Weak recovery in overseas property sales continues

Nigel Howarth
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6

ACCORDING to figures released earlier today by the Department of Lands and Surveys, a total of 180 contracts of sale in favour of overseas buyers were deposited at Land Registries throughout Cyprus in September compared to the 173 deposited in September 2009.

Overseas demand for property is still very poor. And although the market is showing signs of a weak recovery, the number of properties sold to foreign buyers during the first nine months of this year (1,402) is still down by more than 75 percent on the number sold during the same period in 2008 (5,622).

So far this year, Nicosia has performed particularly well with sales up by 50.5% followed by Famagusta, where sales have gone up by 7.4% – and finally Limassol, where sales have increased by 3.2%.

However, sales in the overseas ‘hot spots’ of Paphos and Larnaca are down by 6.8% and 12.4% respectively compared to last year.

Sales of property in Cyprus to overseas buyers
Source: Department of Lands and Surveys

As we reported last month, Chairman of the Estate Agents Association of Cyprus Solomon Kourouklides has stressed the need to find new overseas markets for Cyprus such as China, the Arabic countries and Iran.

The property market could be given a boost by an official two-day visit by the Russian President Dmitry Medvedev to Cyprus this week. A Cyprus-Russia Business Forum is to be held on Thursday which is anticipated to cover many areas of economic cooperation between the two countries including financial services, investments, land development, shipping, commerce and industry.  It has also been reported that that the two governments may sign a double taxation agreement during Mr Medvedev’s visit.

Vanishing Cyprus: Developers’ Bonanza

Andreas Chrysafis
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7

CONSIDERED the “Father of Urban Planning”, Hippodamus of Miletos (498 BC – 408 BC) was the first city-planner to introduce the city grid plan: a quite revolutionary concept at its time!

A visionary, physician, mathematician and a philosopher he had achieved an impeccable, if not, eccentric reputation and set forth a new trend of urban planning for cities and communities alike. Most nations, particularly North America, use the grid system extensively, recognizing that it is one of the most efficient urban planning systems to this day.

Are today’s city-planners, blessed with such visionary talents in the scale of Hippodamus? The public’s perception affirms the view, that, the record of city-planners has certainly not been so successful… in fact it has been a complete letdown! A great number of projects across the island, especially in the area of Paphos, have turned out to be mishmash of ecologically inefficient concrete structures and certainly not in harmony with the environment.

non-transparency within the public sector

Because of non-transparency within the public sector, the “right to inform”, has also suffered due to the ongoing apathy of planners who refuse to respect citizens’ opinions. All planning decisions are taken in private and kept away from public scrutiny, unless one is influential and has political clout. Some of those influential groups are none other than Developers, Banks and their Solicitors.

the real estate industry has friends in high places

This privileged group has been given a free reign for years, and because of this cosy relationship the Cyprus property market – due to shady deals – has received a bad reputation. In the UK for example, angry property owners have publicly protested to highlight the fraudulent behaviour of a number of developers. The European Union is now in the process of investigating the situation. But this multifaceted billion-Euro real-estate industry, has friends in high places and powerful lobbies with a strong financial backing to grease the wheels and stop any opposition.

One of those contentious practices involves the matter of Title Deeds. It has been estimated that over 130,000 property buyers on the island do not have Deeds to their properties; certainly a disgraceful act indeed and should name and shame any government who has failed to resolve the issue so far. It’s easy to get in the habit of doing nothing, but to implement reforms that may jeopardize the cosy relationship between government and powerful Land Development Groups, it takes courage and determination: the one thing that is badly missing!

no public consultation

Anxious to reduce its enormous deficit, a frantic government has rushed through the licensing of 14 new golf courses to big-name developers with no public consultation beforehand. As an integral part to the “golf deal”, these developers and their banking partners, would be allowed to build luxurious resorts the size of small cities like the Limni Mines project, which shall offer over 1000 homes for sale; the Ha Patami project; Aphrodite Hills; and many other similar developments. No villas, no golf courses!

Under those terms, the government relaxed the zoning laws, so developers can build their villa-resorts on cheap worthless land and to stock up their “Land Banks”. But the truth of the matter is that most of these exclusive projects are specifically designed and aimed for the privileged outsiders; Cypriot homebuyers are not part of that equation!

water is dangerously scarce

Golf is a wonderful sport, but in a country where water is so dangerously scarce, developing these golf courses with hundreds of villas complete with swimming pools does not make ecological sense, but sheer madness! Adding to the dilemma, these resorts will certainly cause a serious strain on the local infrastructure, the water supply, hospitals, schools and other facilities. Yet, developers exonerate themselves and claim they have no social responsibility or accountability on such matters, but simply to build their resorts, sell them and move on!

Last year, Cyprus had to import water from Greece to keep the taps of the nation flowing thus exemplifying the need for a sustainable environmental policy. Over 1.2 billion poor people worldwide do not have access to clean water and building 14 extra golf courses for the super-rich, is absolutely a waste of valuable resources that Cyprus cannot really afford to squander.

A single golf course can use as much as 6,500 cubic meters of water per day, enough to service hundreds of homes. For the maintenance of its well-trimmed grass, the amount of pesticides used, it is estimated to be 12.0 kilos per acre, per year, in comparison to 1.2 kilos per acre used in agriculture. A small pool on the other hand, can hold as much as 70 cubic meters of water. There is also a greater danger looming; the possibility of contaminating the agriculture industry on spreading genetically modified organisms by using GMO grass.

creating a two-tier a them and us society

These private holiday resorts (offering villas between 2.5 – 5.0M Euros) in close proximity to local towns or neighbourhoods, could ultimately create a two-tier “them and us” society with unforeseeable social consequences. This kind of selective mass housing policy is not only discriminatory but also reminiscent to the old colonial days, were wealthy foreigners cocooned themselves in secured surroundings amongst their own, to enjoy their lavish lifestyle without any social consciousness towards the rest of the people.

On a positive note, it is recognized that in some progressive countries, developers are held responsible for the extra financial burden imposed upon the community due to their massive projects or housing complexes. By law, developers must fulfil their financial responsibility and social obligation, if not, their building permits may well be revoked.

If a similar fair-minded policy is adopted on the island, it is one positive step towards a sustainable urban strategy and could help to improve communities, the infrastructure, recreational and health centres as well as the long-term social and ecological health of the nation.

Most importantly, on such massive projects the government could introduce a policy for mixed housing projects, which shall include a percentage of homes to be allocated for Cypriots at affordable prices. Developers and banks cannot simply build for outsiders by ignoring the housing needs of the country. There are many arguments, pro and against such a revolutionary concept, but ultimately, the long-term prosperity of the nation surpasses corporate financial gains.

favouritism is a form of institutional corruption

Bending the rules to assist the Land Development Groups to secure permits for their huge developments, such as golf courses with its housing projects, hotels and marinas is not the job of a government but it’s a matter of respecting and following the Laws of the Land. Practicing favouritism unquestionably is a form of institutional corruption with all its implications. Such behaviour it’s certainly the wrong way on resolving the nation’s shortfalls.

They’re may be a sliver of hope in the horizon and that is: resurrecting Hippodamus of Miletos! He can then show the government and planning departments, the ways of a great visionary for a healthier ecosystem and the introduction of fairer social policies so desperately needed on this trapped little island…

Editor’s note

I am grateful to Mr Chrysafis  for permitting me to publish his article.

Andreas C Chrysafis is the published author of:

Andartes – Historical Novel
Who Shall Govern Cyprus – Brussels or Nicosia? – Political analysis
Porphyra in Purple – Adventure/Metaphysical novel

All books are available from bookshops, the Internet including Amazon.com.uk.

Other articles in the Vanishing Cyprus series include:

EU Union and Cyprus
Switzerland of the Med
Immigration: A New Peril
The Environment
Politicians & Plutocracy
Gathering Storm
Think Tanks
Media & Manipulation
Corruption
Demographic Time Bomb

Do not be fooled by guaranteed Title Deeds

Nigel Howarth
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8

SINCE news of the Title Deed scams hit the headlines and made potential buyers much more aware of the problems, a number of  developers are advertising their properties with slogans like ‘Guaranteed Title Deeds’ and ‘Title Deeds to be Delivered Shortly’ in their efforts to entice buyers.

Do not be fooled by this advertising; there is no such thing as a ‘Guaranteed Title Deed’ (unless the property you are thinking of buying already has one and there are no claims lodged against it at the Land Registry).

A Title Deed guarantee is a limited ‘insurance policy’ from a bank (a bank guarantee) against which buyers may claim compensation if the developer fails to register the property in their name by a specified date. They do provide property buyers with an added degree of protection and making a claim against a Bank Guarantee should not result in buyers losing their property.

But this added degree of protection comes at a cost; somewhere between 1.5% and 2.0% per annum of the sum insured. So if you take a Bank Guarantee of £200,000 for a period of five years, it will cost you between £15,000 and £20,000 to insure for something that is yours as a right; the property’s Title Deed.

Some developers refuse to give bank guarantees as they have to ‘lock’ the sum insured with the bank for the duration of the guarantee. Furthermore it leaves them exposed in situations where delays in issuing Title Deeds are outside their control.

In some areas of the island, property developers agree to bear the costs of a Bank Guarantee for two years, although I suspect that its cost is factored into the selling price. In most areas of course it takes significantly longer than two years for Title Deeds to be issued.

I have been assured that the specimen below is a ‘standard’ Bank Guarantee letter. Please ensure that you take independent legal advice before signing any agreement.

Body specimen of Letter Guarantee

In consideration of your granting a loan to xxxxxxxxxxx (hereinafter called ‘the buyer’) for the purpose of enabling the buyer to partly meet his obligations under a contract date xx/xx/xxxx entered into between the buyer on the one part and Messrs xxxxxxxxxx (hereinafter called ‘the seller’) on the other part, for the purchase of an xxxxxxxxx, forming part of the project xxxxxx, which will be constructed on part of the land under Reg. No. xxxxxx plot No.xxxxx sheet/plan xxxxx at the area xxxxxxxxxx (hereinafter called ‘the property’) we hereby at the request of the applicant guarantee the seller up to the sum of £xxxxxxx- (say: xxxxxxx) plus interest at a variable rate to be determined by reference to the Central Bank’s Rate from time to time plus margin …..% p.a. to the effect that the seller shall, until xx/xx/xxxx register the aforementioned property in the name of the buyer, free of any encumbrances.

Provided always that the total liability of the Bank hereunder is limited to £xxxxx,- (say: xxxxxxxxxxx) plus interest at variable rate to be determined by reference to the Central Bank’s Rate from time to time plus margin ….% p.a.

With reference to the above we, xxxxx Ltd, xxxxx Branch, undertake to pay to you the aforesaid amount of up to £xxxx, (say: xxxxxxxxxxxx) plus interest at a variable rate to be determined by reference to the Central Bank’s Rate from time to time plus margin …..% p.a without any reference to and in spite of any contestation by the applicant or the seller on your first demand being made to us in writing by registered mail, or by delivery by hand at our offices stating that:

  1. The seller has not by xx/xx/xxxx registered the aforesaid property, free of any encumbrances, in the name of the buyer OR

    the seller transferred the title of the property to the buyer without giving at least 15 days written notice to you through the Issuing Bank (ourselves) of the intended transfer and

  2. That you claim payment under this guarantee.

Any claim under this guarantee must be made as stated above in time to be received by us not later than xx/xx/xxxx (one month after the date seller is obliged to transfer) after which date our guarantee shall cease and be of no effect whatsoever whether returned to us or not.

This guarantee becomes ipso factor null void and no effect if at any time during its validity the title of the property as above is transferred by the seller to the buyer and the buyer mortgages it in favour of your Bank, such Mortgage becomes your security in lieu of this Guarantee.

Provided that in case the title of the property will not have been issued by the District Lands Office until xx/xx/xxxx and provided you have not submitted a written demand as provided above, this Guarantee shall automatically be renewed for a further period of one year under the same terms and conditions except the present condition of renewal and it shall finally expire on xx/xx/xxxx.

Provided that any claim in case of renewal must be received by us not earlier than xx/xx/xxxx – (the renewal registration date) ant not later than xx/xx/xxxx.

xxxxxxx Bank ltd

Briton in property dispute takes protest to Palace

Nigel Howarth
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15

THE bizarre twists and turns in Conor O’Dwyer’s quest for justice took a further step today when he started a protest outside the Presidential Palace in Nicosia.

Mr O’Dwyer intends to remain outside the Palace until October 4 when he is due in court to face criminal proceedings concerning allegations made on his website LyingBuilder.com. The proceedings were apparently sanctioned by the Island’s Attorney General and in a statement to this magazine, O’Conor said that he believed they were “an attempt to intimidate, silence and prevent me from pursuing my rights through the courts in Cyprus”.

O’Dwyer’s court cases against his developers have been dragging on for more than four years through the Cypriot judicial system. They resulted from a decision by the Attorney General not to start proceedings against his developers in spite of strong prima facie evidence that O’Dwyer’s developer had fraudulently sold the house he was buying for a second time.

Protests

In 2008, Mr O’Dwyer spent 74 nights sleeping rough for justice in a tiny tent outside the Cypus diplomatic mission in London; only relenting when he when he received a court date for an assault he suffered in January 2008. That case is still being heard in a Cypriot court.

He has also staged several protests at overseas property exhibitions in the UK designed to highlight his plight and to warn others of the risks of buying property in Cyprus.

Mr O’Dwyer told me that his lawyers have notified the Police and the British High Commission about his protest and that he intends to remain outside the Presidential Palace until his court case continues on Monday.

Limassol marina on course for completion in 2012

Nigel Howarth
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7

THE President of the Republic of Cyprus, Demetris Christofias laid the foundation stone of the new Limassol marina at a ceremony held earlier this month which was attended by the town’s officials and other dignitaries.

Construction work on the Limassol Marina is already is under way and progressing rapidly and the special crane employed to dredge mud from the seabed has completed its work.

The marina project is one of the largest in Cyprus and aims to promote Cyprus position on the map as a quality tourist destination and should be ready to accept its first vessels in the autumn of 2012.

Despite the general slump in the property market, sales are reported to be doing well. The first units to be delivered in about 2 years time will be the nine blocks of apartments known as the Nerieds (sea nymphs). One bedroom apartments are selling for €450,000, two-bedroom apartments for €850,000 and the three bedroom apartments for €1 million.

At an estimated cost of €350 million, the marina will be able to accommodate all types of vessels from sailing yachts to mega yachts, ranging from 8 metres to 100 metres in length.

Cyprus companies linked to Greek property scam

Nigel Howarth
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3

ACCORDING to reports coming out of Greece, judges, lawyers, civil engineers, Land Registry staff, Inland Revenue officials and businessmen are allegedly involved in a massive property scam ring.

More than 100 people have been implicated in the ring, which was headed up by a team of five. It is thought that the group’s activity cost Greece millions of Euros in lost earnings from property tax.

During house searches in Athens, Greek police discovered at least 400 contracts for the purchase and sale of properties as well as a list of judges.

It appears that the ring would lay claim to properties that were due to be auctioned by banks to recover debts owed by their buyers. According to sources, members of the ring would either present forged papers showing that they also had a legal right to the property or they would produce documents showing that they were owed more than the banks and therefore had first rights on the land or buildings.

It is not yet clear how many properties they were able to obtain in this manner. Notes recovered from the lawyers’ homes over the weekend suggest that certain judges were either targeted by the gang or were in on the scam.

The ring apparently set up some 200 companies to serve as fronts that were controlled by two offshore companies based in Cyprus. The companies alleged to be implicated in the scam have not been named.

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