Cyprus relaxes most domestic capital controls

Press Release
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Cyprus relaxes most domestic capital controls

Cyprus Capital Controls relaxedTHE Ministry of Finance announced new but not complete relaxation in the restrictions on capital movement.

With the new 29th decree, all restrictions on transactions within the Republic are abolished, following the roadmap for relaxations agreed on 8 August 2013, except for the opening an account at another financial institution.

Specifically the relaxations are:

  • the cashing of checks is allowed
  • the limits on transfers and payments of €50,000 for natural persons and €200,000 for legal persons, per institution, are abolished.

However, capital control restrictions on money transfers abroad remain in place. The authorities hope to lift them by the end of the year.

The 20th decree on the international banks is issued without changes.

Further reading

The Enforcement of Temporary Restrictive Measures on Transactions in case of Emergency Twenty Ninth Decree, of 2014. (Unofficial translation)

Stress test scenarios do not bode well

Press Release
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Stress test scenarios do not bode well

European-Banking-Authority-stress-testsTHE European Banking Authority (EBA) has published the methodology and the scenarios to be used for the 2014 pan-European stress tests, which reveals adverse forecasts for unemployment and real-estate prices this year.

According to the EBA, the stress tests “will identify remaining vulnerabilities in the EU banking sector and will provide a high level of transparency into EU banks’ exposures”.

In Cyprus banks to undergo stress tests include Bank of Cyprus, Hellenic Bank and the Cooperative sector.

The Core Tier-1 capital of the banks undergoing the stress tests will have to be at least 8.0 per cent according to the baseline scenario and at least 5.5 per cent on the basis of the adverse scenario.

The adverse scenario for Cyprus foresees that GDP in 2014 will shrink by 1.5 per cent further than Cyprus’ international lenders, the troika (EC, ECB, IMF) predict and will reach 6.3 per cent while it will be contained at 0.5 per cent in 2015 with a modest 1.1 per cent of growth in 2016.

Unemployment will reach 19.6 per cent in 2014, will fall slightly to 19.4 per cent in 2015 and 18.4 per cent in 2016.

The adverse scenario predicts that inflation will be recorded at about 0.4 per cent in 2014, will go up to 0.8 per cent in 2015 and will reach 1 per cent in 2016.

On the basis of the adverse scenario stock prices in Cyprus will fall by 19.9 per cent in 2014, 20.6 per cent in 2015 and 26.6 per cent in 2016.

Residential property prices will fall by 4.0 per cent in 2014, 6.4 per cent in 2015 and 6.4 per cent in 2016. Real estate prices in general are predicted to go down by 11.9 per cent in 2014, 11 per cent in 2015 and 7.0 per cent in 2016.

Commercial property prices are forecast to reduce by 7.9 per cent in 2014, 6.5 per cent in 2015 and 3.0 per cent in 2016.

The adverse scenario foresees also that the impact of a shock in state funding will affect the increase of real GDP by 0.10 per cent in 2014, 0.21 per cent in 2015 and 0.29 per cent in 2016.

In as far as the baseline scenario for Cyprus in concerned GDP is expected to follow troika predictions according to which the economy will shrink by 4.8 per cent in 2014, achieving marginal growth of 0.9 per cent in 2015 and 1.9 per cent in 2016.

Unemployment will reach 19.2 per cent in 2014, will fall to 18.4 per cent in 2015 and will be reduced even further to 17.0 per cent in 2016, the baseline scenario predicts.

Inflation will range at about 0.4 per cent in 2014, will go up by 1.4 per cent in 2015 and 1.7 per cent in 2016.

Real estate prices in general are foreseen to fall by 7.0 per cent in 2014, 5.2 per cent in 2015 and 2 per cent in 2016.

At the same time commercial property prices are expected to go down by 4.9 per cent in 2014, 3.5 per cent in 2015 and 0.5 per cent in 2016.

– Cyprus News Agency

Primary residence protection up to €350,000

Nigel Howarth
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primary residence protectionYESTERDAY the Cabinet approved a much anticipated draft bill to protect primary residences from seizure according to a report in Stockwatch.

The bill, which will be referred to a plenary session of Parliament, will protect those who have borrowed up to €350,000 to purchase their main residence and small and medium sized enterprises (SMEs) that have used their primary residence as collateral to secure a mortgage.

The bill, if approved by Parliament, will extend the functions of Finance Commissioner Pavlos Ioannou to include the management of mediation procedures for restructuring mortgages, in line with the Central Bank Directive, where a primary residence has been used as collateral and the borrower is unable to maintain repayments.

The government’s original draft bill was put on hold following an acrimonious debate between government and opposition parties in Parliament last month.

At that time Finance Minister Haris Georgiades said that the Government was in favour of protecting primary residences under a comprehensive scheme that would benefit low-income families facing economic problems. However, the legislation proposed by the opposition parties would result in benefitting people who, although in a position to service their loans, would take advantage of the situation by holding back from doing so.

Title Deeds issuance completed by year end

Nigel Howarth
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INTERIOR Minister Socrates Hasikos has announced that the exercise to bring property values up-to-date will be completed by June 2014 and by the end of the year the Land Registry will have reduced the backlog of outstanding Title Deeds to 2,000 cases (the target agreed with the troika).

Responding to a journalist’s question on the subject, the Minister said that “the titles of 45,000 properties that are currently pending nationwide will be reduced to just 2,000 by the end of the year. It’s a great effort, but we will get there.”

The Minister expressed his optimism that the Land Registry will complete property revaluations within the stated timeframe and on the subject of the outstanding Title Deeds he said “we hope that we will succeed.” He added that the Land Registry has drafted in staff from other agencies to help clear the backlog of outstanding deeds.

Referring to the task of revaluing properties the Minister admitted that “we have a few problems with some of the municipalities.” He repeated the need for more help from the municipalities which he said had been requested from them both verbally and in writing.

Turning to the Mayor of Limassol, Andreas Christou, Mr Hasikos said that “the Limassol Municipality is among those who are helping with property revaluations.”

Andreas Christou said that the Limassol Municipality had recruited twelve people to help: young graduates, architects and engineers to help at total cost of around €50,000, adding that everyone was interested and anxious for a positive outcome for the excercise.

Editor’s note

The Title Deed backlog of 45,000 refers to those cases where (a) An application has been made to the Land Registry to issue a Title Deed and (b) A Certificate of Final Approval has been issued, thereby enabling the Land Registry to issue the relevant Title Deeds.

It is unclear from the Minister’s announcement whether a Title Deed, once issued, will be free of any encumbrances preventing the transfer of ownership of the property to which it relates.

Cyprus moves up in Top of the Props chart

Nigel Howarth
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Cyprus moves up in Top of the Props chart

CYPRUS moved up one place to number fourteen in the March 2014 edition of the ‘Top of the Props’ published by the property portal TheMoveChannel.com, accounting for 1.27% of on-line searches on the property portal.

The top four real estate markets remain unchanged, with the USA in the number one spot accounting for 15.66% of all enquiries. France kept its second place with 8.40%, followed by Spain 6.04% and Portugal 4.22%.

Italy moved up four places to number five, while Turkey moved up one place to number six. Brazil slipped two places to number seven and Bahamas moved back into the top at number eight.

Canada slipped three places to number five and Greece jumped six places to take the tenth spot.

The TheMoveChannel.com’s Accounts Director Naz Haghi commented: “Buyers are returning to the eurozone thanks to a combination of low prices and improving sentiment. Greece and Italy have both enjoyed a consistent increase in enquiries during the first three months of 2014, a sign that this is not a one-off spike in interest. Argentina surged back to 11th place in March, for example, driven by attractive new launches in the area. Italy and Greece, though, have seen no new products or marketing activity in the last three months. Instead, we have noticed a significant growth in natural traffic for Italian and Greek property, as buyers both inside and outside of the EU search for the countries in Google, attracted by low prices and Greece’s Golden Visa.

“That improved sentiment have seen buyers toy with other old favourites, such as Bulgaria and Cyprus, but momentum remains with more traditional lifestyle destinations. With four out of the top five destinations on TheMoveChannel.com now made up of eurozone markets, confidence is certainly on the up.”

The full breakdown of the February 2014 edition of the Top of the Props chart is as follows:

Rank
Country
Share (%age)
Change
1 USA 15.66 No change
2 France 8.40 No change
3 Spain 6.04 No change
4 Portugal 4.22 No change
5 Italy 3.08 Up 4
6 Turkey 2.84 Up 1
7 Brazil 2.30 Down 2
8 Bahamas 2.23 Up 4
9 Canada 2.05 Down 3
10 Greece 1.84 Up 6
11 Argentina 1.63 Up 38
12 Thailand 1.49 Down 1
13 Bulgaria 1.44 Down 3
14 Cyprus 1.27 Up 1
15 Ecuador 0.97 Up 22
16 Germany 0.97 Up 1
17 Cape Verde 0.96 Up 4
18 Croatia 0.95 Up 6
19 UAE 0.94 Up 1
20 India 0.84 Down 6
21 Panama 0.62 Up 11
22 Cayman Islands 0.50 No change
23 Hungary 0.45 Down 4
24 Malta 0.44 Up 1
25 Egypt 0.42 Down 2
26 Pakistan 0.39 Up 8
27 St Lucia 0.38 Up 2
28 Poland 0.35 Down 10
29 Northern Cyprus 0.34 Down 2
30 Jamaica 0.31 Up 5
31 SWITZERLAND 0.29 Up 12
32 Australia 0.26 Down 24
33 Czech Republic 0.26 Up 13
34 Barbados 0.24 Down 21
35 South Africa 0.23 Up 9
36 New Zealand 0.21 Up 4
37 Guernsey 0.20 No change
38 Romania 0.18 Down 2
39 Belize 0.17 Down 13
40 Philippines 0.16 No change

Founded in 1999, TheMoveChannel.com is the leading independent website for international property, with than 000,000 listings in over 100 countries around the world, marketed on behalf of agents, developers and private owners.

Its ‘Top of the Props’ chart is based on the number of on-line enquiries for property in different countries around the world.

Standard & Poors & Fitch lifts ratings

Editorial
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FITCH Ratings revised its outlook and Standard & Poor’s Ratings Services lifted its rating on Cyprus.

Both agencies cited the country’s progress under the reform program supported by the European Union and International Monetary Fund, as well as better-than-expected economic performance.

Fitch revised its outlook on the country to stable from negative. The ratings agency said Cyprus’ adherence to the EU-IMF program has helped lower both public and private-sector wages. With concurrent price decreases, this contrasts from earlier episodes of recession.

The agency also said the country exceeded fiscal targets by “a significant margin,” and that the economy “has proved more resilient than previously expected,” according the report.

S&P said it raised its rating on Cyprus one notch to B from B-, which is still considered a so-called speculative rating within junk territory.

The ratings agency noted that Cyprus’ “resilient” tourism and business sectors, and the relative buoyancy of private-sector consumer spending helped the country achieve better-than-expected financial performance. S&P did warn that an escalation of EU sanctions against Russia coupled with a decline in the rouble would hurt Cyprus’ tourism industry.

Wall Street Journal

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