A RECENT decision by the Council of Ministers has lowered the ceiling on rent increases from 14% every two years to 8%.
The last date for landlords to impose a 14% increase on rent contracts was Wednesday, April 22.
The Cyprus Land and Property Owners Association (KSIA) said this was an unfair decision and one that the government had not discussed with the association. Its members are determined to seek legal measures to ensure their rights.
Copyright © 2008 Financialmirror.com
DOLPHIN Capital Investors is accused of parting away with shares worth €322 million instead of paying €42.7 million in cash as part of its arrangement to settle a put option right of Theodoros Aristodimou, founder and managing director of Aristo and Chairman of the Board of Directors of Bank of Cyprus.
Dolphin Capital, which is listed on London’s AIM market has called an EGM for April 24 in Nicosia to ratify a Board decision to settle the put option right of Aristodimou, by purchasing the 15% it did not already own in Dolphin Capital Investors Holdings Two Ltd, the intermediate holding firm of Aristo Developers Ltd, for €92.7 million.
The company, which is one of the largest land holders in Cyprus and Greece, said the acquisition follows the exercise of a 15-percent put option rights by Aristodimou.
Dolphin Capital now owns 100% in the unit.
Dolphin Capital said it would pay €50 million in cash and the balance of €42.7 million through the issue of 133.1 million shares in Dolphin Capital to Aristodimou or his companies, based on an issue price of 30 pence a share.
The company said the price is about a 30% discount to the value of Aristodimou’s holdings in Dolphin Capital Holding Two, based on its net asset value of €876 million on Dec. 31, 2008.
Dolphin Capital said Aristodimou’s holding in Dolphin Capital will now increase to 35.44% from 18.07% and the company also agreed on a call option with him to buy back the consideration shares six months after their issue.
Athanasios Ktorides, acting as proxy for Lynchwood Nominees, holding 2 million shares in Dolphin Capital told the Financial Mirror during a press briefing that he opposes the decision of the Board to issue shares to Aristodimou.
“Dolphin Capital should pay the whole amount in cash, as per the original arrangement,” said Ktorides who insists that the 133.1 million share issue means giving away the value of €322 million in assets of the company to Aristodimou.
Ktorides makes particular reference to the fact that the audited results of Dolphin Capital, released in March 2009, show that the net book value of the company as at December 31, 2008 was 285p and the company had ample cash balances to pay its obligations.
“Just because the share price has been marked down to 30p on the AIM, where seldom there is any share trading, does not give justification to the Board to value the new issue at 30p a share, whereas the audited results show the true value at £2.85/share,” says Ktorides.
In a protest letter addressed to the Board, Ktorides says the intended action, which adversely affects the interests of all shareholders is being promoted in a hasty manner and without giving shareholders reasonable time to consider the appropriate actions.
Ktorides said he reserves his legal right to defend his and other shareholder interests and if necessary resort to legal action against the directors.
The fact that Aristodimou will increase his stake in Dophin Capital to 35% and together with other Board members will control about 42% of the company gives rise to concerns that Dolphin Capital may join a long list of companies who are considering to de-list from the AIM and other stock exchanges.
In 2007, Dolphin Capital paid a total of CYP 167.35 million or €285.93 million to wrest full control of the CSE-listed Aristo Developers and subsequently delist it from the Cyprus Stock Exchange, according to official announcements monitored by the Financial Mirror.
Through Aristo Developers, Dophin Capital owns the biggest coastline in Cyprus, plus golf courses and luxury resorts, most of which are located in the Paphos area. It also holds extensive property in Greece.
Copyright © 2008 Financialmirror.com
THE Cyprus Inland Revenue Department has reported a dramatic fall in property tax revenues collected during the first three months of this year.
The amount of Capital Gains Tax collected, the majority of which results from the sale of property, crashed to just €15.1 million from the €90.1 million collected during the same period last year; a drop of more than €75 million reflecting the 64.7% decline in the number of property contracts deposited at the Land Registry this year compared to last.
A survey of the Federation of Contractors’ Association also revealed that 40% of the properties built during the past year remain unsold, further indicating the rapid slowdown in the property market.
Overall, Cyprus tax revenues during the first quarter of the year fell by €45.6 million as shown in the table below.
THE latest BuySell Home Price Index indicates that the average price of a Cyprus property fell during the first quarter of 2009. However, the BuySell figures conflict with those reported earlier from other sources saying that prices of tourist properties have already fallen by more that 10 times the figure reported by BuySell.
GLOBAL real estate trends have eventually reached Cyprus, with home prices displaying a decline, during the first quarter of the year. For the period January to March 2009, the BuySell Home Price Index recorded a cumulative decrease of 1.7%, compared to December 2008, bringing the year-on-year change to -2.2%, for the first time since August 2005.
Overall, Cyprus home prices have been quite volatile during the period, indicative of the uncertainty in the sector and the general economic environment. Home prices recorded a fall of 1.5% during the first month of the year, increased in February by 2% and declined by 2.2% in March. The BuySell Home Price Index closed at 140.52 units (March 2009) bringing the Average Home Price in Cyprus down to EUR 187,053.
The BuySell Home Price Index was created and is updated monthly on behalf of BuySell Cyprus Real Estate by MAP S.Platis. The Index is announced quarterly and depicts the movement of prices at which residential properties are sold in Cyprus, based on the extensive, Cyprus-wide, BuySell Cyprus Real Estate database.
For more information on the methodology of the Index and on Hedonic Prices please refer to: The “Asking Price and Transaction-based Indices for the Cyprus Housing Market (Rebased)” by Dr. Stelios Platis and Marios Nerouppos of MAP S. Platis (available at the Research Centre).
The BuySell Home Price Index constitutes the only valid gauge of the Cyprus housing market and is considered as an effective tool for home buyers, sellers and investors.”
Speaking to a reporter from the Cyprus Mail, Stelios Platis of MAP S.Platis, which is responsible for the Index said he expected prices to drop further across Cyprus.
“I think they’ll come further down. Nicosia doesn’t have a vaccine against the crisis. I don’t think the reasons are place specific. It’s a general phenomenon,” he said.
“For prices to fall we must have unsold property and no increase in demand. If we follow that theory that it’s mostly foreigners who increase demand, then obviously the crisis is going to affect all cities apart from Nicosia.
“But this is half the story because Cypriots are not in the market for housing units now, so Nicosia will also be affected,” he added.
Despite that, Nicosia actually experienced a small increase in the last quarter. “But I wouldn’t draw too many conclusions from that, as it fell significantly in December,” said Platis.
Paphos kept the same levels, which had already experienced a fall, while Limassol and Larnaca dropped average prices.
“Yes we are seeing a freeze in supply, but a lot of projects which have already started will be finished soon and they will have to sell them, so I expect lower offers than last year. And no city is immune to this because the crisis doesn’t have geographic location.”
Platis noted that banks were not lending at favourable rates, people were not buying because they expected prices to come down, and by the summer, prices are likely to go down more.
“We are now at average prices levels of October/November 2007. All the gains of 2008 gone. It took one quarter to throw them in the air. How far lower they go depends how long the crisis will last,” said the economist.
“Personally, I remain optimistic. We need to survive a possible summer shock. If the tourism levels are not so bad, Cyprus may survive the crisis with minimum adverse effects.
“There will be less quantity of housing units and lower prices but not a crash. My concern is what happens after the crisis? Our competitors, like Spain and others, will have much cheaper products than us,” he added.
THOUSANDS of land owners will be affected by the Cyprus Supreme Court’s decision to annul the latest Nicosia Master Plan following an application by around 55 land owners.
The Court ruled that the composition of the Joint Council and Town Planning Council which approved the latest Nicosia Master Plan was illegal. In his ruling, the judge argued that many absences were repeatedly noted at their meetings but that no efforts were made to update those who missed them.
The Supreme Court’s decision has created chaos in the Nicosia property market. The 2003-2006 decision to move certain lands into agricultural, commercial, residential or protected zones has now been reversed and the old Zoning Plan of 1996 will be reinstated. The sudden changes in zoning have caused property prices to collapse in many areas; property development projects are also being affected.
The Interior Minister, Neoklis Sylikiotis, was reported as saying that the government would take what measures it could to limit the consequences of the annulment. The minister is expected to meet with the Legal Service in the coming week to decide on grounds for mounting an appeal and to explore what options are available to limit the consequences of the Supreme Court’s decision. However, legal circles have said that there might be no grounds for an appeal, given the nature of the case.
The Minister pointed out that a revision of the Zoning Plan had already started in 2008, and should be ready in 2010. He further noted that the Supreme Court’s decision was based on “clearly procedural issues” of composition of Councils, not on the appeals of certain land owners.
The Minister acknowledged that thousands of citizens would be affected, particularly where residential zones had been extended by the annulled plan.
LIKE many other Britons looking for a holiday home in the sun, W & E attended an exhibition in 2007 hosted by a well-known overseas property marketing company. Subsequently, they visited Cyprus on an inspection trip and bought an off-plan 2-bed apartment near Paphos.
The marketing company introduced them to a so-called ‘independent’ lawyer to handle the legal side of their purchase.
Both the property marketing company and the developer assured them that the apartment would have a covered area of 79 sq m and a balcony of 33 sq m; the developer’s current price-list for this development continues to reflect these sizes..
The ‘independent’ lawyer also arranged their mortgage and the loan amount was based on the bank’s valuation which was in turn based on the advertised size of the apartment.
The apartment, and the rest of the development, is approaching completion. But an inspection by a professional, independent surveyor has confirmed that its covered area is more than 15% smaller than its advertised size – this means it has been oversold and overvalued in excess of €30,000.
This lawyer actually drew up a contract omitting the size of the apartment and also ensured that no dimensions were shown on the apartment plan attached to the contract as a formal annex – contravening the lawyer’s own statements, given in a booklet given out to property purchasers, about what is essential in a contract!
From the various website forums about developments in Cyprus it appears that this developer has carried out this scam on a number of other developments, aided and abetted by this so-called ‘independent’ lawyer who is allegedly this developer’s own ‘pet’ lawyer and the partner of one of the developer’s family.
This first lawyer has now been discharged by W & E and they have appointed a truly independent lawyer (who is on the list provided by the British High Commission in Nicosia) to genuinely look after their interests and to pursue this matter, through the courts if necessary.
W & E are contacting their local MP, the BBC, British newspapers, and even a journalist friend in Cyprus, to raise awareness of this scam. They feel strongly that purchasers should not let developers get away with these scams – but nothing will change unless those scammed make others aware – even when they feel so foolish for having allowed it to happen in the first place!
Further developments to follow.
To avoid being scammed when buying property in Cyprus, it is absolutely essential that you take independent legal advice before handing over money or signing any contract documents.
The British High Commission in Nicosia maintains a list of English-speaking lawyers and a recently updated warning on the British Foreign Office Website gives prospective property buyers blunt advice.
Invariably, contracts prepared by a developer’s ‘pet’ lawyer are written to favour the interests of the developer!!
