The declining Cyprus property market

Nigel Howarth
-
1

AS we reported on Monday, the number of properties sold in Cyprus during January stood at 375; the lowest monthly figure since records began.

Further Land Registry statistics published earlier today show that of those 375 contracts of sale, 80.8 per cent (303) were in favour of Cypriot buyers and 19.2 per cent (72) were in favour of overseas buyers.

Domestic property sales

Overall, 394 fewer properties were bought by Cypriots in January than in January last year; a fall of 57 per cent and sales were down in all districts.

Nicosia was hardest hit with 136 fewer properties being sold (-77%). Sales in Larnaca fell by 80 (-77%), while in Limassol they were 114 fewer sales (-61%).

Sales in Famagusta fell by 49 (-70%) compared with January 2012, while sales in Paphos fell by 15 (-9%).

Cyprus_domestic_sales_jan13

Record levels of unemployment, with the jobless rate standing at 14.7 per cent in December, together with uncertainty of the future of the island’s economy plus much talk of increasing Immovable Property Tax are keeping buyers away.

Overseas property sales

Cyprus-wide sales to the overseas property market fell by 34 (-32%) in January compared with January last year; with the exception of Nicosia, sales were down in all districts.

In Famagusta just one property was sold; a fall of 94% on the 16 sold during January 2011. Sales in Paphos fell by 16 (-33%), while those in Larnaca fell by 2 (-15%) and those in Limassol fell by 1 (-4%)

Five properties in Nicosia were sold to overseas buyers, the same as in January 2011.

Cyprus_overseas_sales-Jan13

Estimates of sales to Chinese buyers reaching 2,000 this year appear somewhat ‘optimistic’ – particularly as Chinese investors from Hong Kong have recently published details of their unhappy experiences of buying property in Paphos on the Internet.

A report in the local media claiming that in less than five months more than 800 properties have been sold to third country nationals seeking residence permits appears somewhat exaggerated.

In the last five months, Land Registry statistics show that the number of properties purchased by overseas buyers is 595 according to the number of contracts deposited at Land Registries across the island.

Construction industry unrest escalates

Peter Stevenson
-
2

PRESIDENT Demetris Christofias has ordered a full investigation into the violent scuffles on Tuesday at a Paphos building site between striking builders and police, Justice Minister Loucas Louca said yesterday.

Trouble erupted in Paphos on Tuesday when police confronted striking builders who tried to stop strike-breakers who were brought in to take over the work at a hotel construction site.

Three people were arrested during the trouble on Posidonos Avenue. Police intervened in a bid to restore order, arresting two striking workers and a female union official in the process as both police and builders pushed and shoved each other.

Unions accused police of using excessive force, and Christofias later criticised the police for their actions.

“The President’s instructions are clear, and I am awaiting the report of the incident to uncover what really went on so we can act accordingly with the police,” Louca said yesterday. Asked what information he had received so far the minister replied that he did not want to rely on rumours but on the facts, and once he had the report in his hands he would be able to comment further.

Louca was asked by reporters whether police were planning to adopt new methods of dealing with an increase in incidents from protesters. “I have been informed by the chief of police that orders have been given for necessary action to be taken,” he replied. “We have discussed the subject so that we will not see a repeat of Tuesday’s incident,” he added.

Louca was also asked to comment on several small incidents that were reported in Ayia Napa yesterday of striking builders who had visited several sites with trade unionists, armed with bats, in attempts to bully strike-breakers and contractors who were continuing work.

“I am not aware of any incidents in the Ayia Napa area,” he said. “As far as I am aware the Chief of Police has given orders to members of the force on how to act appropriately in these cases,” he added.

Head of the Association of Cyprus Tourist Enterprises, Akis Vavlitis, and the Federation of Construction Contractors’ (OSEOK) representative Nicos Kelepeshis both claimed to state broadcast radio that striking workers and trade unionists ransacked and vandalised hotel construction sites in the Ayia Napa area yesterday.

“Members of both trade unions, PEO and SEK, armed with bats, stormed into hotels looking for strike-breakers,” Vavlitis said. “We are sending out a message abroad, that the strikes are adversely affecting the tourism industry, instead of trying to overcome the crisis,” he added.

Kelepeshis claimed police had received many complaints from hotel owners that striking workers had harassed them on yesterday morning.

PEO representative, Michalis Papanicolaou questioned the accusations, stating that the striking workers would continue their strike until they get what they deserved. “How did they know these people that ransacked the sites were from PEO?” he asked. “Did they ask them for identification?” he continued. “For the moment these workers have an uncertain future and they will continue striking until they receive assurances that their jobs are safe,” he concluded.

Yiannakis Ioannou, the head of SEK’s construction branch, claimed yesterday that both SEK and PEO had acted accordingly and had not committed any crimes.

Ioannou said builders had already agreed to cuts of around 8.0 per cent but contractors also wanted to reduce provident fund contributions by 3.0 per cent, cut Christmas bonuses by 50 per cent, and take away one day from the Easter holidays.

“All they [the workers] want is for the collective agreements to be met,” Ioannou said.

The ministry of labour would continue to actively search for a solution to the problem in the construction industry and will continue talking to both sides in order to resolve the issues, according to minister Sotiroulla Charalambous.

Charalambous said that during the attempt at reconciliation both sides had introduced new demands which had not been discussed before, making matters even more complicated.

Asked by reporters whether she felt that they had reached the point of no return, Charalambous said that she believed that with will and commitment, any solution would be a compromise.

Cyprus construction industry unrest escalates

Building permits slump

David Crowther
-
2

THE NUMBER of building permits issued in November 2012 stood at 554 compared with the 601 issued in November 2011; a fall of 7.8%, according to the latest figures released by the Cyprus Statistical Service.

Compared with November 2011, the total area of these permits fell to 143,762 square metres from 153,763 square metres (-6.5%) but their value increased marginally to €148.2 million from €145.1 million (+2.1%).

During November, building permits were issued for:

  • Residential buildings – 378 permits
  • Non-residential buildings – 90 permits
  • Civil engineering projects – 49 permits
  • Division of plots of land – 33 permits
  • Road construction – 4 permits

During the period January – November 2012, 6,701 building permits were issued; a decrease of 3.5% compared to the number issued in the same period in 2011. Their total value fell 19.6% and their total area fell by 30.9%.

New home construction

The 378 residential building permits approved in November provided for the construction of 565 new homes comprising 167 single houses and 398 multiple housing units (such as apartments and other residential complexes).

This is a fall of 1.2% compared with November 2011 when building permits were issued for the construction of 572 new homes.

During the first eleven months of 2012, the number of new homes for which permits have been issued has dropped 33.8% compared with the same period in 2011.

Cyprus new home construction November 2012

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

Great Cyprus property crash continues in 2013

Nigel Howarth
-
12

PREDICTIONS by the Financial Mirror’s distinguished panel of seven economists who forecast that Cyprus would experience another “annus horribilis” in 2013 are becoming a reality.

Land Registry statistics released earlier today reveal that the number of properties sold in January fell by 53 per cent compared with January 2012. But this figure may be slightly mis-leading as in January 2012 there was a rush to deposit contracts of sale at Land Registry offices to benefit from the reduction in Property Transfer Fees. However, the number of property sales in January is the lowest monthly figure on record.

According to the statistics, the number of contracts of sale deposited at Land Registry offices throughout Cyprus stood at 375 compared with the 803 deposited in January 2012.

Sales were down in all areas. In percentage terms, Nicosia was hardest hit whith 136 fewer properties being sold (-75%) followed by Famagusta, where sales fell by 64 (-74%). Sales in Larnaca fell by 82 (-70%), while in Limassol and Paphos they fell by 115 (-55%) and 31 (-15%) respectively.

cyprus property sales January 2013

Speaking to Stockwatch, first vice chairman of the Real Estate Agents Association, Solomon Kourouklides noted that the lack of liquidity in the market and the difficulty of securing a bank loan contributed heavily to the decline in sales.

However, the interest of foreign investors, especially the Chinese, raises hopes for the recovery of the sector.

“According to estimates, sales to the Chinese in 2013 will reach 2,000 plots”, Mr Kourousides stressed.

PIMCO delivers final report

Alan Lawton
-
14

PIMCO report on Cyprus financial sectorPIMCO, the US investment consultancy firm, has delivered its report on the due diligence review on the diagnostic test for the capital needs of financial institutions in Cyprus.

(PIMCO was commissioned to carry out a due diligence review of the Cypriot financial sector and determine the capital needs of the financial institutions as part of Cyprus’ application for financial assistance from the European Stability Mechanism).

However, the Central Bank of Cyprus said in a statement that “The results of the report will be made public when the Memorandum of Understanding is signed between the Republic of Cyprus and the international creditors.”

As President Christofias has stated that he will not sign the Memorandum, the public will have to wait until after the inauguration of the new president sometime in March (unless the contents of the report are leaked in the meantime).

The report will be examined by the Steering Committee, who will then take into account the mitigating circumstances that have been put forward by the banks.

The Steering Committee, which appointed PIMCO, comprises the European Commission, the European Central Bank, the European Stability Mechanism, the International Monetary Fund, the European Banking Authority, the Ministry of Finance, the Central Bank of Cyprus, and representatives of the supervision the cooperative societies.

The Cyprus Central Bank has not (yet) issued a statement, but unconfirmed reports say that the banks’ recapitalisation needs will reach €10 billion in the worst case scenario, while rumours suggest a baseline scenario of some €8.7 billion.

On Friday, Government Spokesman Stephanos Stephanou said that the recapitalization of Cyprus banks should be done according to the baseline scenario of PIMCO’s due diligence and not the worst case scenario.

Including the €7.5 billion required to support the government, the total bailout could amount to €16.2 billion (using the baseline scenario) or €17.5 billion in the worst case.

According to the draft Memorandum of Understanding: “The (Cyprus) banking sector has been severely affected by the broader European economic and sovereign crisis, in particular through its exposure to Greece. However, many of the problems for the sector are home-grown and relate to overexpansion in the property market as consequence of banks’ poor risk management practices.“

Construction workers strike may spread

Nigel Howarth
-
8

CYPRUS’ two largest trade unions representing over three quarters of workers have given warning of a possible general work stoppage in support of construction workers, now in their fifth day of an indefinite strike.

A meeting of union and employers’ officials with Labour Minister Sotiroula Charalambous failed to resolve the construction workers’ strike. Mrs Charalambous said after the meeting that the leaders of the Cyprus Workers’ Confederation (SEK) and the Pancyprian Federation of Labour (PEO) trade unions have left open the possibility of an island-wide general strike if the construction sector dispute is not resolved soon.

Construction workers laid down their tools on Monday demanding that only qualified workers bearing a special card be employed by construction contractors.

Left-wing PEO leader Bambis Kyritsis said that his union has already decided on a general strike in support of construction workers, while the right-wing SEK Workers Confederation was to reach a decision later in the day.

1...457458459...695Page 458 of 695