RICS Cyprus property price index

Editorial
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THE Royal Institution of Chartered Surveyors (RICS) has announced that the RICS Cyprus Property Index is in its final stages of completion and is expected to be launched by the end of the month.

The project is currently selecting the property portfolio on which the index will be based, with experts and academics in the process of perfecting the methodology. The Index will cover apartments, homes, offices, commercial and industrial properties and has been commissioned to the University of Reading. It will be published in cooperation with the Association of Quantity Surveyors and Construction Economists (SEEOKK).

“The transparency that the Cyprus Property Index can offer, is a shield for the avoidance of economic crises like the one the world is currently facing,” said SEEOKK president Leda Philippidou.

“The Cyprus real estate sector cannot bounce back unless the basic parameters, upon which it functions, remain unsatisfactory,” added RICS Cyprus executive board member Pavlos Loizou MRICS, of Antonis Loizou & Associates. He added that the question of trust in the real estate sector must be the primary concern to all those involved. “Of course, trust without strict rules and transparency cannot exist. The creation of the RICS Cyprus Property Index will provide the necessary transparency that the market needs, so that buyers and investors can regain their trust.”

With reference to practices that are applied abroad, Loizou explained that “there are a plethora of property indexes for real estate that use different methodologies, and target specific types of real estate. Investors and funding organisations select an index, which is always based, however, on clear parameters.”

The United Kingdom’s Financial Services Authority (FSA) informed RICS Cyprus that there is no common index used by the banks and cooperatives. They use their own index, for example, Barclays, Halifax etc. while other organisations use either the Investment Property Databank (IPD – based on re-evaluations of specific real estate and is similar to the pipeline for Cyprus) or on indices produced by consulting companies (also similar to the one proposed by RICS Cyprus).

Reading university & Dr Pat McAllister

Reading University is home to the largest school in the UK for teaching and research in real estate and planning. The department was established in 1968, and enjoys worldwide recognition for excellence in both teaching and research. The Index was designed by Dr Pat McAllister, whose interests include real estate pricing and appraisal, European integration and international property investment, real estate development, environmental certification and real estate pricing. He is currently the programme director for flexible MSc courses and the package director for Urban Property Management and Valuation.

BuySell home price index

Cyprus has been without a property price index since the demise of the BuySell Home Price Index at the end of March last year. MAP S. Platis, the organisation that produced the Index on behalf of BuySell, announced:

“In anticipation of an official Index from the Statistical Service of the Republic of Cyprus, the BuySell Home Price Index shall stopped being produced, as of the first quarter of 2009”.

Many questioned the validity of the BuySell Index. It was based on a combination of prices at which properties were being offered for sale as well as the actual prices they achieved. Also, as agents acting on behalf of those selling property, many felt that BuySell were motivated to report a higher Index than the true reality of the situation.

Association of commercial banks property index

The Association of Cyprus Commercial Banks has announced that the general property index is being prepared with the cooperation of the Central Bank of Cyprus. But as with the BuySell Index, questions have been raised regarding their motivation and the impartiality in the production of a property price index.

Orams must demolish house in occupied north Cyprus

Editorial
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THE COURT of Appeal has handed down its judgment in the case of Apostolides v Orams.  The Court of Appeal has decided in favour of Meletis Apostolides, a statement from his lawyers said.

The present appeal is final, it added, and a further appeal to the Supreme Court of the United Kingdom is not permitted.

The judgment provides that the Cyprus judgments be registered and enforced in the UK.  The Cyprus Court had made a number of orders against David Orams and Linda Orams, regarding land in Lapithos belonging to Apostolides.  In particular, the Cyprus Court ordered that the Orams should:

  • Cease trespassing on the land belonging to Apostolides;
  • Deliver up possession of the land to Apostolides;
  • Pay ‘mesne profits’ (effectively, rent) to  Apostolides in respect of the period of their occupation;
  • Knock down the villa and fencing they had built on the land; and
  • Pay certain sums in respect of Apostolides’ costs of the proceedings.

The Orams will also be ordered to pay the legal fees incurred by Apostolides, regarding the London and Luxembourg proceedings.

“This judgment has determined in a final way that the legal rights of displaced Cypriots against trespassers, as determined by the Courts of the Republic of Cyprus, can be enforced in the United Kingdom,” said the statement from lawyer Constantis Candounas.

“Mr. Apostolides feels totally satisfied that the European institutions have safeguarded his right to have his human rights to property enforced throughout the Union.  He had placed his trust in British Justice and has never felt that this was misplaced.”

Candounas said the ruling is expected to act as a future deterrent for speculators in stolen Cypriot properties, as well as those willing to take small or bigger risks.

“The way is now open for all Greek Cypriots whose properties have been usurped by other EU nationals, to take legal action and enforce Cyprus judgments against such trespassers in the United Kingdom and other EU countries,” his statement said.

The Orams, from Hove, Sussex, were not in court and not available for comment.

Cyprus estate agent declared bankrupt

Nigel Howarth
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IN AN exclusive deal with British property developer Ian Beaumont – Andrew Nolan, of estate agents Peter Stephenson Properties, sold properties in Cyprus to British buyers looking for a place in the sun.

The properties were offered for sale at half price and the deal was that developer Ian Beaumont would rent them for 10 years.

Around 60 Brits paid Nolan up to £100,000 each for their properties, and an estimated £3 million of their money went through Nolan’s bank account in the UK.

Although work began on preparing the building sites, Beaumont and Nolan subsequently fled the Island leaving their victims with nothing. Their plight was reported on UK national TV in a programme ‘Holiday Homes from Hell’.

Earlier this year, victims managed to track down former Peter Stephenson Properties manager Nolan to a farmhouse near Stratford-upon- Avon and took him to the small claims court. Although he lost the case, Nolan failed to pay up and he was then served with bankruptcy papers (see video below).

Source: Daily Mirror

The case against Nolan was heard in the Birmingham court on Thursday, where the judge formally declared him bankrupt in the presence of victim David Goodman and a barrister. Nolan did not show up for the hearing.

Andrew David Nolan is a twice banned company director. He is still serving a maximum 15-year ban over the £2.3m collapse of his insurance company 0700 2 Insure Ltd after accountants found a £722,000 black hole in the firm’s books.

Bank in court next week

The case against the British bank into which Nolan paid the victim’s money will be heard next month.

Although the bank was notified in writing about the scam, it failed to take any action. In the opinion of a barrister working on behalf of the victims, the bank is negligent as it failed to report the scam as required by the Proceeds of Crime Act.

Ian Dyson Beaumont

The search continues for Nolan’s ‘partner in crime’, property developer Ian Beaumont.

He has been seen in the Czech Republic and was last known to be living in Dubai using the names Richard Katz and Ian Morgan as well as Ian Beaumont, and is apparently using a forged passport.

Anyone knowing Beaumont’s whereabouts should contact Cyprus Property News and we will forward the information to his victims.

Cyprus lawyers refuse cases if suing other lawyers

Stefanos Evripidou
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Lawyers in Cyprus refuse to sue

LAWYERS ARE refusing to represent members of the public who wish to take civil action against other lawyers, the House Human Rights Committee heard yesterday.

According to EDEK deputy Georgios Varnavas, who tabled the issue for discussion, representatives of the Cyprus Bar Association confirmed to the committee that there were incidents of lawyers refusing to take on other lawyers in court.

Varnavas argued that it was unthinkable for a country that tries to defend human rights to have citizens going unrepresented when the defendant is a lawyer.

“We believe that the Cyprus Bar Association should first of all put safeguards in the existing decision of December 10, 2009, that if a lawyer does not take on a case, then the current chairman of the District Bar Association will personally take on the case or be obliged to find another lawyer,” said the EDEK deputy.

He called on the Legal Service to consider the matter more seriously and look at whether new laws were needed to enable the state to provide legal aid in civil cases too, as can be done in criminal cases.

Committee Chairman Sofoclis Fyttis said the Bar Association explained that in such cases, it was up to the head of each district bar association to defend or represent the member of the public who was in dispute with the lawyer.

The committee also discussed the issue of money paid to lawyers who end up refusing to take on the brief and fail to return the money. In principle, clients can seek a return of their money from the general insurance taken out by all lawyers.

“This has not happened yet,” noted Fyttis, who questioned how much time was needed for a lawyer to study a brief and decide whether to take on a civil case involving a colleague.

The DIKO deputy said the committee has asked the Attorney-general, Justice Ministry and Bar Association to study these cases and reply within five months on what improvements have been made to the whole system so the committee can push forward on the issue.

Editor’s note

British nationals are encouraged to use a lawyer on the list provided by the British High Commission in Nicosia. Please refer to the article ‘Finding Lawyers in Cyprus’.

 

Cyprus hotel and tourist associations oppose taxes

Nigel Howarth
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IN A JOINT press statement issued on Monday, the Cyprus Hotel Association (PASYXE) and the Association of Cyprus Tourist Enterprises (STEK) expressed their intense opposition to the Cyprus government’s latest proposals on property tax.

According to their statement, “this move will hit the hotel industry as hotel units will be required to pay much higher taxes; 10-15 times more than under he current system” and called on the government to deal with the problems in the “wasteful” public sector.

Their statement concluded: “As a result, the proposed taxation will be the ‘coup de grace’ for the hospitality industry, whose survival will become even more problematic and doubtful.”

Editor’s comment

FIGURES released earlier today by the Cyprus Statistical Service (CYSTAT) show that tourist arrivals fell by nearly 11% during 2009. There were 14% fewer British arrivals last year compared to 2008, followed by 17.8% fewer Russians, 0.9% fewer Greeks and 0.9% fewer Germans.

Increasing their hotel accommodation costs through the government’s imposition of higher property taxes on hoteliers would most certainly result in more tourists taking their holidays elsewhere and cause a further decline in tourism.

Govt figures confirm Cyprus meltdown

Editorial
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FEWER than 1,800 properties were sold to non-Cypriot buyers during 2009 compared to over 11,200 in 2007, according to data released by the Cyprus Department of Lands and Surveys. The worst hit areas were Famagusta (down 90%), followed by Paphos (-89%), Larnaca (-84%), Limassol (-70%) and Nicosia (-55%).

Cyprus is one of very few countries to produce official data on the number of homes sold to foreigners, so a comparison with other similar markets is difficult. However, Cyprus’ reliance on British buyers – whose purchasing power has been hit by the weak pound-euro exchange rate – is cited as a major obstacle to sales. The ongoing controversy over unissued title deeds has also generated negative press for the country in recent months.

Price debate

Some question whether prices have fallen in line with buyers’ expectations and, with no official price index released since Q1 2009, the nationwide situation is difficult to judge.

David Pollard, CEO of agent Fine & Country Cyprus and director of developer Universal Vacations (Univac) Realty, argues that market decline has been “exacerbated by the high cost of land in Cyprus, which kept pushing up retail prices and further fuelled by a healthy dose of greed amongst some developers”. He told OPP that: “Cyprus is already overstocked with completed properties and there are hundreds more due for completion this year. Although the fundamentals are in place the market can only recover with sympathetic bank lending and a realization that prices need to be lowered.”

Developer Aristo has been offering discounts of up to 30% on a number of its completed and near-completed properties, and says this stock is gradually being sold off, but doesn’t think cutting prices further is a realistic solution.

“It is unlikely for new projects to be launched if there is not sufficient demand,” said Savvas Georgiades, Aristo’s finance and operations director. “Construction costs and land prices do not show significant drops and it is unlikely for developers to spend cash in order to receive it back without profit.”

Andreas Ioannou, managing director of developer Alpha Panareti, argues that large discounts have already damaged the market by creating fears of negative equity. But even he admits that “those potential clients who still have the money to invest are now taking much longer to review the market and make decisions, often in the hope of forcing prices down”.

New strategies

Hoping to stimulate sales by improving properties’ investment appeal, Alpha Panareti is introducing units with approved rental licences, which it hopes will improve resale value as well as facilitating rental income. Univac plans to use its affiliation with international network Fine & Country to allow off-plan buyers to more quickly sell on properties once they are completed.

The most popular strategy appears to be a focus on the high-end market, with marinas, spas and golf courses. Cybarco nearly sold out its prime-location resort Amathusa Coastal Heights in Limassol last year and intends to continue targeting luxury buyers, particularly Russians, according to CEO Michalis Hadjipanayiotou.

New buyer markets are also an option, with the Middle East of increasing interest to developers. Agent/developer Pafilia recently opened its first GCC office in Saudi Arabia, while Aristo plans to develop its networks by participating in events in Saudi Arabia and Iran.

Not everyone is convinced, however. “I don’t think targeting other buyer groups will help, unless you can persuade the Chinese to come here,” said Dominic Farrell, director of developer Invest In Cyprus and author of the Jet-to-Let Bible. “All the traditional buyers – Germans, Scandinavians, etc – have the same problems and are dealing with the same banks, while Russians only want big houses in Limassol.”

Emphasising that all Cyprus’ problems are the same factors affecting every market, he blamed “economics, exchange rates and the banks” for the decline over the last year.

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