Real estate news

Are the Authorities up to it?

One wonders - dear readers - if the Authorities are up to the job to carry out their duties for the benefit of Cyprus and its people. The examples that we provide are not the full list of odd events and there are other numerous and shocking, but we will report some of them that we are/were involved with them based on our own experience.• Let us start with the most shocking experience, the one of Paralimni Municipality. According to the Mayor, the Municipality was licensed by the Government to use a Government owned beach plot, within the seashore protection zone (meaning that nothing can be built on it), for its use as a kiosk. What a kiosk is, as we all know, is that of a small building to sell newspapers, perhaps ice-creams and juices. The Municipality duly subleased the plot and the new sub tenant, not only has provided the facilities of a grill bar, but he advertises the establishment on spot as such, including signs for selling in addition to food, alcoholic drinks etc, coupled with a sign stating that his set up was dully license and with all permits available. Because we have realized that this was far from being true (it has no building licence at all and none from the Tourist Authorities who (the latter) submitted to us that the establishment is operating illegally. For this we have submitted a complain to the Municipality, the District Officer, the Ministry of Commerce, the Auditor General and the Ombudsman. Whereas the District Officer reported to us that he cannot intervene because he is not the Authority in charge to issue the planning permits etc, he added that he wrote to the Mayor who did not bother to even reply!! As a result, the kiosk (come snack bar) is still in place. No action by the much self-promoting Auditor General, neither the others to whom we have submitted complain (only the Ombudsman reported ”we will call you back”, but despite our numerous reminders, nothing came out of it). So why do we have these Authorities that cannot/will not undertake their duties? • The Insurance Board who is supposed to supervise the good running of the Insurance Cos (and the industry in general) which acts as a protector to the public, is now met with the big scam of a Cyprus based Insurance Co doing business in Bulgaria and yet the persons in charge not doing the correct supervision are still there, not being fired or being apologetic, still collecting their salary. So why have these Authorities and for what?• The Government in an effort to keep check to an extent the ever-rising rents, has introduced an incentive programme in order to increase supply and thus reduced by this the ill effects of the restricted supply. Notwithstanding the fact that we have wrote (next week from its publication) to the Ministry of the Interior that the incentives given were wrong and they will not reach the goal, we now have the admission by the Chairman of the Governmental Body regarding this development that the incentives did not work. So after almost one year from our observation and notwithstanding the so-called Advisor to the Republic, the Technical Chamber of Cyprus on the subject which participated to this wrong set up we are back to square one. What is the responsibility in terms of wrongdoing for all participants?• Let’s come to the Passport issue which is taking a beating by the E.U. and by the local political parties, who in their effort to score a “Goal” against the Government is causing the Cyprus Investment Programme to run into big trouble regardless of its benefits. Yes, the programme has its failings, but it needs correction and not its practical abolition. This is an investment programme which earned Cyrus over €6 billion according to the E.U., saving from bankruptcy debtors, developers, financiers and providing much need jobs (side benefits apart). Will those beat the programme bear any responsibility, at the end?• If now we are to investigate the football hooligans and corruption, this is an issue that has been going on for years. Yet even last week we had a new corruption incident, with the supervising football Authority doing absolutely nothing and even the hooligans seem to have the support of some MPs, to abolish the ID card for those attending (end result of the introduction of the ID is the sharp reduction of hooliganism in and outside the stadiums).• If we are to turn our attention to our police quality and even worse the coroners, they are both a joke especially the last (we have to get coroners from abroad to get the truth – see the dog attack in Paphos, the serial killer on the Filipino women, the parking incident against a Russian lady at Larnaca town and so on).Coming back to our wise MPs (for whom we have reported our strong disappointment in previous articles) this is all the worse. See sexual harassment and more recently the “holiday to Australia” by a group of MPs costing the State €150.000 and this for what (see also gifts given by foreign countries to our officials which they refuse to disclose and take the gifts home.Etc., etc.A country that aspires to become an international financial center and a first class holiday destination (see the case of a U.K. teenager girl who was convicted at Ayia Napa) these and numerous other incidents do not go unpublished in other countries. Just as well we have E.U. “supervision” to tell us off, but then we base our local income on real estate sales/development and we lure foreign buyers in particular to believe that we are a good country to live.Mind you this sort of goings on happen to practically all other E.U. countries but ignoring the nowadays evident signs of conviction of officials the above are a cause for concern and correction.

June 9th 2020

The value of trees in real estate

Notwithstanding that 40% of the Cyprus surface is covered with trees and bushes (per recent statistics) Cyprus has a long way to go in upgrading the environmental requirements. To this end, the recent announcement by the Minister of Agriculture to plant more and more trees to help towards climate change, is a decision to the right direction.How is this implemented, however? It is a fact that people’s sensitivity is improving and we note with particular to new development projects that “private greens” are increasing according the up to recently concreting the unused surface of the ground with concrete/asphalt cover.We have put forward 10 years ago and reported at intervals since then, that any new development should include, in the issue of the building permit etc., that tree planting is to become obligatory and not only this, tree planting should be looked after by the developer/administrative committee for a period of at least 3 years after the projects/ buildings completion (accompanied by a valid bank guarantee).This is especially important when development takes place in wooded areas, where trees need to be cut down to accommodate the development. For this event we have suggested that at least the same number of cut down trees should be replaced and subject to availability of space +30%. Tree planting should follow the vegetation of the area where this is available. Most tree planting is done nowadays within the boundary distance with the neighbors – the 3-meter clear distance and tree planting, is to be done with mature of trees at least 2-meter trunk height (for all areas).The question now remains who is to make sure that the planting is done, the provision of watering and the maintenance? On average it takes 2-3 years after completion of a building to secure the certificate of final approval and the deeds. So, prior to this issue, the local authority should either check if everything is in order, or provide from the applicants, or by the supervising architect that the planting requirements and the tree maintenance are adhered to. Sometimes, trees which are not chosen properly, when they grow up, destroy pavements, their brunches are protruding to the neighbors and in addition to the brunches of the neighbors trees which are not liked by all, it creates the interruption of sunlight (especially for pools), whereas other residents object to the leaf falls in their garden. Therefore, we suggest that a planting study should form part of a permit. Certain trees, such as eucalyptus, create danger because of the water seeking routes reaching the plumbing installations, others have the leaves falling to the neighbors, whereas others have other problems.Trees require a lot of love and looking after, but then, this is an investment that adds to the environmental value and of course to the value of the project/property. Our favorite tree is pine, but it creates problems because their tar containing leaves restrict any other growth underneath. As an added choice, which we use in our projects, is Cypress trees, which have no/little brunches, they are slim and tall, reducing the side effects to others. In the past, as part of a division permit, the Planning Department required tree planting on the pavements. However, at a later stage and because the pavements were taken over by the tree trunks and brunches, they have abolished this to accommodate pedestrian traffic and including wheelchairs for invalid people, children’s prams etc. So, if you have a tree on your pavement (public) and in the event that it dies, the authorities will not replace it, but it will extend the concrete paving to the whole pavement area – sad but it is necessary when it happens (in public pavements).Certain countries such as Greece, have very silly laws regarding the planting of trees. As such if a plot of land has some vegetation, it is classified as “forest” land, restricting any development. In the end, the result is burning of such trees/vegetation (hence the hundreds of fires that are happening in that country).Watering of plants is always an issue bearing in mind that the water shortages and the use of the sewage water (public of private) are in great demand, as well as on site borehole water.For private housing it is more of a must to have lemon/orange trees, as well as olive trees, which “contribute” to the house enjoyment. Tree planting is especially suitable to seaside areas, where humidity helps, whereas more exotic trees (such as cedars – most beautiful) must have a cold climate, whereas other exotic fruit trees, including papaya, avocado etc., are suitable for the purpose. Palm trees, olive, carob trees etc., in addition.Any tree/vegetation in your home/project is reflected on the property’s sales value, so do not believe that tree planting and maintenance is wasted money. Far from it, it returns it cost in the form of added value by several times.We have a long way to go in upgrading our environment and in this sense the Cyprus University has undertaken several tree-planting projects, ranging from olive to carob trees in a large scale, providing income for this purpose.As a side note we wish to point out Leventis olive plantation in a barren – ex mining area at Petra, who produces olive oil claimed to “the best in the world”.

June 9th 2020

Incentives for housing to let - Affordable Housing

It is a fact that there is a shortage of suitable housing units to let as a result of which rental levels have increased over the last couple of years by 20%-30% depending on the location and town, with the highest increase referring to Limassol and for all towns apartments near the universities and colleges, as well as units within the towns’ centers.The Government in its effort to encourage development of housing units for let, has introduced incentives for those investors who are prepared to develop such units and let them for a period of at least 8 years.The incentives are as follows (given in a summary form):It applies to those areas that their pre-incentives density level is at least 100%. This is wrong since the University of Cyprus, which has a major problem, its immediate area has a density of 80%-90% and as one moves further and further from the University the density increases.  This is wrong in our opinion since students wish to reside as near the university as possible.  As such most suitable localities are excluded to an extent.There is a fixed period for the buildings completion which is reasonable.It applies to those projects that at least 70% of the total number of units are offered to let.The minimum size of the units is now reduced providing smaller units to let (the prevailing sizes are very large in comparison to the affordability of the units). This is a plus.For those projects which cannot accommodate full parking, the developer must compensate the local authorities by approximately €2.500-€3.000/parking spot not provided. This is a mistake and it is an antiphasis for the incentives/goal.Units to let bear an increased development cost, that of the VAT (which cannot be recouped) which amounts to 19%. So, if an apartment of 100 sq.m. costs €150.000, the 19% charge will increase the cost by approximately €29.000, which with an expected rental income/return of 4%, it means that the rent will increase by approximately ±€100 p/m.  This is wrong.  We have suggested to the Government that the VAT should be reduced to 5% and in the event of sale prior to the 8-year period, the developer to pay back the difference (19%-5%) = 14%.As circumstances stand at present any efforts regarding added developments and affordable rents will not happen prior to a 2-year period (permits, construction period etc.).  In the meantime, rents will continue their upward direction, making the problem worse since the number of students/renters are increasing at a faster rate than the supply.  This measure must be combined with the statutory control law, which protects the tenant from eviction (in case of no rental payment) which discourages investors to let their units.  The recent proposal regarding the statutory rents is a move to the right direction (the bill on this subject has been voted last week and we expect that it will become law within the next 15 days).On the 12.11.2018 we have submitted our own proposal to the Minister of Interior giving full details on the subject as well as to the various political parties (no response so far) expressing our reservations on the success of the incentives.  Sure enough, the incentives have failed to attract investors and the Government is now searching for new relaxations on the subject (we hope that this time we will be heard).Now that deposit rates are at their lowest level and even the introduction of penalties for a deposit, it is time to examine such incentives, be it it requires a large amount of investment money.  The Cyprus property market being small and volatile on such investments it requires a fallback position in case the market experiences over supply, increased competition/quality matters etc.  So, do not base the design only on the “for let” units, but keep in the back of your mind the alternative to sell as freehold the units in the future (be it after the 8 year investment period limit).  As such restrict the design to spacious one-bedroom units and to two-bedroom units suitable for family living (initially this may not be more attractive than the smaller units to let, but the future must be taken into account).www.aloizou.com.cyinfo@aloizou.com.cy

May 29th 2020

Governmental Records Unused

The Department of Lands & Surveys is the recipient of a lot of information regarding sales and other matters relating to real estate. Since the publication of the basic statistics a few years ago, little attempt has been made to expand on the information received, with the main information given is the number of transactions per district and if local buyers or foreign. Useful as it may be such a statistic it could be misleading in many respects.Our own opinion is that such information could be utilized for the benefit of the building industry which will provide in addition a marketing guidance for developers and others (including the Government).  This is very important since misleading information can lead to wrong decision in business.  Since the data is there, we would suggest that the so far statistics given should be expanded to include:Number of sales per districtNumber of sales per town/parishNature of property sold (e.g. field, flat, shop, office)Value of the property sold since as is so recorded, now, a hotel sale is classed as one sale and a studio sale is also classed as one saleThe value of sales could also be classed by foreign (and by nationality) and local buyers. This is most important since the industry will learn where and at what level demand comes from.  This sort of statistics will help also financiers to study more carefully finance applications based on actual demand, as opposed to the speculative expectations by all sorts of business/people.In the local transactions the E.U. members are classed as locals; hence no one knows how many Cypriots buy etc.Living in our own small world, we seem that we do not learn by our mistakes of the past.  And now that the market is showing some signs of recovery, there is a surge for new development projects which reflects a rather dangerous competition between developers “who will build the highest and most impressive building”.  This real estate improvement is not Cypruswide however, but very much localized and restricted to certain areas and primarily beach locations.  The visas/passports measure is all the best, but the warning signs from the E.U. (and including the proposal to harmonize the tax system in the E.U. – are all the worst for Cyprus) are there.  To this end our small politics and following the E.U. warnings regarding the passport issue, as well as increasing competition by similar investment schemes (see Greece) has caused a recent reduction of interest by this market source.  So, do not rush to jump on the golden train of wealth since it can be dangerous especially if a project is developed/disposed after the next 2-3 years at the most and not later.  We have also to keep an eye on the financiers whose investors are more of a short term nature, who might lead them to take decisions for their investors’ benefits (why not?) and not for the benefit of the economy as a whole.For these reasons (and others) we need to use all available data that we have in order to protect the business of real estate from the known and unknown reasons that affect our economy.  It is a great shame having all this information in hand and not using it.  If money is the problem, we suggest that the Lands Office sets up a site which will accept contributors to finance the project and the information is sold (as nowadays is done for the sales information) to businesses.We have written on the subject to the Ministry of Interior and we wait some sort of an answer, whereas the various professional associations, business associations and others are nowhere to be found in this effort.  What a shame!!  We had a recent meeting with Central Bank officials on the subject and who promised that they will undertake some sort of own initiative to bring to the foreground this unexplored wealth information.This is another reason why we have suggested as a matter of urgency, to appoint a deputy minister for the Ministry of Interior (as the Tourism and Shipping have done) where results are evidently most positive and whose primary responsibility, among other matters is the title/passport issue, the recent Governmental laws, the Airbnb problem, the common expenses curse (non-payment) and other matters.

May 18th 2020

A matter of Mathematics

It is a fact of life that most towns suffer from traffic congestion problems, difficult accessibility to destinations as well as lack of parking.It is a fact of life that most towns suffer from traffic congestion problems, difficult accessibility to destinations as well as lack of parking.It is also a fact, that the recently acquired attraction by Cypriot shoppers for the Malls with their many shopping advantages, as well as the D.I.Ys and the large retail stores (including supermarkets) attracts thousands of people.Malls and large retailers provide parking, but notwithstanding their abundance, it is just not enough, especially at peak hours with the parking overspilling to the neighborhood.What is worrying here and more important is the congestion of the traffic flow especially during the rush hours, creating queues of cars and based on our own experience, using the same road on the side of the Mall of Cyprus, the traffic delay can reach nowadays almost ½ hours, irritating travelers, causing animosity among car and bus drivers and of course the inevitable accidents.Let’s come now to one area/locality, that of Shacolas Business Park, which in addition to the Mall of Cyprus (extended recently by 20%) includes the IKEA project, the Nicosia hospital and other establishments, which attract thousands of visitors.The locality is served as an exit from Nicosia and despite the new side road and the roundabout leading to the Mall etc, the queue at the rush hours extends to the motorway, causing a blockage of the Nicosia-Limassol motorway.So, we now have the ex-Mazda building (next to the Mall of Cyprus), a car showroom/retail/garage which at most attracted around 100 visitors per day, is to be used as a Jumbo retail unit, which will most likely attract around 1.000/cars/visitors per day.  This (Jumbo) is a worthy retailer which provides low cost and a variety of goods and gifts, hence its popularity and attraction, but its popularity will have side effects of a serious nature regarding traffic adding to the already congested junction.Strictly speaking and following the planning law, the ex-garage/showroom may not be turned into a large retail and it requires a relaxation public hearing and a /special permit for it.  Yet we read in the press reports that an initial environmental permit has been given for the purpose.This, if it happens and with a Mathematical Calculation, the local junction will become blocked and this in addition to the other undeveloped land nearby, such as that of Peletico, the Kalamon road (destined to become developed with paramedical uses, including private clinics, offices etc), which will change at some time in the near future using the same access.We would like to project our reservations on how this junction will work in terms of traffic flow and the consequences that it will create for the Nicosia exodus to the other towns.  It will need a designer artist of highways to explain to us how this will work, but corrective actions in the future (by that time), it will be too late, since the consequences will not be reversible.Unfortunately, when we designed our road network nobody thought (including ourselves) that each household would have had 2-4 cars, the one car-one driver and of course the construction of such size retail units in one location.  Hence the problem for which we have no solution to offer now – see Limassol seaside road also which is already congested, but with another 300 apartments under development/to be in the immediate future, this road will also become blocked. If accessibility is not resolved, we might experience shoppers selecting other locations, causing a reduction of the Mall’s attraction and value.  Regrettably building wider roads and adding parking is not executed at a speed rate that can cope with the increase of car numbers, whereas the long-awaited public transport system, is just not appealing to locals.Coming back to the Mall of Cyprus junction, we may predict that the problem will be such that it might make the Nicosia center more attractive than the existing Mall location and to this end it might be beneficial to the town center, as well as other commercial high streets (both affecting the Mall).

May 18th 2020

Odd Buildings Situations

From time to time, various situations that can only be described as «Οdd» come to our attention - either through our own experience or through our reader’s information. We understand that some of these odd situations occur in third/undeveloped countries, but not to an E.U. member (such as Cyprus) which aspires to become itself to a similar level as other E.U. members (be it sometime in the future).Paphos ComplexA commercial and residential project which erected 40 years ago along Paphos seaside road (Poseidonos) is in turmoil.  The project has a wide private pavement along the road and the local shops took over some of the private pavement and used it for placing tables and goods for the passers-by, by creating a certain cacophony and interrupting the smooth pedestrian flow.Approximately 10 years ago, the Municipality of Paphos wrote to the shop owners suggesting the extension of the shops to a certain line within the private pavement and suggested a uniform structure for an extension charging the owners approximately €20.000/each.  Duly paid and constructed (by the Municipality) the project was improved in its appearance and utilization for all, customers/dinners/bar users etc.  Suddenly and after 10 years of the “new” project operation, the administrative committee wrote to the shop owners suing them for damages etc for an illegal extension (by whom?).The private pavement extension was done by the Planning Authority (the Municipality of Paphos). So, who is to blame, the owners, the administrative committee, the Municipality? (Either of the last two but not the owners).  A mess, dear reader, with a similar situation appearing along the hotels’ road in Paralimni and Ayia Napa, as well as just about every shop in Cyprus (such as cafes extensions into the private pavements).  A most interesting court case when it comes to the court and more interesting, we will examine with interest the Court’s decision.Paralimni seashore protection zoneAnother most odd situation is that whereas the private owned properties cannot build any structure within the seashore protection zone (not even a pergola), the Municipality of Paralimni has leased beach properties within the protection zone and has erected/allowed to, the building of kiosks (for the sale of refreshments) which suddenly are converted into bar/snack bar and restaurants.  So, the same Planning Authority is the one who contravenes the law.  Also, a more shocking fact is that whereas the District Officer has applied to the Municipality to demolish such structures, the Municipality does not bother to reply (we have the correspondence in hand). The Pissouri subsidence and otherAnother odd situation is the subsidence of the soil in the Pissouri region (one locality) as well as in Armou village and others.  On the one hand, the building laws require that the building design structures should be approved by the District Officer, but quite oddly, the Auditor General says that the approval of the structure design is just a formality and as such the Government has no responsibility.  Why then the requirements of approval for the structures? – Odd?Increased Building DensityThe recently introduced increased building density for certain areas has created problems regarding the density of existing properties and including the height, causing damage to the original buyers both in terms of occupier’s density, as well as matters of view, sunlight etc.  On the other hand, we understand that eligible owners can utilize the increased density, but on the other hand we are faced with damage to others.  Who will pay any reasonable compensation for those affected and who is in the wrong? – Odd.Environmental MattersSo here we are. We have built a new motorway connecting Paphos airport to the town for approximately 15km, but environmental issues have now arisen in order to complete the remaining 1km of the highway.  As a result there is no link which will facilitate the shortening of the airport/town travel by approximately 15 minutes time.  No one knows how this situation can be resolved – Very odd.In our opinion, we should place due weight to the environment, but on the other hand we should place more weight to the safety of travelers and the wellbeing of the locals and the economy.  Who has a priority?The Ayia Napa GolfWhat a situation dear reader.  Here we are with Ayia Napa/Paralimni Municipality hosting 40% of the tourism, having the shortest season and the golf which could help extend the season and provide jobs for the locals and others.  Yet, the same people who would have benefited from this project, are the same people who voted ‘No’ for their own small politics.  An odd situation indeed.The Dhekelia RoadA similar odd situation exists with the improvement of Larnaca-Dhekelia seaside road.  The three local Municipalities disagree whether the road should be widened and this notwithstanding the shocking death-traffic accidents that this road creates.  So, what do we do?Most of these ‘Nos’ come from small pressure groups, who had the same stand for Nicosia Athalassa forest to be used as a public park (which is now a jewel for Nicosia, especially for the children/parents, sports facilities etc).  At that time, the Government turned a deaf ear on such protests and now, we have what a center for enjoyment by all.Environment should be protected in our opinion, but to the extent that it does not affect the wellbeing of people.  Such an issue was decided by the European Court of Justice on the expansion of the development zone into a Natura area in Hungary, which decided in favor of the wellbeing of the people.  Natura does not prohibit development, but it restricts it to low density uses and with due care to the environment.  We, in this country being the champions (in the wrong meaning of the word) go the other way and projects such as the Shacolas Limni development golf area come to an end, whereas the Akamas long awaited project is yet to be decided (be it that it is ongoing for the last 20 years) since the locals object to it. We must bear in mind that in this country due to the limitations imposed by our constitution, restrictions that are imposed on real estate owners that affect the value of the real estate should be so compensated.  So, who is going to pay for such a multi-million compensation?There are other numerous odd situations such as the one of Sotira’s beach (Ayia Thekla) which is now the top destination both for locals and weddings. We believe that the beach facilities provided by the Paralimni Municipality such as showers/restrooms/changing rooms have improved the environment and health of the bathers, but yet the same so-called environmental pressure groups object to it.It is an odd country dear reader, trying to find ourselves. Although we are improving, the procedures of democracy are such that it makes it a long effort.As Winston Churchill said, “Democracy is not the best system, but it is the best until we find something better”.

May 13th 2020

High-End Residential Living in Cyprus

There are numerous high-quality homes around Cyprus in the region of €1.5 - €5 mil. (plus), whose main interest comes from the foreign market, since by local standards this is a considerable amount for such an investment. Approximately 60% of the Cyprus real estate demand comes from foreign buyers (i.e. non E.U. countries) mainly comprising of Russia, Ukraine and to a lesser extent from China, a recently introduced market. The rising economy of India and the recent problems in Hong Kong, is another source of increasing demand be it at a very low level at this point of time.The Cyprus investment scheme which require a residential investment of €2.0 mil. (+ another €150.000 for Governmental housing and innovative industries) seem to be quite attractive to the international market, relating to the securing of Cypriot passports. Our favorable tax system, which in addition to other benefits reduces the income tax to very high salary earners/international employees by almost 50%, the booming shipping industry, tourism and other activities, have also turned the attention of international high end residential demand to Cyprus.To the foreign market and as a projection to it, we have some locals who earn unusual high amounts of money and which comprise of the more known business people and some accountants, advocates, auditing firms and doctors, who are all in the local market for such a type of property.In addition to quality, location is a major criteria of choice, as is the plot size (around 1.500-3.000 m2 of gardens), high technology (smart homes) and facilities provided, such as swimming pools, large reception areas, cinema room, mature gardens, views and so on comprise the basic buyers criteria.The favorite spots of demand for the foreign market is mainly Limassol town/outskirts, as well as that of Paphos (to a lesser extent) and even less that of Nicosia, with the bottom scale being the Famagusta and Larnaca regions.The high-end houses do not have a wide and ready demand, but the prices required as compared with the recently developed sky-scrapers apartments, which appear to have nowadays a ready market, are by comparison a better deal.Nicosia has, by comparison to other areas the lowest prices of such a standard, as opposed to comparative prices in the Limassol region being around ½ of this town. Yet for the foreign market having sea views/being close to the beach is the main prerequisite for the price set up.In general, Cyprus real estate, as compared with other countries and in addition to the acquisition cost, it has low transfer fees-stamp duties (halved from the previous requirement) and no property tax, no estate duty and even low Municipal taxes. By comparison, ownership taxes are very low as is the VAT (5% for permanent residential units by the buyers – as compared with the 19%, 24% etc., in other countries).Non important as it may sound, the security of living (2nd lower crime rate in the E.U.) and the attraction offered by foreign speaking schools, colleges and universities, which are connected at a higher level with mainly U.K. universities, is another attraction which has a reflection on the housing/family living attraction, as is the clean atmosphere and sunny weather for 300 days p.a. For those who want to combine living here and business, the second has low overhead cost by comparison, in terms of rents/cost of staff, as is the availability of high quality of the latter, whereas at the end a major attraction is the widely spoken English language (90% of the locals speak English and 100% of the professionals and others).The short distance and the well-connected areas/towns through a motorway network with a maximum driving distance of 45’-1 hour is another plus, as is the proximity of 4 international golf courses (another two golf courses pending) and blue flag beaches/sea, the availability of 3 completed marinas and 2 under development and the international casino (Las Vegas type) now under development with a completion date in 1½ years’ time.Having acquired a home, living cost and eating out is at a very reasonable cost depending on the places you go. Similar food/drinks are at least ½ less the prices that in the tourist areas within the towns/beach ones, whereas drink cost is one of the lowest in Europe. Experience the out of town eating especially in small villages with the costs next to nothing. For the younger generation and those who feel young, entertainment of all sorts and sporting clubs are abundant. This is a most attractive country for family living.

March 6th 2020

Liability of our MP's? – Real Estate

In a democracy dear readers, one has to use process and procedures and the voting system in order to get things done. One would have hoped that with so many process and procedures our House of Representatives (and with our elected MPs) we would have had a better governance. Alas, the results and what it comes out from the public to know the results do not support this.What is most worrying is the small politics which prevail, the under the table dealings, the “tit for tat” which wounds the republic, with little care what is good for the public interest. Most of our MPs seem to look after their own personal and party’s interests and we often wonder in this column Who loves Cyprus(!!).There are many examples of this unacceptable and provocative behavior and we just concentrate on some, since the extent of the column cannot accommodate all of them!!Deputy Ministries – Our proposal for the Government to create a Deputy Ministry for the Ministry of Interior, was not approved because the various political parties did not wish this Government to “accommodate” more jobs for the “party boys” notwithstanding that such a Ministry would have done wonders, especially if its job would have been to look after the Lands Office matters (titles/common expenses/non-paying tenants etc) that of the town planning matters (timely issue permits, deviation procedures, innovative ideas regarding the use of the building density, the crazy limitations on the residential unit sizes, the speed of replies and information required by the public etc etc).We point out that notwithstanding the initial objections by the opposing parties, the only two Deputy Ministries approved by the House, that of the Tourist Industry and the one of Shipping, have done wonders for the economy, streamlining the first and doubling the income for the second. These young people (Deputy Ministers) in their 40’s, eager to work and with no prior political commitments have produced a phenomenal success, despite their short operation period – Be that as it may, this success can go wrong if for such political positions, the “jobs for the boys” take priority.The unacceptable stand of a House member who was part of a committee to examine the Non-Performing Loans and with his offer to the Chairman of the NPL pressure group, to cooperate for mutual financial benefits. Although reported nothing came out of it (to this end we blame the press for not following up).Concerned by the fear that next time it will be their term to be investigated, by the self-promoting Auditor General (he is good mind you), they compete amongst themselves who will be the first to explore such exposures – see the recent dispute between the Attorney General and that of the Commissioner of Personal Data Protection. (For which some members jumped on the bang-wagon of self-promotion as if they have nothing else to do).What has happened to the Bulgarian Insurance Co scam for which the Cyprus Government may be called upon to pay millions in compensation to the insured? No interest since it will not come with any similar political gains (we blame the press again).If we are to go higher up in the hierarchy of the House, we note that its Chairman has 16 private consultants to advise him on various matters, that he is dealing with (notwithstanding his constant travelling abroad of a most doubtful value).The non-attendance by MPs of the various House committees is simply not on and this, even when E.U. guests are invited and attending.We are still waiting the list on those members who are involved in the committee to discuss the NPL’s of their own eight months ago and this has not as yet happened (neither it will do).The recent rοw of the passports issue is another case for concern on our MPs quality and non- love of Cyprus. Instead of coming up with corrective ideas, they compete with each other how to damage the Cyprus investment plan notwithstanding the widely acceptable beneficial effects on the Cyprus economy (see also the recent poll that 70% of the public support it).EtcWe should introduce a system of penalties, not only for stupidity (which Is subjective) but those who place their own interest-political or otherwise, the Cyprus economy should pay a penalty.In Greece, at this point of time, there is a proposal under way in order to make responsible both the ministers and House members. If and when this is approved by the Hellenic House, it will be an example for us to follow (doubtful for Cyprus mind you).This matter could have been reduced to an extent, if we were to have truly independent journalists, who would investigate such matters and keep on/follow up the issues. We have suggested in the past that depending on their quality of journalism they should be subsidized by the state based on recommendations by the University of Cyprus – it is a fact that the low paid journalists to a great extent are governed by political parties and public media owners. Bearing in mind their very low pay, they cannot act truly independently for the benefit of the public service. For this reason we have suggested, based on the University of Cyprus decision, to subsidize to 2-3 journalists per year with a similar recommendation for an award as that of Pulitzer.It is no wonder dear readers why the voters in Cyprus do not turn up to vote and the polls show exactly this (40% voting only).Our column is a real estate one and we place a major interest to the building industry how to correct the wrong situation that we have at present and for the previous 20 years at least. The non- adoption of the Deputy Ministries is a major issue for Cyprus and unless we do this, the problems will continue with no/little chance for improvement. With the delays and inefficiency that the real estate procedures that exist it is no wonder how corruption is on the increase (in desperation the public turn to the political parties, who have in Cyprus their influence promoting political exchange for favors and so on).Winston Churchill said that “democracy is not the best system, but it is the best until we find something else to replace it”.Any hope to improve the situation? We doubt it.

January 27th 2020

Culture & Real Estate in Cyprus

A country which is more known as a holiday destination and its good weather, we are experiencing an upgrading in our standard of living and entertainment, having attracted the attention of international stars, which is now extended to real estate (as it may appear at present). To this end the hospitality of Cypriots play a major part.The trigger of our article came about due the recent concert that was given on by the Italian international singer Eros Ramazzotti in Limassol. We were there and by mistake we sat on the first 3 rows of seats and this “gig” (using the 1975’s era expression) was most entertaining, with the 6.000 people attending (of all ages mind you). It was a breath of fresh air and a good event for social interaction and getting to know other people. This, until the next show that we will attend, that of Celine Dion in August 2020. These international artists (and deservingly), are the start (not the last we add) which are helping upgrade Cyprus living and culture for which we are not known for. These “gigs” follow other artists such as Elton John, Tom Jones, the Paphos Opera annual event and even sports events such as the Marathon Run (especially the one in Limassol), the sailing boat races, the numerous lectures given by local and international speakers that take place in Cyprus including academics, such as our own Mr. Pissarides (Nobel awarded), whereas the recent upgrading of the Nicosia Theatre and those of Limassol are nowadays hosting all sorts of cultural events, ranging from folk dancing to chorus of international fame and quality, are some of the activities that are taking place.Cultural events and the attendance of those international stars are a free advertising for Cyprus (be it they do it for money than out of love for this country) generates an interest for real estate and themselves (the stars) puts on the map of international interest for little Cyprus.Let’s record our own experience on the subject stating the most recent one Shakira, who bought a house in Peyia, Paphos (around €3 mil.), which was reported in the international news.The Paphos Opera brings over around 2,000 Israelis p.a. who would not have come to Cyprus otherwise, not only benefiting the hotels, but also they get to know the country – In fact 3 Israelis (high end) investors informed us that having come to know Cyprus as a result of the opera visit they were keen to live within a “peaceful environment”.The Ramazzotti event, in addition to the local attendants, a lot of foreign visitors - particularly Russian speakers - were there in force (the promotion was undertaken by a Russian Co.), who were very enthusiastic. Eros Ramazzotti’s concert cost €500-€800/each abroad and in Cyprus the average seats cost around €200/p.p. The recent promotion events were costing (abroad) at a range of €800/each for average seats “... so I came from Ukraine and the ticket together with hotel cost and air fare did not come to the one at Paris. What a place to live she added”.Let’s come to Celine Dion with a good following from Lebanon. Our Lebanese agent told us “let’s advertise the event together with property sales in Cyprus since it is a way out of Lebanon with the mess that we are going through”.Promoting Cyprus also as a place for culture will not be a mistake, since so many events are taking place. A recent international Co. event at a beach hotel in Limassol, the participants (we attended) were more excited by the visit to the wine region wineries rather than the seminar given, whereas the quality of our meze/souvla food won them over. We had 2 enquiries to buy property out of those lovely food and fun seeking participants (we are keeping our fingers crossed for the outcome).Selling real estate at “subsidized” prices to international stars is not unknown and David Beckham’s acquisition of a villa at the Palm Island (Dubai) promoted further this successful project.The Limassol marathon (2019) caused us to meet a young German couple at the Castle tourist area, whom we did not take seriously (our mistake). They are now in process of buying (hopefully with us) a €4.5 mil. penthouse!!The hosting of Elton John, the Prince of Monaco, Tom Jones etc. at the Anassa Hotel put this hotel on the top list of “best hotels in the world” with reference to others to visit.We hope that the new and worthy Minister of Tourism gets the message that culture especially at the Cyprus low comparative costs and quality of life, is an opportunity to explore for the “benefit of the wider Cyprus economy”. Promote dear Minister Cyprus our culture, little as there is now, but we are getting there, be it slowly.In ending we must tell you our little (true) story for a potential foreign buyer who required a house of £1.0 mil. from Leptos Kamares project. At that time (1990) this amount was huge. So we hired a 7-seater Mercedes car, we picked him up from the airport, but because we were early for our appointment on our way to Paphos (we realized that we were 2 hours ahead of the meeting), we stopped for breakfast at the Hani restaurant in Pissouri village. Fried halloumi and eggs, where the grandmother charm did the start. We noted afterwards that he was not so enthusiastic to go further.Driving through the vine area of Pissouri, we crossed a field where grape picking was in full force with around 20 people plus donkeys to help. The vine owner stopped our car and insisted that we get out, for him to “treat” us (and to be quite honest we did not know how this would have gone). Thanassis, the owner, insisted that we should have as a gift from him, 2 cases of grapes each, and the whole family came around for photos. Long story short, this Swiss client of ours ended up baptizing Thanassis’ son in Pissouri and more importantly and in addition to the purchase of a house there, he built a couple of hotels in Cyprus (sorry Leptos Estates).There are so many problems in the world from Bolivia to Hong Kong that we do not appreciate how lucky we are, something which the foreign market pays special attention to.

January 21st 2020

The Era of Apartments

The real estate market is at an improving stage, with regards, especially, the revival of the demand for residential apartments. The recent 5-6 years of the stagnancy of the development (2008-2016), the increase in the population, the provision of bank loans (be it with difficulty) and an increasing confidence in the economy have caused demand to increase steadily over the last few years (2016-2019).We do not refer to the Limassol towers at this point, whose demand comes from the foreign market, but we restrict ourselves for residential apartments for locals.The returns of the residential apartments is around 4% based on their market value, which is most competitive by comparison to the deposit interest rates, which are now ½%-1% p.a. and going down (and based on press reports, they will soon experience a negative rate). The 4% return reflects the gross income (i.e. before allowing for expenses, void periods, Municipal taxes etc) which at the end reduces the return to 2½%-3½%, depending on the expenses (higher expenses for the older apartments).We have recently experienced an interest by the House members regarding the regulation of the common expenses law and the eviction for non-paying tenants for rent, with summary proceedings of 1-2 months. If these proposals are voted, interest for apartments will increase, causing an analogous increase in their value.We hereby provide for your information the prevailing monthly rental income of residential apartments (which of course can vary depending on age, location, quality and the services provided). NicosiaLimassolPaphosLarnaca1 Bed€500€600€400€4002 Bed€620€750€500€5503 Bed€800€900€600€700The basic “ideal” requirements that is demanded by the market is:Covered parkingOne bathroom/w.c. per bedroomSpacious verandahsLow common expensesWell maintained apartment buildingProximity to schools, work places, children parksEtcPrices of new apartments have on average a sales price of €2.000-€2.500/sq.m. and for the older units (depending on their age/repair/location) around €1.000=€1.500/sq.m.With such a difference, it pays for local buyers to buy older apartments and do them up.What is notable is the demand for the smaller units (studio/1 bed units) suitable for students and especially for those which are close to local colleges/universities. Notwithstanding that supply for such units is increasing, the numbers of students are increasing at a faster rate, something which provides a security for the investment in the near future.The Government in its effort to restrain the increase of rents (approximately 30% increase on average over the last couple of years) has offered incentives which includes the increase of local building densities for such uses (sell or rentals) by 20%-25% of the prevailing building density. Having examined these incentives however in detail, their attraction to developers and investors is rather questionable.The time of the large villas seems that is fading, for the reason of their high cost, as well as the high cost of maintenance, whereas the reduction of the family size and the change in our way of living, children opt for the less expensive units and practically with regards to the large villas opt to buy “large” apartments within the town center rather than the villas.For those who have the financial ability to construct/buy an individual house, they must pay special attention to the garden availability and the use of new materials, especially regarding the solar heating/photovoltaic, insulation etc which reduce the consumption of energy.The construction cost of an ordinary house in the residential areas is similar to the acquisition costs of an apartment, but then these houses are located mainly in the periphery of the town and in ½ building plot’s size. This however creates other problems to do with travelling to and from work, children friends visits, private lessons problems etc.Coming back to the rental levels, we urge owners to pay more attention to the security of income (rent) as opposed to the level of the income. Aiming for high rental may lead to non-payment of rents, delayed payments, void periods, non-payment of common expenses etc, which might lead to legal battles, something which takes years to be resolved. This, in addition to the possible demands that an incoming tenant may require (such as repainting).Our own opinion is to try to keep the tenant as long as possible and the provision of the basic equipment, such as kitchen equipment, clothes washing machine/dryers, air conditioning etc increase the attraction of a unit to let, whereas those who are more particular, the installation of a security system, security door, ceiling funs etc is an added plus.Watch out however:Leases for a period less than one year requires 4 witnesses (2 for each party) otherwise the lease contract may not be valid.If the rented property falls within the statutory tenancy law, prepare a contract which increasing sharply the rent after a certain period of time, with the tenant having the right to leave.Include with the rent the common expenses avoiding in some way the problems that the tenants may create from non-payment of the common expenses.Insist on the provision of guarantors which will reduce the risk of the tenant non abiding with his lease terms.Attempt to place a maximum number of occupiers (e.g. 2 person per bedroom) protecting the landlord from over-crowding and which reduces the risks of sublets (including Airbnb).Keep receipts of your expenses not only for income tax purposes, but in the event of a resale, it will help against the capital gains tax.Insert in the lease agreement the right of landlord to visit the property, be it that this is not so adopted in practice. So in a recent case the tenant placed in the washing machine small mats, destroying the machine, whereas another had the a/c operating for 24 hours and at the end another was using the bedrooms for marihuana growing!!Keep a good watch on your investment dear readers.

December 11th 2019

Investment in Land/Building Plots

Acquisition of land/building plots as an investment, either for future capital appreciation/development in the future, was up to the recent years more of a national sport. Due to the booming period over the years up to end 2008 for the real estate market with prices increasing at a very fast rate and with positive sale prospects, investing in land made a lot of sense.Since the commencement of the recession however (end 2008) demand for this nature of property was reduced considerably, causing a freeze and even reduction in values, especially for agricultural and land with no immediate development prospects. The market has started to improve after the year 2016/2017, be it that values are still below the pre-recession levels.Nowadays demand directs itself towards building plots for residential development for locals and it refers to the town periphery mainly forthcoming for private housing development. Central towns plots having a building density in excess of 100%-120% are also now in demand mainly forthcoming from developers, who are now in competition to provide residential apartments directed towards locals, rather than those for the foreign market (restricted in the seaside towns and for chosen locations).Commercial plots have now a somewhat unpredictable market due to the over supply of shops and with no widespread demand for offices. Land in the tourist areas have a keen market following the improvement of the tourist industry and the good demand that there is for (chosen localities) for holiday homes. Land along and near the beach and those which are near the marinas, have also interest, but suitable plots are quite pricy limiting their ready market. At this point of time values for such properties are kept at constant level and landowners are not keen to dispose their holdings and as such supply comes mainly from foreclosure deals by the financiers and from investment Cos.Industrial land is not in good demand save those plots near the harbors and locations such as Nicosia and Limassol have a higher interest than others (considering also that in industrial areas offer also ready buildings for occupation).The recent announcement of the Minister of Interior that the prevailing building densities adopted are low and suggested that they should be increased by at least 20%, has added to the speculation for such properties and at this point of time, it is a wait and see what the new provisions of the planning zones will be (expected to be introduced within the next couple of years).The residential market seems to be the leader in the recovery and demand especially for those plots which are close to existing colleges and universities and notwithstanding the increase number in the supply, the students number increases at a faster rate. So at this point of time they have the most clear positive future (whereas the lack of small studio – 1-bedroom units, show an increase in rental levels by 30% over the last couple of years).L and which are destined/suitable for the tower blocks, whose demand is mainly directed towards the visa/passport investment scheme, seems now that they might be in trouble, due to the recent events restricting this scheme as well as the pending/expected new limitations on the interested buyers and we even read suggestions that this investment scheme should be abolished. As such their future depends on what sort of restrictions will be introduced (in addition to the expected resale of the already acquired units, which will be coming into the market over the next couple of years).The one that took the biggest hit due to the recession is the agricultural land, which has no potential nowadays for development (even for one house as it was allowed before) and such property is at a level less than 50% of the year 2008 values, with no signs of a short term improvement.The reduction of the deposit interest rates, the uncertain future of some of the local banks and the still recent (2013) Bail in, which are in memory of the locals, are some of the factors that there is a general improving interest for real estate since it is considered as being more safe than cash deposits and other type of investment (e.g. shares).

December 10th 2019

Properties for Income

With the lowering of the deposit interest rates, now prevailing at ½%-1% p.a. and with the signs of negative interest which was recently announced in the press, as well as the non-stable situation of some of our local banks (the fear of the Bail in, is still with us) there is a turn towards real estate investment properties for income.This turn of added interest for investment in real estate is also the result of a constant increase in the rental levels for most properties, the expected (be it speculative) increase in capital values in the future and the feeling that no one can take the property away from your ownership (unlike bank cash). To this end the various reports regarding some financiers’ instability due to the N.P. Loans (see recent E.U. reports) and all these at the end our “wise” MPs are causing part of the problem with the financiers increasing depositors worries.In general, gross income for real estate market is around (i.e. gross expected income p.a. in relation to the capital value):Our own opinion based on own experience RICS Statistics3%-4% for residential apartments 4%-5%2% for houses 2.5%5%-6% for shops 5.7%5%-7% for offices 5%4% for industrial units 4%Hotel/tourist projects show return of around 10% (uncertain long-term income).Others – e.g. medical centers, small (500m2) for group doctors visiting clinics (due to the National Health) show at this point of time around 8%-10% (supply is expected to increase, but demand as well). Similar for rehabilitation centers.All these returns/rates assume permits availability and good location depending on the use and as such returns can vary – the more attractive and secure the investment, the less the expected return.Regarding residential apartments, the returns can increase if close to local universities/ colleges, where supply is nowadays limited. Notwithstanding increasing students’ accommodation, numbers of students are also increasing at a faster rate.Shops rates indicated are in commercial suitable areas, be it that the more commercial the property is, so it is higher the acquisition cost. The question of sizes regarding flats, the highest in demand are the one- and two-bedroom units in the region of 70m2-90m2 units offering some views which are not easily to be found in suitable locations. Double size shops of around 70m2-80m2 and mezzanine are more in demand, due to their capability to be used for other purposes, such as cafes/take away units etc.Offices is another attractive investment if they are in suitable locations, mainly within the town centers, with easy access, ample parking and quality (e.g. high-tech units) since lower end offices are just not in ready demand. Most popular size 150m2-200m2.The upcoming Airbnb is an investment to look for, especially in the towns and near the beach areas (complexes with common swimming pool and facilities, or individual villas of 3-4 bedroom with own pool and services are in top demand). This type of investment notwithstanding the high let out/agents’ cost, show nowadays a return of at least 10% on the investment (net of costs). Especially suitable for investors who can look after their own projects – care is needed however pending the new Parliament’s measures on the subject (recent agreement with the Airbnb/villas to let set ups and so on) including tax charges, VAT etc.With an improving real estate market, one must consider the possible increase in capital values on such investments and this is another plus vis a vis cash deposits.We have the option of investing abroad in real estate in counties that we are more known to, such as Greece, Romania and of course the favorite Cypriot investment place that of the U.K. and London in particular. Examining however the local Cypriot way of investment wishing to “see and touch” their investment (and as such Cyprus is to be preferred), as well as foreign agents and managers who seem to overcharge and under declare the income (many examples) is a drawback.At some point of time the Cypriot Co-Op (during the good old days) was placing ads, where the Co-Op was suggesting to keep one’s money in a plastic bag in a hole dug in the garden!! Be that as it may, we are not far away from it, as circumstances appear from time to time.Real estate investments are attached with problems as well, such as non-payment of rents and common expenses by tenants, delays and costs for eviction, maintenance costs etc.Our experience has shown that a landlord should place a greater weight on the quality of the tenant and his capability to meet the lease terms, as opposed to the level of rent.Nothing comes free we are afraid.

December 6th 2019

Over 40 years experience in Cyprus Real Estate

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