ACCORDING to PropertyAbroad’s monthly look at the top 10 overseas property choices of those searching for property on the site in June, America has climbed into the number 1 slot, relegating Spain to second position.
France and Greece have also swapped places, with France climbing one place to take 3rd, knocking Greece into 4th.
Cyprus slipped back 2 places into 7th place, moving Turkey and Italy both up one place to take 5th and 6th respectively from 6th and 7th behind Cyprus last month.
Portugal remained the 8th most popular in June (the same as in May) but 9th and 10th changed significantly. Egypt and Canada, which only entered the top 10 in May, in 9th and 10th place, have been replaced by Bulgaria and India.
The full results of the top 10 most popular in June were as follows:
BETWEEN May 2008 and May 2009, the banks increased their credit portfolios by more that €10.2 billion, expanding the gap between loans and deposits to more than €6.6 billion.
Six months after government attempts to boost liquidity into the market by injecting €2 billion into the system, the problem is still apparent. Since May 2008, the banks have increased their credit portfolios by €10.2 billion, while taking less that €3.6 billion in new deposits.
The two largest banks, the Bank of Cyprus and the Marfin Popular Bank, are under the greatest liquidity pressure, although the Coops increased their liquidity cushion by €325 billion.
Source: Central Bank of Cyprus
Bankers have emphasized that the government injections to date have been insufficient to resolve their liquidity problems, which emerged from the uncontrolled credit growth during 2008. They also stressed the need to regulate the deposit rates offered by the 113 Coops, which are exceptionally high with significant impacts on the cost of borrowing.
IMF statement on Cyprus
In the concluding statement of their report issued at the end of June, the International Monetary Fund (IMF) Mission in Cyprus said that:
“The global crisis has started to affect Cyprus. After some years of credit-financed overheating, the economy is headed for a sharp slowdown which will put pressure on the private sector, banks and the public sector to adjust balance sheets. Cyprus has been relatively shielded from the crisis until now, largely because of a lesser reliance on exports, prudent fiscal policies in the past, euro adoption, and a resilient financial sector which has not needed public capital injections. However, the evaporation of growth in 2009-10 will worsen credit risk in the banking sector which will bear monitoring and make current fiscal policies unsustainable without a policy correction. Structural reforms will be needed to assist the recovery and boost growth potential.“
DOLPHIN Capital Investors, a developer of holiday homes in the eastern Mediterranean offered its investors an opportunity to exchange their shares in the company for properties worth twice their value in Cyprus.
The results of the shares-for-property swap programme were announced yesterday. On offer were 124 completed and 888 nearly completed properties in Paphos & Limassol, 22 residential plots in Paphos, Larnaca and Famagusta, and 14 plots of land in Paphos, Limassol and Famagusta.
Although more than 1,000 assets were on offer, investors took up the offer on just 39 of them; 35 properties in Paphos and Limassol, three residential plots and a plot of land, for a sales price of €8.8m (£7.6m). The properties ranged in size from 77m2 to 244 m2.
According to reports, the shares-for-property swap was taken up entirely by new investors, mainly private individuals from across Europe and Cyprus.
Although the scheme had targeted sales of €50 million Miltos Kambourides, the founder and managing partner of Dolphin Capital Partners Limited, declared it a success and said Dolphin was prepared to reopen the plan later this month.
“The biggest achievement is that this programme was implemented successfully,” he said. “The first person moved in last week and called up to say thank you.”
He also said that those who had taken up the scheme were “brave“.
The main purposes of the Programme were to provide an exit opportunity for current shareholders, generate interest in the Dolphin shares by new shareholders, and increase the Net Asset Value per share.
Last year, the company posted a pre-tax loss of €156 million following falls in asset values. Its shares had been down 80% since the start of 2008, but have recovered by 23% since the scheme was launched in March.
In an announcement made on 9th April, Dolphin acquired the remaining 15% interest in Aristo Developers Ltd.
Theodoros Aristodemou, the founder, Managing Director and Chairman of the Aristo Developers Plc Group of companies, is also the Chairman of the Bank of Cyprus.
WE REFER to your article under the heading Legal stakes raised in Cyprus title deed scandal published on June 28 and categorically reject the false and unsubstantiated accusations against our company and, specifically, your description of our company Aristo Developers as:
contravening the law, by including our company to be “among the main offenders” over Immovable Property Tax and
one of the few big developers which account for the lion’s share of 4 billion debt
As you should have known if your report was based on true facts and if you had the courtesy to enquire further and ask our view as well, you would have established that Aristo Developers is:
a law-abiding company in every respect with absolutely no offence recorded against it regarding Immovable Property Tax
a company with one of the lowest debt to asset ratios in the industry and
a company that has always served its clients and buyers promptly and has fully safeguarded their interests.
Our customers have had peace of mind in the knowledge that ownership of their property is fully secure and that the unfortunate delays recorded in the issue of separate title deeds does not put them at risk in any way, while once separate title deeds are issued in any of our projects we are in a position to proceed with transfers to our clients without delay.
Furthermore, on the matter of title deeds which gave rise to the said article, we wish to add that we fully endorse the new initiatives to change the cumbersome procedure for the issue of separate title deeds. For over 25 years Aristo Developers has been striving to expedite the issue of title deeds to our clients, and we fully sympathise with them for the delays faced due to bottlenecks in the process and which are outside of our control.
Savvas Georgiades
Finance & Operations Director
Aristo Developers Ltd
WHEN Mr Georgiades says “no offence recorded against it (Aristo Developers) regarding Immovable Property Tax ” he is correct. However, readers should be aware that the Cyprus government has decided not to take action against unscrupulous developers who defraud buyers by ‘overcharging’ Immovable Property Tax.
The Cyprus Property Action Group is still waiting for a reply to their request for a Presidential Review into why the Police refuse assistance to buyers who have been defrauded in this manner.
THE SHARP fall in foreign demand for property in the first half of the year is reflected in the latest figures from the Land Registry; they are down by 78%. The slight recovery in property sales reported last Friday is entirely linked to domestic demand.
Estate agents and property developers who sold more than 3,800 properties to foreigners during the first half of 2008 sold just 847 during the first half of 2009. With the reputations of development companies being dragged through the dirt in the UK press on a regular basis, high lending rates in Cyprus are also having a negative effect on sales.
Sales of Property to non-Cypriots (Source: Land Registry)
According to the Chairman of Real Estate Agents Association, Solomon Kourouklides: “The banks are keeping their rates high while other European countries are cutting them. This means that the foreign buyers turn to other markets or to their own country of origin, such as the British do. Also, it is difficult for the Cypriot businessmen to become active in the property sector due to the high cost of money.”
Chairman of the Land and Building Developers Association, Lakis Tofarides, believes that the drop in external demand was expected. “If the government fails to take the necessary measures and the interest rates won’t drop, the sector of constructions will go through tougher days. It seems that the government has not realized the size of the problem“.
However, the Cyprus banking system has liquidity problems with the liquidity level standing at just €1.8 billion at the end of May. In spite of receiving two cash injections from the government amounting to €2 billion since the start of the year, their ability to lower interest rates is limited.
IT WAS a question from a British peer that exposed legislation to fix the much hyped title deeds saga was a fantasy.
A month later the same man shot another broadside when he publicly warned that buying a house in Cyprus was a risky endeavour and called for the closure of Cypriot developers in the UK.
Since being rocketed in the local news headlines, Lord Jones of Cheltenham has declined to speak to the media, but in a rare interview this week, he told of how he became involved in the Cyprus property quagmire.
“The Title Deed trap is unjust… my file of cases grows by the week.”
“I received a stream of letters and emails from UK citizens who had been caught in the trap. It struck me as (a) unjust and (b) an ideal issue for the House of Lords to mull over. My file of cases grows by the week. I am unable to take up individual cases as that is the job of the person’s own MP and lawyer,” he said.
It was his call last month for the British government to shut down the UK offices of Cypriot companies selling property and to impose a ban on the promotion of Cyprus property at overseas property exhibitions in the UK; that caused a considerable stir in Cyprus. However, he admitted, he never expected such proposals to be adopted.
“If it has concentrated the minds of good, honest property businesses in Cyprus to put pressure on their own government to sort out the mess, then it might have achieved something. Under European competition law, the idea of shutting business is almost certainly anti-competitive and therefore illegal. No doubt that is why the UK Government has turned down the idea.”
In the event, the British government said they would not take any steps to close down offices of Cypriot companies or ban the promotion of Cyprus property at exhibitions unless they received evidence of illegal behaviour.
With British and European politicians lining up to condemn the Cyprus governments lack of action on the deeds fiasco, Lord Jones is happy to offer advice to the government in Nicosia.
“There are two issues. First, pass a piece of legislation obliging title deeds to be passed over on completion of new property sales. This ought to be relative straightforward as no retrospection is involved.
“Second, ban the use of title deeds for properties already sold to someone else to raise loans for further developments (or any other purpose). Again this should be relatively straightforward.
“Third, use whatever powers they currently have to force handover of deeds for sales which have happened already – including European competition law.
“I understand a fee is payable to the Cypriot government every time deeds are handed over, so there is a financial incentive for them to act. If additional legislation is necessary, I’m sure property lawyers can advise.”
“Can you imagine Cyprus holding the Presidency of the EU with this nonsense going on?”
Jones added that with potential buyers and EU governments increasing aware of the problem the state should be busily working on a fix.
“If it is not sorted out, the advice to UK citizens and other Europeans will become stronger to have nothing to do with the property sector in Cyprus. I know that recently elected MEPs are onto the case in the European Parliament. There is therefore some urgency in sorting out the mess. Can you imagine Cyprus holding the Presidency of the EU with this nonsense going on?”
Lord Jones’ message to the rogue property companies: ‘Clean up your act!’
With many developers criticising his recent questions to the Upper House, Jones had a simple, but blunt message for them.
“I have every sympathy with good, honest property companies who have done nothing wrong. They probably felt a bit bruised by the questions and I’m sorry for that. My real target is the rogues who are damaging the image of the industry for everyone else. My message to them is ‘Clean up your act!‘”
Currently, the title deeds to more than 100,000 properties have still not been received by their owners, 30,000 of them non-Cypriot, with little sign that any new fix is in the pipeline.
