Construction deal with Qatar on track

NEGOTIATIONS with Qatar over the construction of a multimillion Euro commercial project in Nicosia have not been frozen, the government said on Monday.

The much-touted joint venture involving the construction of a luxury hotel, apartments, shops and offices in a plot opposite the Hilton Hotel, appeared to have stalled of late after the agreement was signed in April 2010.

But the Cyprus Finance Minister Kikis Kazamias said the Qatari delegation was expected on the island at the end of the month.

The minister told MPs on Monday that the Nicosia army barracks on the land earmarked for the project has also been cleared.

Under the agreement, the Cypriot state will contribute the land to the 50:50 venture, with the Qataris, acting through state-owned Qatari Diar Real Estate Investment Company, matching that agreed value in cash – €50 million.

It is understood that the two sides will finalise payment of the cash during the visit.

Any extra required funding would be sourced through loans.

Central Bank of Cyprus reports housing price falls

RESIDENTIAL property prices have fallen for the sixth consecutive quarter, with apartment prices in the coastal resorts losing 18% of their value over the past year, according to the latest quarterly report from the Central Bank of Cyprus.

The Bank’s report, for the second quarter of 2011, shows that the crisis in the real estate market is continuing; a recovery is not expected before 2013.

During April, May and June of this year (before the devastating Mari blast that killed 13 people and destroyed the Vasilikos Power Station) house and apartment prices fell by 0.9%.

House prices in Paphos fell by 2.3% during the second quarter, while those in Nicosia fell by 0.2%. Apartment prices in the seaside towns also fell, with Famagusta being the worst hit area, while those in the Island’s capital, Nicosia, appear to have stabilised.

On an annual basis, prices have fallen by 4.9%, according to the Central Bank. These falls are mainly attributable to the drop in apartment prices of 6.5%, while house prices have fallen by 3.7%.

Over the past twelve months, Paphos has suffered the biggest fall in apartment prices (-18.4%) followed by Larnaca (-10.8%).

Property valuer Polys Kourousides believes that property prices will continue to fall. He said “I believe that the drop in property prices will continue in the next one and a half years unless something drastic changes things. There seems no positive sign”.

In his statements to StockWatch Lakis Tofarides, the chairman of the Cyprus Land and Building Developers Association, questioned the validity of the figures and stressed that it is about isolated data which does reflect the reality of the situation. “The game with the price declines hit a record low, there is no other decline”, he concluded.

Further reading

Residential Property Price Indices – second quarter 2011 (Greek)

Residential Property Price Indices – second quarter 2011 (English)

Further information and explanations on the methodology used for the construction of the various price indices can be found in the Central Bank’s methodology report (English)

(The seventh issue of the RICS Cyprus Property Price Index, which tracks property prices and rents across 46 locations in Cyprus, is due to be published in the next few weeks).

The Cypriot real estate market will recover when…

NOW is your chance to have your say on what needs to be done to set the Cyprus property market on the road to recovery; what do you consider to be the most important factor?

Property sales in Cyprus have plummeted in recent times and many reasons have been given for their decline:

The economic situation – unemployment levels in Cyprus have reached unprecedented levels having doubled in the past 30 months. The ratings agencies Standard and Poor’s, Fitch, and Moody’s have downgraded Cypriot banks and the Island’s economy. Most recently, the IMF warned that the economic situation “demands a strong and immediate policy response” from government.

If the Island’s economic situation were to improve, would this stimulate the property market?

High interest rates – bank lending rates are now amongst the highest in the Euro zone area and there has been a tightening of credit standards for loans to households for house purchase.

If borrowing criteria and interest rates were to fall, would this help the property market to recover?

Overpricing – property prices increased out of all proportion during the boom years and people were prepared to buy at those prices. But now that the years of frenzied speculation have come to an end, property prices in some parts of the Island have fallen by 30 percent.

Would further price cuts restore the property market?

Lack of Title Deeds – as a result of the Title Deed fiasco, which has led to property unscrupulous developers exploiting property buyers financially, Cyprus is no longer considered as a “safe” place to buy a property unless its Title Deed has been issued and is readily available.

If Title Deeds were readily available on delivery of a property, would help the property market to recover?

Poor build quality – many properties have been built to standards that are less than adequate. Problems with rising damp, leaking roofs, ill-fitting windows, lack of heating, plumbing and electrical issues and are amongst the most common reported.

Would improved building standards and quality restore the market?

More attractions such as golf courses, marinas and theme parks – there has been much talk about providing recreational and other facilities that would tempt more potential buyers to the Island.

Are these key to restoring the property market?

Other reasons – we know that there are many other problems faced by those buying property including lawyers who fail to represent the interests of their clients, the ‘secretive’ nature of the Land Registry and Planning authorities that make it difficult to uncover information about a property and plans for other developments in the vicinity, long delays in getting any form of justice through the judicial system, etc.

Have your say

WE are running a poll to discover what our readers believe is the most important factor in getting the Island’s property market back on its feet.

Just click on the button in the ‘HAVE YOUR SAY’ entry in the right hand column that you consider will have the greatest positive impact on property sales. (As you can only vote once, please consider your answer carefully).

We will be running the poll until the end of November, so check back frequently to see how it is progressing.

Cypriot economy faces substantial risks

risksTHE International Monetary Fund (IMF) has warned Cyprus that its economy faces “substantial downside risks” and is likely to contract next year.

The warning came in the IMF’s annual review of the of the Island’s economy in which the IMF urged the government to implement measures to balance its budget by 2014 and to implement spending cuts to reverse large increases in public sector pay and social benefits over the last three years.

According to the review, an overhaul of the pension system is vital as the Island faces one of the largest increases in retirement costs in the Euro area, with the system becoming unsustainable as the population ages and that reversing the large deterioration in public finances is an urgent priority..

The IMF expects that the government budget deficit will reach 7% of gross domestic product in 2011, more than twice the European Union’s upper limit.

A member of the IMF mission visiting Cyprus said that the IMF considers that the current situation is very serious in light of the fact that the government cannot access the capital markets. He said that Cyprus must do all it can to avoid problems getting out of hand.

Further reading

Cyprus – 2011 Article IV Consultation Concluding Statement of the Mission

Town Planning Amnesty: six month extension agreed

AS widely anticipated, an extension to the Town Planning Amnesty and a simplification of the procedure has been approved by Cyprus parliament.

The changes approved by parliament are that:

  • The period during which ‘Statements of Intent’ may be submitted under the provisions of the Town Planning Amnesty laws has been extended to 6th April 2012.
  • The requirement that the ‘Statement of Intent’ has to be accompanied by a sworn statement made by an ETEK registered architect/engineer has been removed. In its place, the applicant is required to submit a ‘Statutory Declaration’.

Statement of Intent application conditions

The Town Planning Amnesty only applies to “existing buildings” which, according to article 10D of the Streets and Building (Revised) Law 2011, are those that have a Planning and/or a Building Permit (although they may have expired). The building must have been completed before the above law came into force on 7th April 2011.

Applications must be accompanied by a ‘Statutory Declaration’ made by the applicant.

When the period during which Statements of Intent may be submitted ends on 6th April 2012, applicants will have until 7th October 2014 to apply to the relevant Town Planning or Building Authority to obtain a Certificate of Final Completion for the building.

Purchasers may submit applications by attaching a stamped copy of their Contract of Sale to the application.

Preparing and submitting a Statement of Intent

DEPENDING on the nature and extent of planning infringement, applicants will need to submit either a Statement of Intent under the provisions of the Town and Country Planning Law or a Statement of Intent under the provisions of the Streets and Buildings Regulations Law:

The Town and Country Planning Law

Excessive density should be 30% of the allowed density and no more than 10% outside the approved envelope.

A penalty will be payable, corresponding to a fraction of the value of the land area that should exist for the building to be legal. Alternatively, density can be transferred from another plot (which then becomes public property) or from a listed building. A 20% discount will apply for applications submitted during the first year and 10% for those submitted in the second year.

Note that planning irregularities such as excessive coverage, building height, number of floors, distances from boundaries, changes to the layout of buildings etc. can be accepted under certain circumstances. No penalty is payable for these irregularities but corrective measures will be required.

Town and Country Planning Law Statement of Intent Application form – includes the required ‘Statutory Declaration’.

(Please complete the Greek language part of the above document. The English language translation is provided for guidance only).

The Streets and Buildings Regulations Law

Small scale excess density can be allowed to the building up to a maximum 10% of the permitted density and half of it to be included in the building envelope.

The penalties imposed are the same as those of the Town and Country Planning Law.

Minor changes can be covered like excessive building height, changes to the internal layout of the building, changes to the doors and windows and other architectural characteristics.

Streets and Buildings Regulations Law Statement of Intent Application form – includes the required ‘Statutory Declaration’.

(Please complete the Greek language part of the above document. The English language translation is provided for guidance only).

Deciding which application to submit

APPLICANTS need to compare the approved plans, attached to the Planning Permit and/or the Building Permit, against what has been built.

Applicants may wish to use the services of an ETEK registered Architect or Civil Engineer to assist – contact two or three to get competitive quotations.

Obtaining planning and building permit

DISTRICT and Municipal office will provide certified copies of Planning/Building permits and approved drawings for €27.

Where the applicant is a purchaser, they will need the number of the Planning/Building permit, a copy of their contract and proof of their identity (an ID card or passport).

Purchasers who are unable to obtain the number of their Planning/Building permit from their developer, building contractor or architect should speak with the planning officer responsible for their area who should be able to advise and provide them with a certified copy of the documents.

Penalty payments

AS mentioned above, fines will be payable that correspond to a fraction of the value of the land that should exist for the building to be legal.

Penalty payments have been published for buildings in Nicosia town, Nicosia villages, Paphos town, Paphos villages, Famagusta (all areas), Larnaca town, Larnaca villages, Limassol town and the Limassol villages.

Note that the penalty payment tables are in Greek, but it is relatively straightforward to translate their contents using Google Translate or Yahoo Babel Fish.

Notes

It is important to appreciate that the temporary provisions of the Town Planning Amnesty is designed to address specific problems described in the law and only applies to planning irregularities impossible to resolve using other procedures.

Applicants can be buyers of individual units in a complex who are encouraged to apply together.

Applicants are advised that  serious planning infringements that are outside the scope of the amnesty could result in in the authorities issuing a ‘Certificate of Unauthorised Works’ that will result in the Land Registry registering a note against the title prohibiting the transfer of the property until that infringement has been corrected. (But beneficiaries can inherit the property by Will).

Completed ‘Statements of Intent’ and accompanying documentation should be sent to the Ministry of the Interior.

More than one thousand new home owners

FIGURES released on Tuesday by the Department of Lands and Surveys show that 1,046 property transfers took place at District Lands Offices throughout Cyprus during September.

So far this year 8,975 transfers have taken place compared with the 5,317 contracts for the purchase of property deposited at the District Lands Offices this year.

Source: Department of Lands and Surveys

The Land Registry’s assessment of the market value of the 7,202 properties transferred so far this year totalled €1,462,442,460.16. This is 7.8% more than the sale price of €1,356,106,366.13 declared by vendors and purchasers.