Aristo trial gets underway

Nigel Howarth
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Aristo trial gets underway
Aristo trial gets underway
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THE TRIAL of the four suspects in the Aristo land fraud case, which was postponed on 12th January following a request from the defence council, restarted today at the Paphos Assizes.

The four defendants, Theodoros Aristodemou, his wife Roulla, former municipal engineer Savvakis Savva and Aristo architect Christos Solomonides, are accused of corruption and fraud in the alleged division of plots of land at Skali in Paphos.

It is alleged that the illegal division of the plots of land at Skali enabled Aristo Developers Limited to develop on a considerably larger area of land than the company would have legally been entitled to, gaining the company some additional €1.1 million in illicit revenues.

The four defendants are facing 32 charges. However the former municipal engineer, Savvakis Savva, is facing a further four charges relating to abuse of power. All four have pleaded not guilty.

Each of the four had previously been granted bail of €100,000 and surrendered their travel documents, while their names were added to a stop list so that they could not leave Cyprus.

Ayia Napa marina investment

Editorial
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ayia napa marinaAN EGYPTIAN businessman will invest some €220 million in the construction of the Ayia Napa marina, it emerged on Monday.

Naguib Sawiris was received by President Nicos Anastasiades who later tweeted: “We welcome the highly important €220 million investment by Orascom in Ayia Napa.”

Energy and Tourism Minister Giorgos Lakkotrypis said the Egyptian investor had come to an agreement with the consortium that planned to build the marina in the Ayia Thekla area.

“The project is of great importance to Cyprus,” Lakkotrypis said outside the presidential palace.

Work on the marina was expected to start mid-2015.

“It is a project that will enrich our tourist product, in line with the objective of the new strategy,” the minister said.

Sawiris said he had opted to invest in Cyprus “because we believe in this country” which has beautiful beaches.

The Egyptian businessman said he expected the project to be completed in three years. It will include a marina, a luxury hotel, villas and apartments.

He said the aim was to promote Ayia Napa as a top tourist destination.

[youtube=https://www.youtube.com/watch?v=4NC1abgLXHg&w=470&rel=0]

The major problem of non-performing loans

George Mountis BSc, MSc, Ph.D
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non-performing loansTHE CENTRAL Bank of Cyprus (CBC) started releasing data on non-performing loans (NPLs) of both commercial and cooperative banks in June 2013. Ever since, NPLs as a percentage of total credit facilities continue to rise.

However, although they rose from 30.6% in June 2013 to almost 51% in November 2014 (latest available data), something that corresponds to over €7bn of additional non-performing debt, NPLs restructuring has been very slow with the percentage of restructured on total non-performing loans not having exceeded 12% during the aforementioned period (CBC, 2015).

More in particular, as of late November 2014, only about 11.1% of NPLs, equating to loans worth €3.1 billion, had been restructured. As far as credit facilities to legal entities (mainly corporations) are concerned, the construction industry was the one to display the highest restructuring rate; by the end of November, 25.3% of the sector’s non-performing loans had been restructured. It should be noted that Construction displays the highest percentage of NPLs with 78.7% of the loans granted to corporations active in the industry not being serviced. The NPLs to developers and contractors that have been restructured account for over €1.4bn representing therefore more than 46% of total NPLs restructured. High restructuring rates have been recorded in the Transportation and Health industries exceeding in both cases 30%. Restructured NPLs in the real estate and tourism (accommodation & food services) industries reached 15.6% and 16.1% respectively.

Credit facilities to private individuals, of which more than half (51.7%) are classified as non-performing, the average restructuring rate reached 8.3%, 9.9% for housing and 6.6% for consumer loans. Of the c. €4.3bn worth loans granted for the purchase or construction of owner-occupied immovable property that are not being serviced, only €378mn had been restructured by the end of November 2014.

Loan restructuring refers mainly to the extension of their repayment periods, and/or ‘temporarily’ decreasing monthly instalments. In some cases, restructuring involves decreasing interest rates or waiving part of the capital and/or the interest due. Moreover, the complex procedures that need to follow in order to proceed with loan restructuring are considered to be an obstacle to their effort; for this reason various stakeholders have already submitted a demand to the Central Bank of Cyprus asking for the simplification of the process. Finally, the approval of a bill for property divestment and of an appropriate insolvency framework are also believed to be critical for the acceleration of restructuring rates within 2015.

Banks could secure the collection of significant parts of loans that are currently not being serviced (and, therefore, the increase their revenue and liquidity), by managing their NPLs more efficiently. A more effective management approach comprises the restructuring of loans that are classified as non-performing but are still considered ‘viable’. On the other hand, there are no obvious benefits resulting from the delay of the restructuring process; quite to the contrary, the danger of a new crisis in the Cypriot banking system is posed by the accumulation of huge amounts of NPLs in it. NPLs therefore act as an obstacle for the recovery of local economy.

The ‘new’ Bank of Cyprus (and the other recapitalised local banks) can contribute to growth by granting low interest rate loans and proposing ‘smart’ NPL restructuring solutions. Cyprus’ level of NPLs is the highest among European countries. For the economy to be able to return to and sustain growth, household and corporate debt need to be significantly reduced.

Banks should promptly proceed with writing-off default interests and overcharges on overdue loans including interest on capital that debtors will never be able to repay mainly because of previous usurious charges imposed by the financial institutions. A few months ago, six years after its banks went bankrupt, Iceland proceeded with a haircut of household debt by subtracting value of housing loans mainly. It is estimated that this initiative will directly benefit c. 85% of households and that write-offs will near €25,000 per debtor. It is important noting that Icelandic households and corporations never reached the levels of lending of their Cypriot counterparts.

Finally, although deposit interest rates have been significantly de-escalated, existing and new lending rates remain at artificially high levels and have not been proportionally reduced. ‘Fuelling’ businesses with new but notably cheaper money is a necessary move to reboot the economy. The Government should search for a solution for the huge debt gathered for households and businesses and consider (under specific terms and conditions) a ‘private debt relief’ programme having of course calculated its impact on local banks.

Dr George Mountis
Managing Partner
Delfi Partners and Company
T: +357 22 503152 | D: +357 22 503182
M: +357 99 494142 | F: +357 22 503113
E: [email protected]
W: www.delfipartners.com

US group plans expansion to Cyprus

Press Release
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US group plans expansion to Cyprus

US group plans expansion to CyprusREALTY Group International, Inc. (RGI) announced today their plans to expand the Company’s reach into the upcoming boom in the European country of Cyprus.

Visibly the first American realty company to do substantial business in the region, RGI has developed an alliance with Antonis Loizou & Associates (ALA), the most recognized and respected real estate company in Cyprus with over 3000 properties for sale. Directly contracted with the Cypriot firm, RGI additionally boasts satellite offices in New York, Paris, Rome, Barcelona and Rio de Janeiro.

Recognizing that Cyprus has a massive potential for economic and residential growth due to a recent discovery of large deposits of natural gas, a recovering market and an underrated tourism destination, RGI owner and CEO Michael Fiscina says,

“Real Estate investors are looking internationally for new buying opportunities with a better return on their investments. Most of the investment opportunities from the US crash in 2008 have been exhausted, not as many deals emerged in 2014 due to the decreasing availability of short sales, foreclosures and higher market rate sales.

“We see countless homeowners taking advantage of the possible temporary housing bubble and are getting out when the market is at its peak. Also, we discovered that these sellers and investors are not necessarily re-investing; the common reason is because they are waiting for the market to deflate before they re-purchase and many sellers choose to rent instead.”

He states that the potential for growth in Cyprus is incredible for investors as for the time being it is still a buyer’s market.

“In many Southern California neighborhoods the demand is more than the supply, pushing up pricing,” quoted Mr. Fiscina who is a licensed Real Estate Broker in multiple American states.

Unaware to most Americans, market research indicates that investors from other European nations, China and the Middle East are the primary participants showing interest in the island nation of Cyprus, in part because its real estate investment laws allow for obtaining residency and citizenship in the European Union.

“Investors who purchase property totaling €300,000 are eligible for permanent residency with visa-free travel throughout the EU; and now, through Realty Group International, Inc., this includes Americans as well,” Fiscina explains. “These factors, and a real estate market that’s still reeling from the recent financial downturn, are the reasons why properties in Cyprus are about to be red hot.”

Determined to provide their clients and potential investors with the essential information on the Cypriot market, RGI has brought on board American resident and native Cypriot, Hratch (James) Chaderjian as a consultant. Mr. Chaderjian who was previously employed at the UN for nearly 10 years brings a more personalized approach to the unfamiliar investor.

“Since Americans are now intrinsically involved in the natural gas and oil drilling and production we feel it’s important to have a Cypriot influence to provide our US citizens and companies a high level of consumer confidence to be able to comfortably purchase,” Chaderjian stated. “It is necessary that the US investor be educated towards the fiscal developments and investment opportunities and in turn put Cyprus on the map for not only American but potential international investors.

“Also, our Executive Sales Coordinator, another native Cypriot is located on the island. He is our welcoming committee and even considered our tour guide when needed,” said Rachelle Schreiber RGI’s Executive Regional Manager. “Having a native Cypriot here and on the island grants us an influential vantage point to provide our clients and investors the most successful real estate information and prospects.”

Rachelle who has been licensed with the BRE for over 25 years states that RGI is currently working with a few Fortune 500 Companies that are showing great financial interest in the Cyprus real estate and business marketplace.

“In addition with the discovery of natural gas and the American alliance forged for this endeavor it is only a matter of time until the Cyprus economic market and real estate industry skyrockets. Along with the hydrocarbon industry and the tourism sector being greatly highlighted due to the state of the art developments such as the marinas, golf courses, commercial buildings, multi-family and single family residences—the super casino will be a significant deal in this region as there is nowhere else like this except for Monte Carlo and a project as such will dwarf it in comparison. The casino resort will be something the EU and the Middle East cannot experience anywhere else except for in Las Vegas, Nevada,” according to Mr. Chaderjian.

About Realty Group International, Inc.:

Realty Group International, Inc. (RGI), headquartered in Beverly Hills, is a worldwide residential and commercial real estate company with offices in London, Paris, Rome, Barcelona and Rio De Janeiro. Specializing in the most exciting cities for over a decade, RGI has had the privilege to complete over a thousand purchases, sales, leases and build-outs for companies throughout the globe. With a proud heritage of providing comprehensive representation for their clients, RGI is committed to informing and connecting global communities by utilizing their extensive experience and knowledge of the market to ensure a unique experience for investors and home buyers. By delivering unparalleled value and customer service to sellers in the most glamorous cities in the world, RGI successfully keeps your ultimate goals as the focus of any deal while utilizing our media relationships to ensure maximum exposure for every property we represent.

For more information:

Rachelle Schreiber, Executive Regional Manager
(800) 449-0150
Outside the USA : +1-310-425-3466
[email protected]
www.RGICyprus.com

Residential property prices fall 1.7 per cent

Nigel Howarth
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Residential property prices fall 1.7 per cent

Residential property prices fall 1.7 per centCOMPARED with the second quarter of 2014, house prices rose by 0.6% in the euro area and by 1.1% in the EU in the third quarter of 2014 according to a Eurostat report issued earlier today.

Among EU members states, the highest annual increases in residential property prices during the third quarter of 2014 were recorded in Ireland (+15.0%), Estonia (+13.2%), Latvia and the United Kingdom (both +11.7%), Sweden (+10.3%) and Lithuania (+10.1%) and the largest falls in Slovenia (-5.4%), Italy (-3.8%) and Romania (-2.3%)

Prices in Cyprus fell 1.7% during the third quarter compared to the same period in 2013, but remained at the same level as the second quarter.

Eurostat employs a different methodology to assess price movements to that used by the Cyprus Central Bank, which recorded an annual decrease of 8.9% in the third quarter of 2014.

The Eurostat House Price Index (HPI) measures the price changes of all residential properties purchased by households (flats, detached houses, terraced houses, etc.), both newly built and existing, independently of their final use and independently of their previous owners.

The Member States’ HPIs are compiled by the National Statistical Institutes. The euro area and the EU aggregate HPIs are compiled by Eurostat. HPIs are computed as annually chained indices with weights being updated each year. The European HPI aggregates are currently calculated as weighted averages of the national HPIs using as weights the GDP at market prices (expressed in millions Purchasing Power Standards – PPS) of the countries concerned.

The figures are not seasonally adjusted.

The methodology is summarised in the Handbook on Residential Property Price Indices, published in 2013 (first edition).

Further reading

Eurostat newsrelease 14/2015 – 21 January 2015

Land Registry corruption investigation

Editorial
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Land Registry corruption investigation

Corruption investigation at land registryAUTHORITIES are investigating at least five land registry workers for corruption, Interior Minister Socratis Hasikos said on Tuesday.

The employees are suspected of carrying out official business for various applicants but pocketing the fees themselves.

“The normal way is for an individual or bank to pay the fee and receive a result. In this case there was a detour and there was a relation between land registry officials with legal entities,” Hasikos said.

The alleged fraud concerned certificates issued by the department to interested, and authorised, parties who pay to find out what property an individual or company have in their name.

Such a search could cost between €50 and €70 if done through the official channel.

These are carried out by banks for example but the cost is usually paid by their customer. Banks usually do bulk searches.

It is understood that the case concerns thousands of applications.

Hasikos did not say whether the suspects charged the official fee or less. But it is understood that one of the motives for clients may have been the speed with which their application was processed.

“What is certain is that they took money,” the minister said.

Hasikos said it was an old story, reported back in 2012.

“At some point it froze and we had no result,” he added. “Our administration revisited the matter and we are seeing with satisfaction that the legal service is investigating.”

Hasikos told reporters to ask the previous administration why nothing incriminating came up two years ago.

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