Home Blog Page 614

Property businesses expect increased domestic demand

David Crowther
-
0

Those in the property business expect that the decline in prices will reheat activity in the Cyprus property market. References to price decreases, which were a taboo subject for estate agents and developers until recently, are now significant weapons in efforts to boost demand.

Although official data shows a drop in activity of more than 60%, those in the property business talk about increased mobility in the past few weeks. They insist that improvements in market conditions are linked to increased domestic demand.

Chairman of the newly-established Association for the Promotion of Property Development, Giorgos Mouskides stated today that “demand in Nicosia concerns flats and houses, in Protaras and Ayia Napa summer houses by Nicosia residents and in Limassol flats and houses by Cypriots and Russians. On the other hand, the interest by Cypriots in Larnaca and Paphos is lower, with the exception of certain areas such as Pervolia“.

Mr. Mouskides was not in a position to provide figures on the increased demand or the trends in each municipality.

As for the drop in prices, he stressed that it was “a result of the plethora of unsold housing units in relation to the downturn in demand especially in the tourist areas“.

Mr. Mouskides supported the view that competing countries such as Spain and Greece play a significant role, as do the pressures that the banks exercise on developers, who are forced to sell their properties at lower prices, while bigger opportunities are seen in used houses sold by the non-Cypriots especially the British.

“In Nicosia, although prices in the city centre and the suburbs are stable, in certain areas they have dropped by 5-10%. A Larger decline of up to 15% is observed in the used houses and flats”, he noted.

“In other regions, the price decrease stands at 15-20%, in used houses and flats mostly“, he added.

Analyzing the reasons that push demand up, Mr. Mouskides said that this is attributable to the Cypriots’ mood to look for opportunities, the more attractive housing loans granted by the banks and the government’s measures to boost the property sector. “The government’s announcement for the construction of big projects such as golf courts and marinas and the upward trend in the Cyprus Stock Exchange in the past two weeks contributed significantly towards this direction“.

Finally, Mr. Mouskides stressed the need for a cut in taxes and VAT, capital gains tax that stands at 20% and transfer fees at 8%. There is also a need to hasten the procedures for issuing Title Deeds, which can take anything from 3 to 20 years.

© 1999 – 2009 Stockwatch Ltd.

Will Cyprus face the wrath of the EU Parliament?

Nigel Howarth
-
0

The European Parliament’s decision to vote in favour of a report criticising Spanish property laws has been welcomed by those campaigning for their property rights in Cyprus.

The Parliament decided that Spanish property laws breach the European Convention on Human Rights and it has voted to freeze hundreds of millions of euros in EU funding if the Spanish government fails to take action to resolve the problems.

Spain was at the top of the European Parliament’s property agenda and this decision gives the Cyprus government fair warning of the potential consequences should it fail to act to protect the rights of those who have bought property in Cyprus.

EU warns Spain over development

The European Parliament has voted in favour of a report criticising Spanish property laws.

The report says Spanish legislation allowing developers to acquire private land below market rates breaches the European Convention on Human Rights.

MEPs were acting on complaints from Britons and other homeowners who feared their homes might be bulldozed.

MEPs say they hope the vote will increase pressure on the Spanish government to change its laws.

Extensive urbanisation

The European Parliament voted overwhelmingly to freeze hundreds of millions of euros in Spain’s EU funding if the Spanish government does not tackle what the parliament condemned as “extensive urbanisation” practices.

In a full vote in Strasbourg on Thursday, 349 MEPs voted in favour, 114 abstained and 110 cast their vote against the report by the Danish Green Party MEP Margrete Auken.

MEPs from the Spanish conservative PP party were among those who voted against the report while those from the governing Socialist Party abstained.

The report was drafted after more than 100 petitions by thousands of expatriates living in Spain complaining of breaches of their land-ownership rights were sent to the EU’s petitions committee.

One of the main campaigners behind the case, Canadian expat Charles Svoboda, says local and regional governments often rubber-stamp planning applications submitted by developers.

Under current Spanish laws, developers can then demand that home-owners sell their properties at prices well below the market rate.

If they refuse to sell, Mr Svoboda says, they may even have their houses demolished. MEPs backing the report say that constitutes a breach of citizens’ legitimate ownership rights.

Speaking after the “yes” vote, Margrete Auken said this showed the European Parliament was willing to fight on behalf of EU citizens.

“We’ve shown now that this parliament can listen to the citizens and can take their case seriously and really support them.”

“So it’s much easier for them in the future to have the feeling that they have the EU institutions behind them.”

Endemic corruption

The European Parliament also criticised the “endemic corruption” which it says the Spanish property market suffers from, and demanded that any plans which did not comply with EU law be halted.

This is the third time that the European Parliament has debated urban planning practices in Spain. It condemned the lack of redress Spanish and foreign residents have in the face of alleged development excesses in 2005 and 2007.

This time though, it says, Spain will suffer the consequences to the tune of millions of euros in frozen funds if it fails to act.

Story from BBC NEWS

Has the Cyprus government misled us?

Nigel Howarth
-
0
Gordon Brown and Cyprus President Demetris Christofias
Gordon Brown and Cyprus President Demetris Christofias

IT seems as if the Cyprus government may have misled the British government into believing that it intends to resolve the current Title Deed problems faced by many Cypriot and foreign property buyers.

The truth was revealed at a Title Deed seminar organised by the Cyprus Property Action Group (CPAG) at the Elysium Hotel in Paphos last Thursday. The event was attended by some 500 people, both Cypriot and non-Cypriot hoping to hear about legal avenues they could take to secure their Title Deeds.

Lawyer Tasos Coucounis spoke about the various courses of legal action that property buyers could take and then, together with Andreas Symeou – a senior official from the Department of Lands and Surveys in Nicosia, he gave an overview of new legislation that is being prepared for consideration by the Cyprus Government to address the current Title Deed problems.

It soon became apparent that no new legislation is being prepared to help existing buyers who cannot get their Title Deeds because they’ve been conned into buying mortgaged property and face the very real threat of losing their homes if the developer goes bust.

“The Cyprus Government has announced that there will be new legislation to fix the problems here.” said Denis O’Hare of CPAG. “But as far as we can see, the new legislation is only an amnesty for developers who have not complied with their building permits. This was tried three years ago but it didn’t work then.”

“The underlying problem is the loans that the developers have on their construction sites and you cannot have Title Deeds issued until those loans have been paid off.”

“In the situation that we find ourselves in today, in this global economic crisis, with developers receiving little or no income because they cannot sell properties, unable to keep up their mortgage payments – this is leading to only one thing. Some of these developers are not going to be around in a year’s time.”

“What happens here when a developer goes bust is that buyers can take action through the Court to get Title Deeds issued and eventually get ownership of the property they’ve bought. The problem is that if there is a mortgage on the property and if those people bought after that mortgage was placed on it, the bank has first call on the property.”

Even though the people who bought the property may have paid for it in full and have been living in it for many years, the bank can then sell the property on the open market to recover the debt, leaving the property buyer who’s been conned with nothing.

Editor’s comment

Someone needs to tell the Cyprus Government that if it fails to keep its promise to the UK government, changing the property laws is a waste of time because no-one will buy a property in Cyprus again unless legislation is introduced to protect those buyers who have been duped into buying mortgaged property.

Cyprus title misdeeds

Dr Alan Waring
-
0

property-crimeIF POSSESSION is nine-tenths of the law, then possession of Title Deeds is surely nine-tenths of immovable property law. Property law in most countries requires that immediately on completion the seller must hand over to the purchaser the Title Deeds. Any transgressor would be liable to arrest and criminal charges of fraud. So, what about Cyprus?

Where property fraud is not a crime

Cyprus developers who withhold Title Deeds are not arrested and are actively encouraged by government policy and an archaic processing ‘system’ created by the local Planning Offices and Land Registry Offices. Moreover, during years of delay, some developers take out mortgages against properties already purchased and some also commit tax frauds against the purchaser. Developers have even sold the same property to second or multiple buyers and pocketed all the monies. The Attorney General and the Interior Ministry have both decreed, however, that all such matters are non-criminal civil issues between purchaser and seller.

Fully paid-up property purchasers are kept waiting typically 10 years or more (some over 30 years) for their Title Deeds. The Cyprus Property Action Group (CPAG) puts the number of properties awaiting Title Deeds at over 100,000 (see Editor’s comment below). Of these, 30,000 have been bought by foreigners, largely British. The Land Registry completes only around 1,600 Title Deed transfers per year. During the years of delay, tax fraud, unannounced mortgages and potential loss of the asset if the developer goes bust are all real threats. The Inland Revenue is also thought to have an estimated 1 billion deficit in cumulative Immovable Property Tax caused by developers foot-dragging on Title Deeds.

Unacceptable by any standards

Angry foreign purchasers in Cyprus, mainly British, have lobbied very effectively British MPs, MEPs, the Prime Minister, the Foreign Secretary, the European Parliament, GRECO and other relevant power bases. The Cyprus government seems to have no defence to the deluge of criticism and demands for action.

Enter the fray Cyprus MEP Dr Marios Matsakis, who has been confronted on the scandal by fellow MEPs in Brussels. Dr Matsakis wrote a stinging and widely publicised e-mail to Mr Neoclis Silikiotis, the Interior Minister. He went on, ‘The matter is quite unacceptable by any standards of justice or fair play and it must come to a speedy and satisfactory conclusion soon …… I demand that the Cyprus government takes effective remedial action urgently‘.

Questions on the scandal have been tabled in the House of Lords of the British parliament. In answer, the British government said it is closely watching the situation and that the Cyprus government had given assurances that it would introduce legislation to solve the problem. A more pointed statement from the British Foreign Secretary David Miliband soon followed. The significance of the Cyprus government assurances is crucial, as discussed later.

A rogue state beyond the fringes of civilisation?

Several questions on the Cyprus Title Deeds scandal E-6513/08EN, E-6793/08EN and E-0110/09EN have been tabled in the European Parliament. The questions centre on breaches of EU law, EU/UN Charters on human rights and Article 23 of the Cyprus Constitution regarding property rights. In answer, the EU Commission has stated that it has asked the Cypriot authorities for detailed information on the legal provisions and practices regulating and operating in this sector and that ‘The Commission will take the necessary measures if it can establish the existence of infringement of EU law‘,

One outraged MEP, Mr Nigel Farage, registered his disgust to the Cyprus Justice Ministry as follows: ‘Is Cyprus a rogue state beyond the fringes of civilisation? Does it have no laws, no impartial courts and no responsible government? How could this practice of retaining Title Deeds, after the sale of the properly, be condoned in a state which pretends to be worthy of the name and is not merely a bandit stronghold?‘

Consequences for property buyers

There are three main consequences for buyers. First, the Title Deeds delay encourages rogue developers to commit tax frauds, especially grossly inflated Immovable Property Tax (lPT). The Inland Revenue only receives the legitimate amount while the developer pockets the difference. Only after CPAG publicity have some developers suddenly reduced fantasy IPT charges from 000’s and often by 90% or more but this fraud is still flourishing thanks to the police declaring that such fraud is not a criminal matter!

Second, lack of Title Deeds makes resale of property much more difficult, especially as so many buyers are now aware of the trap and particularly in a properly slump.

Third is the serious prospect that a Cyprus developer will go bust and leave the Title Deeds collateral in the hands of his mortgagor. The purchaser, who has already paid in full, may still lose the entire asset In boom times, this was most unlikely but the 2009 Financial Crisis and properly market slump have changed all that. Curiously, the government and others seem to be in denial. The fact that it has not happened in Cyprus before does not mean that it can’t happen now.

Consequences for Cyprus

Cyprus has a small population and a modest economy heavily dependent on tourism and property, Therefore, Cyprus simply cannot afford to alienate buyers, especially foreign buyers, or to damage its image abroad.

On the surface, the Title Deeds assurances given to the British government seem reasonable: the Cyprus government will introduce new legislation to fix the problem, although no timetable was given. However, official sources now deny any knowledge of such legislation, either in draft or even being planned.

Perhaps the assurances to the British government were made as a desperate fobbing off, without any real plan or commitment behind them. Even if such legislation does eventually appear, it is likely to be far too late to protect people at risk now. Moreover, will it simply relax the Title Deeds issuance procedures for new purchases and do nothing to protect the backlog of tens of thousands of existing buyers?

Misleading a friendly foreign power is unwise, for the Cyprus government can neither afford to antagonize its allies nor alienate all those foreign buyers and investors. The Title Deeds issue has been racing up the UK domestic political agenda – the incumbent government has a General Election to fight soon and ‘Cyprus being Beastly to Brits’ is a great media and political football. The British government needs vote-winners. So, the pressure on the Cyprus government to resolve urgently the whole mess will intensify,

Furthermore, Cyprus has a very just case regarding Greek Cypriot property rights in north Cyprus controlled by Turkey, The Cyprus government cites fundamental human rights to demand support from the international community. Yet, it seems to be unwilling to protect those same rights in respect of property buyers in the government-controlled areas. The Title Deeds and properly protection situation here appears to totally contravene the Constitution of the Republic of Cyprus, Article 23, and also equivalent EU and UN charters.

Who runs the country?

Questions about state governance arise. Why would any government be so reluctant to sort out the mess? Put the interests of developers ahead of its own tax coffers? Risk damage to Cyprus’ market reputation internationally and its relations with friendly powers? Declare that property fraud is not a crime?

CPAG has a disturbing answer “There are 4 billion reasons. Developers’ outstanding loans amount to 4 billion and developers are, in effect, strong-arming the government to do their bidding, by holding up the spectre of economic collapse. Further, developers and their lawyers are so strongly connected with MPs and Ministers that any attempt to normalize the Title Deeds and property protection system is squashed flat.” Even if the stranglehold by developers is sorted out, there remains the operational matter of poor management within the Land Registry which adds to the delays.

Long-overdue solution a golden opportunity

The whole property protection system in Cyprus needs radical modernisation. As this is unlikely soon, CPAG and others are demanding that the Government of Cyprus urgently (a) guarantees Title Deeds to buyers who have lodged their sales contracts with the Land Registry, and (b) develops a strategy to exit this risk-laden situation. This is a real test of Cyprus’s right to consider itself a full European state, What a coup for the Cyprus government as it heads towards the EU Presidency if it were to solve the Title Deeds mess in the south! For this would prove to the international community conclusively that it has the unquestionable moral superiority on property rights. Its hand regarding the north would be strengthened immensely. The world is watching.

Dr Alan Waring. international risk management consultant, is  Adjunct Professor at the Centre for Corporate Governance & Financial Policy, HKBU Hong Kong. Contact mailto:[email protected]

©2009 Alan Waring

from the pages of Financial Mirror www.financialmirror.com March 25 – 31, 2009

Editor’s comment

The figures concerning the number of foreigners who had bought property and are awaiting Title Deeds were released by the Cyprus Land Registry in October 2008 and were subsequently announced in Parliament – see Title Deed delays affect 30,000 non-Cypriots.

Cyprus offering too little too late for Ryanair

Charles Charalambous
-
0

RECENT state incentives to boost Cyprus’ flagging tourism, which included a cut in airport fees, is too little too late, low-cost carrier Ryanair has said.

“The ones who will survive the [financial] crisis will be those who are flexible and nimble-footed. The urgency being shown by competing countries doesn’t seem to be shared by Cyprus. We could have been flying tourists in before the crisis broke“, Berger told the Sunday Mail in an interview.

For the past several years, the Cyprus Tourism Organisation (CTO) has been attempting to woo low-cost carriers such as Ryanair.

However the Irish airline, which recently touted charging passengers to use aircraft toilets, had been pushing for the government to lower airport fees.

“We hoped that the new President would make a difference to the way things were done, and be more open to new ideas“, he said.

“Is the government clawing back one-third of landing revenues the correct thing to do in the current situation? There is a crisis situation. You need to look aggressively at the government’s take of airport fees, which is high in relation to Cyprus’ main competitors. The recently-announced cut in the government share is too little too late. It is a huge lost opportunity.”

Berger said in the current crisis the global tourism sector was evolving quickly and developing new niches.

In this context, major industry players like Ryanair measure the CTO’s performance against their other potential partners. “The CTO’s budget should be tested for value for money. Making mistakes is OK, but keeping on making the same mistakes is not right.”

Ryanair first opened discussions with the CTO in January 2007 on bringing tourists to Cyprus on a scale that would cure the already-present problem of falling numbers. Discussions continued until February 2008, when the CTO decided that Ryanair’s requirements were “prohibitive, and not covered by any EU-approved scheme“.

There are also practical reasons why Ryanair won’t be planning UK flights to/from Cyprus, which take four to five hours compared to the low-cost carriers’ usual ceiling of three hours.

“You have built a new palace of an airport in Paphos, but you need to look at travel costs, fees and so on. To use an election metaphor, our “floating voters” will go where it’s cheaper, like Greece or Malta. They’re the ones who will make the difference, not the “core vote” who will keep going to their favourite destination.”

The airline’s plan was to focus on using Cyprus as a hub for routes to and from various shorter-range European destinations, such as Stockholm, Milan, Pisa, Marseille, Barcelona and Dusseldorf, but also Israel and the Middle East. As Berger put it: “We want to help you guys diversify your market.”

CTO chairwoman Phoebe Katsouri said the organisation could not do this alone.

“It needs the participation of the Ministry of Commerce, Industry and Tourism, the Civil Aviation Department, the airport operators, as well as the potential commercial partners. There needs to be a well-thought out plan in order to meet the objective,” she said.

The CTO is now preparing to launch its Air Route Development Scheme (ARDS), which was given the green light by the EU in April 2008. The ARDS is a start-up scheme for new routes, designed to connect Cyprus with new European destinations, and it complies with EU directives and regulations, which ban direct subsidies in the airline industry.

Berger welcomes the prospects offered by the ARDS: “As soon as they are prepared to talk, we’ll talk. If things go well, and we have the aircraft to allocate, we could start flights as early as February next year. This would mean that tickets would have to go on sale five to six months in advance,” he said.

But he was critical of the timing. He said: “Launching the ARDS now means the CTO has lost a whole summer. Getting market share back will be hard enough, without bad timing.”

Responding to this particular point, Katsouri said: “We’re a semi-governmental organisation, spending government money, so we must remain absolutely within our statutes in everything we do. We have winter 2009 and the whole of 2010 to aim for.”

Katsouri also pointed out that there are more flights to and from Cyprus now: “We have new routes, new airlines who came to us. We’re not unresponsive, but what is proposed needs to be doable and logical.”

Katsouri was referring to increased traffic to/from the Gulf states. As of 1 December 2008, Emirates increased the number of their Dubai flights to a daily service, complementing the three flights per week by Cyprus Airways. Jazeera Airways now runs three flights per week from Kuwait, and from June 2009, UAE national carrier Etihad Airlines will be flying three days a week Abu Dhabi.

However, the CTO seems to have already taken part of Berger’s message on board. Katsouri said that shorter air routes will be more important in 2009-10. “Our strategy has been adapted to take into account neighbouring countries for short-range tourism. We are modifying our allocation of marketing resources – advertising, for example – to address these markets.”

To be fair, the government and CTO are putting real effort into opening up new markets and developing existing ones, having sent high-level missions to Germany and Russia recently and planning missions to Philippines and China.

These new flights have been welcomed by the hotel sector. Katinos Socratous, Director of Sales and Marketing for the Elysium Hotel in Paphos and the Mediterranean Beach Hotel in Limassol, said that guest numbers from the Middle East should increase this year: “The flights are there for us to get more business.” Socratous added: “The barometer for Limassol is Russia, especially for the high-end hotels.”

Copyright © Cyprus Mail 2009

Cyprus popularity declines with British holiday home buyers

Nigel Howarth
-
0

AFTER Spain and France, Cyprus used to be the most popular destination for those seeking a place in the sun.  But it seems that Cyprus’ popularity amongst overseas property investors from Britain is in decline according to statistics from the overseas property portal PropertyIndex.com.

The breakdown of overseas holiday home searches via the property portal for January and February 2009 were as follows; in order of popularity:

  1. Spain – 23.4%
  2. France – 13.24%
  3. Turkey – 7.18%
  4. Portugal – 6.27%
  5. Bulgaria – 5.81%
  6. Italy – 4.84%
  7. Cyprus – 3.41%
  8. USA – 3.33%
  9. Greece – 2.83%
  10. Malta – 1.03%
  11. United Arab Emirates – 2.17%
  12. Egypt – 1.43%
  13. Morocco – 0.96%
  14. Cape Verde – 0.69%

The overall average house price searched for in all countries dropped 9.4% from €227,680 in Jan-Feb 2008 to €206,218 in Jan-Feb 2009.

PropertyIndex.com claims to be the UK’s largest database of overseas property listings, holding over 150,000 global properties and said that it recorded 298,000 property searches in 2008.

Editor’s comment

MANY Cypriots blame the credit crunch, the current weakness of Sterling against the Euro and inflated house prices for the decline in the islands’ popularity amongst British property buyers.

However, I have no doubt that media revelations about the numerous ‘property scams’ are causing Brits to look elsewhere for their dream holiday home in the sun.

1...613614615...693Page 614 of 693