Property price falls reduce

Nigel Howarth
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Property price falls reduce

Property price falls reduceTHE LATEST housing price index (houses and apartments) from the Cyprus Central Bank reports a fall of 1.8% in property prices during the fourth quarter of 2014, with the house prices falling 2.1% and apartment prices falling 1.5%.

However, on an annual basis, the housing price index recorded a fall of 8.2% in the fourth quarter compared with a fall of 8.9% in the third quarter indicating that the fall in prices may be slowing.

The largest quarterly decline in prices was recorded in Famagusta (-2.6%), followed by Nicosia (-2.1%) and Limassol (-2%); while prices in Larnaca and Paphos fell by 1% and 0.6% respectively.

The largest annual decline in prices was also recorded in Famagusta (-10.4%), followed by Nicosia (-8.2%) and Larnaca (-7.75%); while the annual falls in Limassol and Paphos were 7.5% and 3.7% respectively.

According to the Central Bank, residential property prices are now at levels last seen in 2006, two years before the bubble burst.

(Property prices in Spain, where their property bubble also burst, are currently at levels last seen in 2003 according to data from the European Central Bank.)

Cyprus real estate dynamics report

Nigel Howarth
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13
Cyprus real estate dynamics report

THE NEWLY published Real Estate Dynamics report by Ernst & Young Cyprus Ltd (EY) provides a valuable analysis of the many factors that are currently affecting the Cyprus property market.

The twelve page report draws data from a number of sources, including the Department of Lands and Surveys, the Central Bank of Cyprus, the Royal Institution of Chartered Surveyors (Cyprus), and the International Monetary Fund.

Of particular interest is a map showing the annual fall in apartment and house prices together with the number of transactions in each of the Districts. It shows that the higher the reduction in prices, the greater the rise in the number of transactions. I.e. If prices fall, sales increase.

The reports points out that the island’s construction and real estate sectors have been hit hard by the economic crisis and continue to face significant challenges and that while mortgage interest rates have fallen over the past year, they are still considerably higher than the Eurozone average mortgage interest rates.

The market has also been adversely affected by the uncertainty over the implementation of the foreclosures legislation passed last year, whose implementation is currently blocked by opposition MPs. EY considers that the implementation of the legislation is expected to dramatically shorten the amount of time required to repossess property used as collateral, ultimately leading to enhanced activity in the real estate market.

Further reading

Cyprus Real Estate Dynamics – issue 1 Ernst & Young Cyprus Ltd.

Troikans bump into elephant

Editorial
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12
Troikans bump into elephant

Troikans bump into elephantON A RECENT visit, the Troikans were quite appalled to find out the glacial speed with which the Lands and Surveys Department issued Title Deeds.

They were discussing the privatisation of the Cyprus Ports Authority, examining its assets and discovered that the Authority had no Title Deeds for the land on which the Limassol Port was built.

Back in 1972, the government had asked for a loan from the World Bank for the building of the port. The Bank said the Authority would have to have assets to use as collateral for the loan and so the government transferred the state land to it.

Forty-three years later, the Lands and Surveys Department had still not got round to issuing the Title Deeds.

Investors eye Venus Rock

Editorial
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3
Investors eye Venus Rock

venus rock development cyprusA HANDFUL of prospective buyers are believed to have shown keen interest to invest in the Venus Rock project, the biggest integrated beachfront resort already underway on the island with a market value of €5.7 billion, with on-site visits that followed last week’s successful Cyprus Investors’ Summit held in Limassol.

The project, under the wings of Aristo Developers, the property company 49%-owned by AIM-listed Dolphin Capital, turned out to be the star attraction at the Summit, organised by the Cyprus Investment Promotion Agency. The aim was to bring major institutional investors in contact with managers of local projects, including the Cyprus Limni Resorts & Golf Courses Plc, developer of the €1.5 billion hotel and golf resort project near Polis Chrysochous, as well as the upcoming privatisation of state companies and sale of government-owned assets.

“Of the 34 major investors and fund managers who attended the Summit, nearly half showed keen interest primarily in Venus Rock and also other investments, engaging in one-to-one presentations, while seven of those arranged for on-site visits,” Aristo Head of Marketing, Marios Pavlou, told the Financial Mirror on the sidelines of the Limassol event.

Ever since the €350 mln deal arranged by Dolphin Capital Investors with China Glory Investment Group fell through, there has been steady interest in Venus Rock, because it is a mature project and includes plots that are ready for delivery, Pavlou explained.

“While the real estate market was impacted by the financial crisis that hit Cyprus during 2012-2013, this has been less pronounced in prestigious golf resorts and beachfront projects,” he said.

Pavlou added that about 400 plots and 400 villas have already been sold, 300 villas have been built so far and a further 250 plots are available in the present phase.

“Don’t forget that the project incorporates the 18-hole Secret Valley golf course, which is a ready-made project for any investor.

“It’s a matter of time for the right investor to come forward. As a general investor rule, Cyprus is at the bottom line of its economy curve and it is best regarded as a buyer’s market,” Pavlou said.

Some of the features of the project incorporate Cypriot and eastern architecture, which makes it very attractive to Asian buyers.

The long list of associates includes EDSA Landscape Architecture (US), Porphyrios Associates (UK), Robert AM Stern Architects (US), Geoffrey Mouen Architects (US), UDS Architects (Cyprus), Gasterelia Design of Lebanon (developers of the Nikki Beach hotel, club and villa concepts), and Tony Jacklin championship golf course (US), all of which are attractive features and contributors for potential buyers.

At 10 million sq.m. of land, and a capacity to build up to 5,000 units, Venus Rock’s managers are expected to proceed with some sort of deal within 2015 that will inject much-needed cash into the economy and allow for the construction industry to pick up again.

The project’s marina is the only pending issue with the authorities, while the inclusion of the Nikki Beach Hotel concept has also created interest from investors.

Guarantor’s proposals to troika

Editorial
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6
Guarantor’s proposals to troika

Guarantor's proposals to troikaTHE government has made a number of bridging proposals to the troika of international lenders on the issue of guarantors to bad debt, which forms part of the fifth and final bill of the so-called insolvency package.

It is hoped the international creditors will green-light the provisions so that the bill can be brought before the cabinet for ratification in the first week of March, and then tabled to parliament, the Cyprus News Agency (CNA) reported.

Earlier, the lenders had red-flagged a proposal that guarantors of loans-turned-bad be let off the hook.

According to unnamed government sources cited by CNA, the finance ministry now proposes that guarantors are called to settle the principal debtor’s dues when the latter is unable to do so. However, it must be ensured that guarantors are left with reasonable living expenses allowing them to pay off their share of the outstanding debt.

The reasonable living expenses for guarantors must be 1.5 times the corresponding reasonable expenses set for the principal debtors.

A guarantor will have the right to pay in monthly instalments, if he or she so chooses, and the interest rate will not be higher than that charged to the principal debtor in the latter’s repayment scheme.

Also, the primary residence of a guarantor cannot be foreclosed on and auctioned off in order to pay off the principal debtor’s loan, unless the guarantor has put up his or her house as security for the debtor’s loan.

Under another bill regulating personal bankruptcy, the troika had agreed to spare from repossession individuals whose homes are worth up to €250,000 and the amount they borrowed up to €300,000.

But in addition to this, CNA reported, the troika people now want to add an additional eligibility criterion: the exemption will also take into account an individual’s total immovable assets. The eligibility value of the assets will be decided during further talks with the finance ministry technocrats.

Cyprus has agreed to overhaul personal and corporate bankruptcy laws, among other things, in exchange for a €10bn international bailout.

Construction at record low

Nigel Howarth
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2
Construction at record low

REFLECTING the on-going crisis in the construction sector a total of 4,493 building permits were issued in Cyprus during 2014, a fall of 7.6% compared to 2013. The total value of these permits fell 24.7%, their total value fell 24.7%, while the number of new homes fell 31.1%.

In December 2014 a total of 345 building permits were authorised, a fall of 12.4% on the number issued in the same period the previous year. The total value of these permits fell 13.5%, while their total area fell 5.2%.

In December 2014, building permits were issued for:

  • Residential buildings – 233 permits
  • Non-residential buildings – 65 permits
  • Civil engineering projects – 21 permits
  • Division of plots of land – 19 permits
  • Road construction – 7 permits

New home construction

The 233 residential building permits authorised in December provided for the construction of 263 dwellings comprising 134 single houses and 129 multiple housing units (such as apartments, semis, townhouses and other residential complexes).

Cyprus new home construction

Annual performance

During 2014 a total of 3,363 building permits were authorised for the construction of new homes, a fall of 9.0% compared to 2013 when 3,699 permits were issued. The total value of these permits fell 24.7%, their total area fell 24.9% and they provided for the construction of 31.1% fewer homes.

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

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