of its intention to foreclose the property.

“It seems unorthodox if not abusive to use a procedure provided by legislation in order to pursue a result which was already an order by the court,” the ruling said.

“The foreclosure procedure, pursuant the provisions of Part VIA, starts when the type I notification is served,” the court said. “When the notification is rejected, it is self-evident that the procedure triggered by the notification can no longer exist”.

An official of the Cyprus Banks Association said that its members will study the ruling and assess anew the situation.

“We are carefully studying and evaluating the ruling,” Michael Kammas, director general of the business group said on the phone on Tuesday.

As the ruling was issued at the first instance, he continued, “it does not constitute precedence for similar cases” and neither cancels “foreclosure procedures”.

In a first reaction, sources at Bank of Cyprus expressed their concern. “The legal framework is a complete mess,” a Bank of Cyprus source said in a telephone interview. “We now have to assess the situation”.

Last year, the bank announced its intention to test the new, modernised as part of Cyprus’ bailout terms in 2014 before coming into force in August 2015, by foreclosing properties for which courts already issued rulings. Since the start of foreclosures in June, success was disappointing as only a fraction of the real properties foreclosed found a buyer.

Costas Melas, who heads a group representing borrowers, said on Tuesday that banks could still foreclose properties based on existing orders, issued before the new, unpopular law came into effect.

“Banks are at risk” of losing other cases at the courts, “there are thousand lawsuits pending for the foreclosure of collateral,” he said in an interview to state-radio CyBC on Tuesday.

Slight fall in building permits

Nigel Howarth
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Slight fall in building permits

Cyprus: slight fall in building permitsTHE NUMBER of building permits authorised in June 2016 stood at 455 compared with the 461 authorised in June last year; a fall of 1.3 per cent according to official figures released by the Cyprus Statistical Service.

However, compared with June 2015, the total area of these permits rose 24.2% to 91.4 thousand square metres from 73.6 thousand square metres and their value rose 19.4% to €89.5 million from €74.9 million.

During June, building permits were issued for:

  • Residential buildings – 315 permits
  • Non-residential buildings – 87 permits
  • Civil engineering projects – 15 permits
  • Division of plots of land – 33 permits
  • Road construction – 5 permits

Building permits for new homes

The 315 residential building permits approved in June provided for the construction of 287 new homes comprising 173 single houses and 114 multiple housing units (such as apartments, semis, townhouses and other residential complexes).

This is an increase of 20.1% compared with June 2015 when building permits were issued for the construction of 239 new homes.

Building Permits Issued for the Construction of
New Homes (Number of Dwellings)

Month 2015(Dwellings) 2016(Dwellings) Increase/Decrease %age
Change
January 204 243 39 19.1%
February 384 312 -72 3.0%
March 297 306 9 3.0%
April 147 201 54 36.7%
May 276 278 2 0.7%
June 239 287 48 20.1%
Total 1,547 1,627 80 5.2%

Year to date

During the first half of 2016 the number of building permits authorised for both residential and non-residential projects has risen by 4.6% to 2,611 compared with the 2,495 authorised in the first five months of 2015.

However, the total value of these permits has fallen by 4.4% to €490.2 million and their total area has fallen by 0.6% to 455.4 thousand square metres, while the number of housing units has increased by 5.2%.

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

Work to start on Ayia Napa marina

Stelios Orphanides
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Work to start on Ayia Napa marina

Ayia Napa MarinaMAKRONISOS Marina Ltd, a unit of the Caramondani Group, said that it signed an agreement with Greece’s Terna A.E. for the construction of a marina in Ayia Napa with a capacity of 600 vessels over a 30,000 square-metre area worth €220 million.

Construction work, expected to take five years, is scheduled to begin on September 30, the company said in an emailed statement on Wednesday.

The contract with Terna, signed on Tuesday in Nicosia, “concerns the first stage of construction work, which include harbour and infrastructure works, the construction of which will take about three years,” Makronisos Marina said. Terna chairman Dimitrios Antonacos and Gerasimos Caramondanis and Stavros Caramondanis signed the agreement.

A separate tender for the second stage of the construction works which will include residential and commercial developments, such as “two towers and villas,” will follow, the company said. “Construction works are estimated to create 800 jobs by contractors and subcontractors and further 200 persons will be employed to operate the project”.

“The ambitious project is expected to offer new dynamism to the local economy and Cyprus’s tourism product in general,” Makronisos Marina said.

Ayia Napa’s mayor Yiannis Karousos was quoted as saying that “the Ayia Napa marina is the basis of materialising our vision and make Ayia Napa the best and most cosmopolitan tourist resort in the Mediterranean”.

Swiss Franc loans: 80 per cent non-performing

Staff Reporter
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Swiss Franc loans: 80 per cent non-performing

BRIEFING the Parliamentary Committee of Finance head of the CBC Supervision Division Yiangos Demetriou said that loans in Swiss Franc declined from €2,052 million in December 31 2015 to €1,778 million on 30th June 2016, adding however that 80% of these loans are considered as non-performing.

The problems with loans denominated in Swiss Franc (CHF) arose when the exchange rate in relation to the euro increased by 40% trapping borrowers who concluded such loans.

According to Demetriou out of €274 million reduction only €60 million concerned household loans whereas the remaining €214 million concerned corporate loans. These loans are held by three banks, Bank of Cyprus, Alpha Bank and, to a lesser extent, Hellenic Bank.

“From the figures it is evident that the schemes implemented by the commercial banks are more effective for legal persons and less effective for households,” Demetriou said.

Loans in CHF for households on 30 June 2015 amounted to €1,124 million of which €893 million for house purchase, whereas loans for primary residences amounted to €264 million. Corporate loans amounted to €654 million.

Demetriou noted that the reduction emerged in the context of debt repayments, debt write offs and conversion of loans from CHF to euro.

Replying to questions, Demetriou said that “more pressure will be exerted so that the banks improve their schemes and attitude,” towards the troubled borrowers.

MPs expressed concerns on the slow pace in restructurings of household loans and suggested the parliament should consider approving a law forcing the banks to be more generous in reaching settlements with the borrowers.

“Yes the banks should suffer in a way that would not create additional capital requirements. If the banks are called to cover a greater cost and if capital requirements arise these will be covered by the taxpayer,” Demetriou said.

Averof Neofytou, the Committee president said the Parliament could assist adversely affected borrowers “without harming those who suffered the biggest blow of the (financial) crisis.”

As part of a €10 billion bailout by the EU and the IMF to Cyprus in 2013, 47.5% deposits over €100,000 were converted to equity to recapitalise Bank of Cyprus, whereas Laiki Bank entered in resolution which whipped out approximately 80% of deposits over €100,000.

Neofytou said the banks have a buffer of 25% – 30% to assist the borrowers in finding the best possible solutions, but he cautioned that if a bill imposes losses exceeding the buffer “we would shoot the depositors in the foot once again”.

Strong growth in Cyprus property sales

Nigel Howarth
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Strong growth in Cyprus property sales

Strong growth in Cyprus property salesPROPERTY sales in Cyprus increased by 50 per cent in August compared August last year according to the latest official figures published by the Department of Lands and Surveys.

During August a total of 451 contracts for the sale of commercial and residential properties and land (building plots and fields) were deposited at Land Registry offices across the island; up 50% from the 496 sold during August last year.

Of those 451 contracts, 69% (346) were deposited by domestic (Cypriot) purchasers, while 31% (105) were deposited by overseas (non-Cypriot) purchasers.

The 50% increase in August follows a 26% increase in July, 42% increase in June and a 17% increase in May.

The number of contracts includes ‘non-sale’ agreements such as loan restructurings, recoveries and debt-to-asset swaps agreed between the banks and defaulting borrowers. As these ‘non-sale’ agreements are not recorded separately, there is no clear picture of the actual demand for property in the domestic market.

Sales rose in all districts with Famagusta leading the way with sales up 193% compared to August 2015. Sales in Nicosia rose 73%, while sales in Paphos, Limassol and Larnaca rose by 55%, 48% and 8% respectively.

Total Property Sale Transactions – 2015/2016 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2015 46 45 83 88 86 61 60 37 65 64 60 54
2016 54
 79
 82
 79 82 98 102 64
Famagusta 2015 16 27 17 17 21 33 45 14 30 29 33 42
2016 22
 35 33
 35
 24 34
 27 41
Larnaca 2015 90 71 98 67 68 111 95 75 85 87 111 114
2016 78
 108 121
 127
 103 120
 123 81
Limassol 2015 95 97 160 115 135 135 156 87 114 166 137 169
2016 92
 179 197
 166
 145 222
 220 129
Paphos 2015 74 85 94 94 95 124 140 88 91 117 105 134
2016 81
 100 106
 107
 120 183
 153 136
Totals
 2015 321 325 452 381 405 464 496 301 385 463 446 513
2016 327
 501 539
 514
 474 657
 625 451

Year to date performance

During the first eight months of 2016 property sales have risen 30% to reach 4,088 compared with 3,135 during the corresponding period last year.

Property sales have risen in all districts. In Limassol sales have risen 38% and they have risen by 32% in Famagusta. Meanwhile, sales in Larnaca, Nicosia and Paphos have risen 28%, 26% and 24% respectively.

Domestic property sales

Property sales to the domestic (Cypriot) market in August rose 44% compared to August 2015, with sales reaching 346 compared with 241 in the same month last year.

(Note that domestic sales include ‘non-sale’ agreements and the figures presented do not truly reflect the number of ‘real’ sales.)

Sales rose in all districts with Famagusta leading the way with sales up 129% compared to August 2015. Sales in Nicosia rose 61%, while sales in Limassol, Paphos and Larnaca rose by 55%, 38% and 8% respectively.

Domestic Property Sale Transactions – 2015/2016 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2015 39 36 71 74 74 58 56 36 55 60 50 44
2016 43
 70
 10
 69 68 92 94 58
Famagusta 2015 9 2 16 16 9 30 28 14 25 24 24 41
2016 20 31 21
 33
 24 7 19 32
Larnaca 2015 77 49 91 40 45 82 60 62 53 59 81 81
2016 68 96 85
 91
 93 75 91 67
Limassol 2015 71 77 147 90 86 100 123 65 81 127 82 123
2016 68 158 145
 122
 126 162 156 101
Paphos 2015 39 38 86 64 34 63 83 64 47 92 71 89
2016 61 72 59
 65
 105 126 74 88
Totals
 2015 235 202 411 284 248 333 350 241 261 352 308 378
2016 260 427 382
 380
 416
 462
 434 346

Year to date performance

Domestic sales during the first seven months of 2016 are up 35% compared with the first seven months of 2015 with sales reaching 3,107 compared with 2,304 during the corresponding period last year.

Sales have risen in all districts. Sales in Famagusta have risen 51% and by 38% in Paphos, while sales in Limassol, Larnaca and Nicosia have risen by  37%, 32% and 27% respectively.

Overseas property sales

Property sales to the overseas (non-Cypriot) market rose 75% in August compared with August 2015 with 105 properties being sold compared with 60 in the same month last year.

Sales rose in all districts. In percentage terms, Nicosia led the way with sales to the overseas market up 500% compared to August 2015, while sales in Paphos, Limassol, and Larnaca rose by 100%, 27% and 8%% respectively. (Nine properties were sold in Famagusta following August 2015’s dismal total of zero).

Overseas Property Sale Transactions – 2015/2016 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2015 7 9 12 14 12 3 4 1 10 4 10 10
2016 11
 9
 10
 10 14 6 8 6
Famagusta 2015 7 25 1 1 12 3 17 0 5 5 9 1
2016 2 4 12
 2
 0
 27
 8 9
Larnaca 2015 13 22 7 27 23 29 35 13 32 28 30 33
2016 10 12 36
 36
 10
 45
 32 14
Limassol 2015 24 20 13 25 49 35 33 22 33 39 55 46
2016 24 21 52
 44
 19
 60
 64 28
Paphos 2015 35 47 8 30 61 61 57 24 44 35 34 45
2016 20 28 47
 42
 15
 57 79 48
Totals
 2015 86 123 41 97 157 131 146 60 124 111 138 135
2016 67 74 157
 134
 58
 195
 191 105

Year to date performance

Overseas sales during the first seven months of 2016 are up 17% compared with the first seven months of 2015 with sales reaching 981 compared with 841 during the corresponding period last year.

With the exception of Famagusta, where sales have fallen by 3%, they have risen in all the other districts.

Sales in Limassol have risen 41%, while sales in Nicosia, Larnaca and Paphos are up 19%, 15% and 4% respectively.

Cyprus Property Sale Transactions 2000 – 2016

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 (Aug)
 981 3,107 24.0% 4,088
Totals
 57,786 139,044 29.4% 196,830

 

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