Residential property construction plunges 41 percent

David Crowther
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4

NOVEMBER saw another sharp fall in the Island’s construction sector according to the latest figures from the Cyprus Statistical Service.

CySTAT’s figures show that a total of 601 building permits were authorised by the Municipal Authorities and District Administration Offices in November 2011. Compared with the 733 permits authorised in October 2010; a fall of 18%.

In November, building permits were issued for:

  • Residential buildings – 415 permits
  • Non-residential buildings – 102 permits
  • Civil engineering projects – 32 permits
  • Division of plots of land – 45 permits
  • Road construction – 7 permits

The total value of these permits reached €145.1 million and their total area 153.8 thousand square metres.

During the period January to November 2011, 6,946 building permits were issued; a decrease of 13.6% compared to the corresponding period of last year. The total value of these permits fell by 23.4% and their total area by 24.5%.

Residential buildings

In November, 415 permits were approved for the construction of 572 dwellings comprising 299 single houses and 273 multiple housing units (such as apartments and other residential complexes).

This is a fall of 40.8% compared with November 2010 when building permits were issued for the construction of 966 dwellings.

Source: Cyprus Statistical Service

During the first eleven months of 2011, building permits were issued for the construction of 8,226 dwellings compared with 13,396 during the same period in 2010; a drop of 5,130 (-38.3%)

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

Cyprus may be further downgraded by Fitch

Alan Lawton
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11

SPEAKING in Madrid on Thursday, Fitch senior director Ed Parker said the agency was likely to cut the ratings of six euro nations by one or two notches by the end of this month.

Fitch, the third-largest rating agency, placed Belgium, Cyprus, Ireland, Italy, Slovenia and Spain on credit watch “negative” in mid-December, signalling the possibility of a downgrade within three months. At that time, Fitch said that the absence of a “comprehensive solution” to the region’s debt crisis was the reason for placing the six countries’ ratings on credit watch negative.

Cyprus has a BBB rating from Fitch.

Last week Cyprus was downgraded by ratings agency Standard & Poor’s along with eight other European countries. As a result, France and Austria lost their coveted AAA rating, while Cyprus was downgraded to junk status.

In response to that downgrade, Finance Minister Kikis Kazamias said that Standard & Poor’s decision on Cyprus was arbitrary and unsubstantiated and that the ratings agency had acted in a high-handed manner.

On Thursday Fitch’s Mr Parker, who was speaking at a conference in Madrid, said that the review would be concluded by the end of January.

Property market review and expectations for 2012

Nigel Howarth
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17

A PACKED audience of Rotarians and guests at Limassol’s Londa hotel listened to a presentation by Pavlos Loizou MRICS about the Island’s property market and his predictions for its future on Wednesday evening.

Mr Loizou, lead consultant with niche real estate market research company Leaf Research, spoke of the economic factors and other issues that had resulted in dramatic downturn in sales that started in 2008.

“A fall in the Island’s GDP and rising unemployment means that the ‘good days’ have gone” said Mr Loizou, adding that “we are probably approaching the worst point, but things are unlikely to get back to where they were.”

Since January 2010, loans for housing have increased by 17% (€1.818 billion) and have rocketed by a staggering 197% since 2006. “The high cost of servicing these loans combined with increasing interest rates is putting a greater financial burden on households” said Mr Loizou.

The reduction in domestic sales started in 2004 as salaries failed to increase in line with the rising cost of housing. Although wages kept pace with construction costs, land prices rocketed by 576% between 1998 and 2008, pricing many local buyers out of the market.
Overseas sales peaked in 2007 and then declined as a result of troubles with their economies and as news of the problems with Title Deeds spread. It is difficult to see how the many holiday homes built specifically for the British market, which lay part completed or empty, will be sold and their future is uncertain.

Demand for property has also changed in recent times. Land sales have fallen as construction slows and this has led to a fall in the price of land. Falls in the price of properties in the towns and city centres has resulted in increased sales to local buyers in those areas. And as many prefer to buy a house, rather than apartment, house sales have remained steady over the last three years while the number of apartments being sold has fallen.

Focusing on Limassol’s property market, local buyers are looking for good quality properties with a Title Deed costing between €200,000 and €400,000 in the central areas, while overseas buyers are focussing their attention to the west of the town, towards Paphos.

Market predictions for 2012

As for his predictions for the coming year, Mr Loizou believes that prices will continue to fall:

  • Housing plots down 17%-22%.
  • Housing fields down 22%-27%.
  • Commercial plots down 12%-17%.
  • Offices down 10%-15% for grade A and 20%-25% for grade B/C.
  • Apartments down 10% in city/town centres and 15% in secondary and tourist areas.
  • Shops down 10% in city/town centres and 20% in secondary and tourist areas.
  • Agricultural land down 25%-35% and in some cases more.

Click here to view Mr Loizou’s presentation.

Editor’s notes

Organised in conjunction with the Rotary Club of Limassol Berengaria-Cosmopolitan , a raffle was held to raise money for a minibus for PASYKAF (The Cyprus Association of Cancer Patients and Friends) that will be used to ferry cancer patients between the towns and the specialist cancer treatment centre in Nicosia.

On 25 January at 13.00 Mr Loizou will be giving his presentation (in Greek) at the Hotel Crown Plaza in Limassol; the entrance fee is €22. Organized in conjunction with the Rotary Club of Limassol, those wishing to attend should contact George Araouzos at [email protected]

Licence for Polis golf project expected by June

Editorial
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14

THE FIRST phase of a proposed world class golf resort in Polis Chrysochous in Paphos will get underway this year according to the local mayor.

“I believe that the licence to commence the project will be granted by June at the latest,” Angelos Georghiou said yesterday, adding that he had a meeting with company representatives on Friday.

The Shakolas group, the largest private commercial group in Cyprus, owns a plot of about three million square metres in Limni, the site of the now defunct copper mines-in Polis Chrysochous. Here they will undertake the project, which according to Georghiou will be one of the largest to date in Cyprus.

“It will include two 18 hole golf courses, a 160 room five star hotel and luxury residences amongst other facilities,” he said. The proposed project, costing millions, also includes a sea front area.

The Shakolas group first announced their intention to develop the Limni Golf Resort project in 2007.

“This is a very important project which will help the economy of Polis and surrounding villages, creating many jobs and will encourage many tourists to visit the area,” noted Georghiou.

The mayor said he was unsure of the total cost of the plans, adding that it would run into the millions and that it would be completed in stages.

The two signature championship standard courses are being designed by renowned Gary Player Design and Nicklaus Design which will be the centrepiece of the new development.

Future prospects for the real estate market with Rotary

Editorial
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6

PAVLOS Loizou MRICS, a real estate valuer with Antonis Loizou & Associates and the CEO of Leaf Research (a niche real estate market research company), will be giving presentations in English and Greek on the future prospects for the Island’s real estate market in conjunction with two Rotary Clubs in Limassol.

His first presentation (in English) will take place on January 18 at the Londa Hotel at 19.45. Organized in conjunction with the Rotary Club of Limassol Berengaria-Cosmopolitan the admission fee of €20 includes a two-course meal followed by tea and coffee. Those wishing to attend should contact the editor via the contact page.

His second presentation (in Greek) will take place on 25 January at 13.00 at the Hotel Crown Plaza and the entrance fee is €22. Organized in conjunction with the Rotary Club of Limassol, those wishing to attend should contact George Araouzos at [email protected]

All proceeds from the events and any donations received will be given to the Rotary Clubs to help fund their community service projects.

This year, the Rotary Club of Limassol Berengaria-Cosmopolitan plans to purchase a Ford Transit 350LWB Minibus for PASYKAF (The Cyprus Association of Cancer Patients and Friends). The minibus will be used to ferry cancer patients between the towns and villages of Paphos, Limassol and Larnaca to the specialist cancer treatment centre in Nicosia.

About the speaker

Pavlos Loizou graduated from the University of Reading and University of Cambridge and has a degree in Financial Management from ACCA. He is a Visiting Fellow at the University of Reading and University of Cyprus, a member of the Executive Board of the RICS Cyprus, and has published numerous articles in local press and in scientific journals. He previously worked for CB Richard Ellis and AXA REIM in London, before setting up the Bucharest office of Antonis Loizou & Associates.

Bill to give more powers to Land Registry Directors

Nigel Howarth
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5

DESIGNED to overcome disputes involving the division of co-owned properties, a bill has been submitted to Parliament that will give the Directors of Land Registries powers to resolve the situation.

The bill seeks to provide a resolution to co-owning problems, when their owners seek to divide or distribute their properties and one or more of the co-owners refuses to cooperate without reasonable justification.

According to a report that accompanied the bill, the Director will be given the necessary powers to decide on the division and distribution of the co-owned property in question and will take into account contracts of sale, shares of ownership and building permits when reaching his decision.

In addition, the procedure to divide and distribute a co-owned property may be instigated by any interested party, the planning authority, or by the Director himself, while at the same time the Director will be able to distribute the new pieces or units.

The government believes that these changes to the law will be significant due to efforts being taken to legitimise planning infringements under the provisions of the Town Planning Amnesty. Many amnesty applications involve the shared ownership of land and the proposed changes to the law would ease the issuing of Title Deeds to the purchasers of properties and beneficiaries.

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