Real estate news

Who will pay the Bill? – Passports

So, here we are dear readers, now we have received the Bill of €1.200.000 for the foreign Cos to carry out the due diligence investigation regarding the passports issue (since we do not seem to do a good job ourselves).This Bill, should, in our opinion, be covered by the developers/agents/advocates who are the primary beneficiaries of this billion bonanza. We fail to see why, the rest of us who have no direct benefit, should foot the Bill, through the Governmental budget and not the primary beneficiaries.In our opinion and bearing in mind the maximum ceiling set by the Government for the passport issue to foreigners (700 passports), this comes to approximately (€1.200.000 ÷ 700) = €3.500/ applicant. This amount should be paid at least by the seller (developer or individual sales) since they are the primary beneficiaries. Similarly to the passport charge of €3.500/applicant, we should introduce another charge of €1.000/applicant for the visas – in order to be consistent.It is a fact that the developers with their insatiable increase of their profits, have caused the E.U.’s reaction on the subject, which has resulted in the increased taxes (see added €150.000 per applicant) the proposed 4‰ tax on transactions etc, which at the end this investment scheme will become a non-competitive one, by comparison to other countries, with a similar investment/passport scheme, causing damage to the whole economy in general.As the French says “one’s appetite grows as one eats”, we seem that, we, as a country have to foot the bill and as these restrictive measures/taxes are not enough, we have our “unwise” MPs, to insist that we should publish the names etc of those who secure such passports (why not Cypriots property acquisitions as well we say). So at the end we will be out of this market and we will be wondering at the end what went wrong, whereas the non-clear stand of the “Commissioner of the Protection of the personal data” is all the worst.We remind you of the warning of the ex-Minister (Mr Hasikos) of Interior 2 years ago on this regarding the whole page press and magazine ads on the subject and even the shocking shop window at the ex-Hilton Hotel, as well as even now a Pafian developer, who placed an open invitation to everybody who introduce such clients for passports “who stand to gain a substantial income”.We wonder in which country in this world, its property market does not comprise of local and foreign buyers. If such a publication measure were to be introduced to e.g. U.K. and Greece with thousands of Cypriot buyers there, who will buy at the end? Is there a logic when our competitors do not adopt such extreme measures, we should be the ones to inflict upon ourselves the damage?With all these restrictions (some of which are reasonable since we did not do a good job ourselves) and bearing in mind the increasing competition from more attractive countries, such as Greece, Spain etc, it is a matter of time (1-2 years) before the whole Cyprus investment scheme fails and with it the loss of millions of foreign income.We seem to concentrate our attention to passports and home buying, but based on experience, these Cyprus passports holders extend their interest for large scale investments, especially in the development of hotels and other (see Nicosia hotels, Ayia Napa, Sotira village, Larnaca etc). The influx of this foreign currency has helped numerous debtors to pay off their debts to the delight of our local banks, who would otherwise be in deep trouble (affecting all of us).We have many projects which are at a standstill such as the pending/licensed 4 golf courses, the marinas and other type of investments not relating to real estate as such, which we must consider the effect on such projects, if the investment scheme fails.Who will pay then dear readers for the situation that we will have in the near future – We have suggested in a previous article that those developers, who do not handle such a matter with extreme care, should pay a fine of €500.000 per transaction and for which we have received the angry reaction by a number of developers. We took it that we must be on the right path mind you!!

November 22nd 2019

At long last – The Common Expenses Curse

Here we are dear readers, a long awaited review of the statutory tenancy laws (it refers to buildings which were completed prior end 12/2009). The new proposal is expected to be voted by the House on 22.11.2019, subject to changes which might be introduced prior to this. So the proposal is not a final one.The proposal suggests that non-paying statutory tenants can be evicted within 1 month for the residential units and for the other within 3 months from the landlord’s application. This is quite correct since property owners may be in debt or base their income (wholly or partly) on the rental income. A recent BBC report suggested that tenants in the U.K. who do not pay landlords, lead to desperation of the landlords with many of them having to lose their homes in foreclosures, since they cannot meet their obligations. A live report which is very touching we must admit. Although the U.K. has no statutory tenancies, the legal procedures in that country take a considerable time with the various legal tricks used by tenants to avoid/delay payments.Having studied at a first glance the proposal, we suggest that in addition to the non- payment of the rent, a cause for eviction should also be:The non-payment of the common expenses based on the administrative committee’s proof.Any damage caused by the tenant and or its alternative use without a permit by the landlord should also be a cause for eviction.In case that the tenant does not pay, the landlord to be able to place a memo on the tenant’s property (if any) blocking the sale/transactions for his own property (as well as those of his guarantors). At the same time any income that the tenant receives from the Government, e.g. social security, pensions etc to be so reduced against the rental level (USA law).A damage caused, to be so assessed by the Technical Chamber of Commerce, within one month from submitting a landlord’s claim etc.We believe that we live in a capitalist system (be it is more of a mix between the capitalist system and a communist ideology) and the prevailing situation interferes and disrupt the real estate market. The situation that exists today encourages the non-paying tenants, who, over the years of delay in legal/court decisions, frustrate the landlords, who more often than not forgo the delayed rents, which could run into thousands, so that they get rid of the bad tenant.This state of affairs has discouraged landlords to let out their properties with the end result is the scarcity of units to let, which at the end it resulted in the increase of rents which over the recent couple of years have increased by 30%-40% (residential units), the disappear of blocks of apartments in addition. Since there are provisions for subsidized rents by the Government for the needy, to an extent, weak financially tenants are assisted.There are many other provisions which require discussion, such as the subject of insurance/rebuilding of one’s property, the proposed set up of a Council which might undertake to repair commonly owned properties (where this Council is going to find the money, or who is to lend it, is another matter) and so on.It is a good start dear readers and having the okay expected on 22.11.2019, it will be all for the best (we must comment on the unreasonableness of the communist party objecting to this proposal on the subject, but, then, it is their ideology).We wish to add here that what is more important than the rental level, is the ability of the tenant to pay. Bearing in mind the more higher rental the landlord requires the higher the risk of non-payment. Make sure that lease agreements for one year or less, require 4 witnesses (2 for each party), whereas we find it necessary to include in a lease agreement guarantors (usually the wife of the tenant) giving details e.g. ID number, full address etc.We will come back to you after the Bill is voted.

November 19th 2019

Famagusta Golf will do wonders for the region

The since 8 years pending, proposed Famagusta region golf course, seems now that there is a chance of getting the go ahead (be it that it will take another 1-2 years to have the proposal prepared and the final decision to follow.Much of the delay was caused by the developers themselves who originally submitted a proposal for a golf course only, but as the French say “eating brings up the appetite”, have changed their mind and they asked for housing development and hotel to go.The Government has, admittedly, tried to help the golf original proposal, but it came up at the end with another obstacle to by-pass, the so called “passing route” of migrating birds. So that location was dropped.Now a new area is found and it seems that there are no environmental issues, so let’s hope that it will go ahead at some time in the near future.We are not particularly sympathetic by the change of minds of the developers, but we want to stand on what the wider benefits will be to the region with a local golf course in place.Famagusta region host approximately 40% of the foreign tourist trade and approximately 50% of the locals, yet it has the shortest occupancy season, as compared to the more all over the year destinations such as Limassol and to a lesser extent Pafos.End result is this 40% of the local hotels close down during the “winter” period of October to March, with hotel staff laid off and with financial losses to them, as well as the subsidiaries uses such as restaurants, excursions, entertainment, sports and so on.Admittedly and to their credit, local Municipalities with the leader that of Ayia Napa, promote all sorts of attractions extending to various activities for the visitors to do during and off the tourist season. Easter events is one, the food festival is another, the upcoming period of the Medieval festival, the open air park sculptures and so on (whereas others are pending based on their published proposal, such as the seaside footpath, Potamos of Liopetri, the underwater sculpture park, the installation of security cameras in order to reduce crime (mainly from too much drink) and so on, whereas the pending amphitheatre and the ongoing football grounds success (see the young people’s event) is all the best.The Famagusta region is the top choice in terms of having the favourite holiday home spot by the Nicosia residents and to a lesser extent by the foreign market. The latter with little “things to do” have almost abandoned the area, notwithstanding the best beaches in Cyprus (see off season places that are closed, giving an “abandoned” picture with the seasonal permanent residents being cats).If a golf course is in place and being the most popular area of the Nicosia residents, the tourist season will extend and with it the enlarged income for those who choose to let (we can assure you that there is much demand) and the other benefits to go.So now the region has a chance with the Ayia Napa marina and that of the under development Paralimni one, is a plus, as is the recent upgrading of the hotels and quality restaurants. The golf will extend the season of occupancy, reduce the redundancy pays of hotel staff in addition to idle labour which is soul destroying.This is a region which has been the worst affected by the Turkish invasion and as we have said previously, to an extent, the local Municipalities are trying to finance and improve the quality of life of their own residents and visitors. The recent upsurge of foreign interest (see the Chinese hotel at Sotira, the improved beach at Ayia Thekla church which is becoming most popular for weddings, as are the small beach churches for christenings and weddings, much against the “environmentalists” objections), are facts in hand.Demand is there, quality is there (see 15 days waiting for a booking for a hamburgers place located on the 5th floor of a hotel, the known sushi restaurant, the various Italian places and even the Mexican place at Ayia Napa (with 7 days waiting) and that of the Paralimni steak house 2-3 days waiting for a booking.So that we do not paint an all rosy picture for the region, the region has serious infrastructural problems, such as the local taxi mafia and the irregular bus service which do not allow residents/tourists in the Paralimni region, whose demand is mainly for families to visit the Ayia Napa one (for the younger at hart). Then we have the provocative illegalities by some of the Municipalities (mainly Paralimni) such as the so called kiosks in front of beach houses which have become grill bars without a permit and with the Government not having the authority to intervene.The “coumbaros” relationship and local votes help towards this state of affairs and we even have beach containers which have been converted into “houses” to let, the lack of local policing and of course the endless noise nuisance.As Winston Churchill said “we have a democratic system which is not good, but until we find a better one, it is here to stay”. Local Government democracy in this region leaves a lot to be desired however.

November 14th 2019

Grandiose Schemes?

We will not stop wondering if, as a country, have our head placed correctly on our shoulders. Being isolated islanders and with more than our fair share of attention (be it good or bad) and having been spoiled with money (up to recently), we do not feel that our thinking, as a country, is rational based on the big opinion that we have for ourselves.Politicians in an effort to please voters are no better (regarding the big head) and we have all sorts of grandiose schemes proposed which are not possible to be attainted.The Nicosia old football stadium (Γ.Σ.Π.): We must have spent over €1½ mil. in studies so far. No one became interested and now a new proposal is offered as an incentive to a would be investor, to allow a hotel development. More recently the decision is to turn it to a park with underground parking. The cost of the land say €50 mil. + construction + a heavy annual maintenance and security the project makes no financial sense, whereas adding more and more parking in the center, it will increase the loaded conjunction of cars. At this point of time in our opinion, it will not happen since we are not serious.The Nicosia tram: Notwithstanding that we subsidize the public bus service by over €20 mil. p.a. and notwithstanding that other than the foreign workers and retirees (free of charge) use the service (otherwise they are empty), we have spent over €200.000 in research to have a Nicosia tram service. But with an investment cost of €216 (as the Government’s estimates) who has this sort of money to invest in such a financially losing transport? It will be a B.T.O., project we were told – are we serious?The prime Real Estate: The prime real estate plots which belong to the Government (locally known as the “fillet” of real estate) has been examined by foreign consultants at a cost of over €200.000 who came up to tell us what? That we should build a hotel in Nicosia (see new boutique hotels coming up) to abolish the proposed national Museum site and in its place to build a mall (another one is now under construction) to divide the various beach and other plots of land into building plots (over supply existing) and that office buildings should be developed in some areas (over supply) in Nicosia center. Are we serious?The Pentacomo fiasco: What a fiasco dear readers to develop a technological park where international high tech firms will be queueing to develop. After Bill Gates got interested and because of the inexcusable delays, he ended up in Malta. We are just not up to it to fight our red tape, the quality of civil service and our own attitude. We spend several years in studying and studying again and we are now looking at empty land having spent millions on the compulsory acquisition and the construction of some roads. Now that this will not happen, we will have complications in returning the acquired land to its owners – A mess!!The Larnaca Port: After studies and studies to attract the prospective investor for over €1/2 bil., we seem that we are reaching the end (no serious interest with only one possible candidate) but in the meantime over the last 12 years we are quarrelling amongst ourselves how much more we could demand from the possible investor (prime reason of failure are the Larnaca people themselves – they just do not know what they want). We are not serious.The Multi-Millions Projects: The disappointment of the various multi- million projects proposed by foreign investors ranging from the Yeroskipou one, to another 3 in Larnaca are all at a hold. All waiting for answers from the public service like nothing is urgent. Now it appears that “something” is moving, but after 7-8 years of wait circumstances, have changed as well as the investors’ appetite for such investments.The Troodos properties: Studies and studies again. Save the Governmental houses at Troodos (in a derelict state), the installation of a teleferic (cable car), the management of the camp sites etc (all runned down) we think that investors will throw their money away. Save the aged houses which have some potential value, the rest is just theory. We have Mr Papadouris appointed as the man in charge for preparing and executing the Troodos mountain proposed projects. Be it that he has spent even €800.000 of his own money, refusing to get paid and he is now charged that he has vested interest in the whole project. We are not serious.The Akamas Park: After 30 years and having spent over €5.0 m. in studies, we come back to square one – i.e. yet another study for a cost of €2.0 restricting the park only in the Government owned land (as it was the proposal 27 years ago by ourselves). The reaction of the locals is not the best (see bush fires purposely started) but with limited incentives for the local land owners. It requires a combination of preservation and isolated low density development, but then each side has extreme positions. We are not firm in our proposals.Rent or Build – Governmental offices: Again a lot of talk for nothing. It simply pays to rent Governmental buildings as opposed the Government to build its own. A simple arithmetic shows that Governmental buildings should be hired from the private sector and not developed.Others: The list is endless and this column does not have enough space. The examples given proves that our big head just cannot comprehend the realities of life to accommodate “imaginative” proposals/projects, self-interests and backhanded deals in addition.

October 24th 2019

Losing out in indifference?

In our previous article we have suggested how our foreign embassies could work towards attracting foreign investments in Cyprus.In this article we will touch upon the unexplored wealth that is recorded in the records of the Lands Office, with very limited analysis given by the Department regarding the goings on of the real estate market. Some analysis of the transactions are prepared by the auditors KPMG and PWC (as well as others to a lesser extent) but even those who carry out such analysis have limited data to go by.If we are to start with foreign sales in real estate, these transactions, are recorded in number of sales and not together with the value of the sales. So whereas the registered sales in terms of numbers to the foreign market is around 40%-50% of the total number of transactions, in terms of value it could be 60%-70% of the total (see the tower sales, hotels, beach land etc). No one knows and since the data is there we suggest that in addition to the number, the values of these sales should also be recorded giving a clearer picture of foreign demand to the Cyprus real estate market (who are foreigners who do the purchases). Based on the Lands Office, locals are considered to be the Cypriots, as well as all E.U. members. So purchases by British and other E.U. nationals are not differentiated and in fact this broad classification (Cyprus + E.U.) is not analyzed both in terms of volume and value per country. Similarly the foreign buyers (non E.U. members) are not classified as such as we do not know if such foreign sales come from which countries nationals and the acquisition value.This is of a major importance since if such statistics exist, we, the local real estate market participants, can ascertain which countries one should target and by projection direct one’s marketing and promotion to these countries. If one then goes a step forward numerous acquisitions are concluded through local Cos (foreign controlled and owned but by a Cypriot Co) they should also be analyzed. In a simple questionnaire in addition to be filled in by local/foreign buyers, Cos, could enter questions such as why invest in Cyprus and what they consider as being the minuses and pluses for such foreign demand and this could provide valuable added information.We do appreciate that the Lands Office will say “we do not have the staff, the expertise etc and the work involved is time consuming to enter into such a statistical analysis”. The work of analyzing this data could be reduced, if the department collaborates with the Statistics Department, that of the Central Bank and the Ministry of Commerce etc. If we are to encourage such a statistical information and be it that it might cost around €300.000 p.a., the value of such information which will be collected will be a multiple of such a cost (it will surpass the cost of at least 10 times, saving time and money and provide correct information to the Cyprus real estate market participants, as well as the Government and the Ministry of Economy).Let’s come to one crucial example of how we are “blind” by the lack of statistics. The U.K. is leaving the E.U. and the question is what this market will have on the British real estate incoming investors? No one knows with the provided statistics and without an analysis it is anyone’s guess, with opinions ranging from 10%-15% reduction on the foreign demand (once it is cleared what foreign demand is). The Central Bank took a role (and well done) to prepare statistics on the price index and its success is, in addition to the Lands Office information, information is also provided by private Cos, who provide the same. This particular cooperation could expand to include the above suggestions.In extending this, we have upcoming markets and for which we know little about them e.g. Azerbaijan, Hong-Kong, Singapore and others with huge wealth with an expected demand where we could explore, but without necessarily investing with blind eyes. India is one of the countries to keep an eye on, as is a recent investment by an Afghan Co who is concluding a deal by buying a local college!!Chinese are active but China is the whole Europe x 5 in size and as such one cannot be certain where the demand comes from (which regions and towns).Information towards this “new” department of land statistics, could come also from auditors/advocates/local agents, thus enriching the cold statistics by Governmental Departments with what is happening “on the ground”.With small countries such as ours anything is possible to achieve, but it requires a vision and not expert only the Lands Department to analyze such data.So we have this unexplored wealth and we could have thought that the first people to ask for these statistics are the developers and investors, as well as the various consultants, who handle such foreign/local sales (so far the beneficiaries are quiet).In the Yeltsin Era (Russia) we had participated in exhibitions in Russia with our “leader” being the ex-Governor of the Cyprus Central Bank (Mr Axentiou), leading a group of professionals and in addition to auditors/developers and people like us in the real estate sales/consulting. Unfortunately and ever since there is no such leadership and everybody “does his own thing” individually losing the original “one stop shop”.In the last years of Yeltsin’s era, our group was dressed in local/national dresses, we had Cyprus delicacies and we had a Zorba like dance to go. Our competitors (especially the Spanish) wonder what we are doing and why our Cyprus Business Booth had so many attendants!!Sitting back on our couch and expect things to happen is no longer with us we are afraid.

October 8th 2019

Attracting Business from Abroad

The embassy of any country abroad is the mirror of the country back home. In the business world the embassies should promote business interest of the country that it is representing, keeping an eye on opportunities that the host country may offer regarding business back home. It should then be up to the locals (Cypriot) firms and those in the host country to get together. The embassies should try to deal with any problems that there are and host events in the host country with Cypriot firms and the host country representatives, keep an eye on developments and suggest to the Cyprus Government and especially the Ministry of Commerce & Industry what action local (Cypriot) firms to be undertaken.Are our embassies up to these basic requirements? We very much doubt it. From what we read, embassies and the staff are looking after themselves on personal comforts and the recent report of the Auditor’s General on their inactivity is an example in hand.In addition to the excessive costs, existing staff bring over their spouses, medical bills are over charged and so on. How can we depend on any Cypriot embassy for business regarding Cyprus? Don’t depend on them we say. Our embassies in terms of business promotion are absolutely useless.We, as a firm, a few years ago, we wished to expand our activities in Germany in order to promote Cyprus to this affluent country for real estate investment. We have even visited at the time the then Minister of Commerce due to the fact that we received no replies from our Germany embassy. We offered the embassy to invite at the embassy house certain business firms in Germany, who might be interested and offered to pay whatever the cost was. After a six month delay in responding and after the Minister’s intervention, we duly got an estate agents (German) directory for us to call etc and no investigation or any offer for help on their part!! We understand that we pay handsomely those civil servants, neither we asked for an overtime work, but the interest on their part was zero. We also offered at the time our Iranian ambassador a similar proposal (at better times mind you – prior to suctions etc), who replied that he had no staff to deal with it – being also a bit upset that we have reported this in the press.The role of the embassy is a major asset for any country in its business development and we are addressing this letter to the Minister of Commerce, as well as that of the foreign Affairs Mr Christodoulides (in hope for what mind you). On the opposite side, we give the credit to the U.K. High Commissioner in Cyprus at any time, who does not let a month go without some sort of reminder of his/embassy presence and the needed exchange of views. Invitation of locals based on enquiries by U.K. firms, including lunches, questionnaire on our views on the Brexit etc etc. Well done Mr High Commissioner and we hope that our own “lot” in this country copy your actions.When the business associations in Cyprus realize this state of affairs (such as OEB-KEVE and others) they should pressure the Government in hope that it will wake up our embassies abroad, especially to those people who bear the title “commercial attaché”. We feel that it is time for a business/foreign ministers’ forum to be set up in order to examine the setting up of a road map on the subject of Cyprus Business promotion through our embassies abroad in collaboration with CIPA and other bodies who have the duty to explore exports and Cyprus investments. In order for this to happen and be successful, the people on spot must have the aptitude and the energy to investigate the host country’s opportunities, to report back to the home country and set up meetings with local commercial representatives say every 6 months. With the low deposit rates that prevail, there must be businesses with cash which might be looking for “unknown” countries in the investment field (such as Cyprus) to investigate.Will it happen? We very much doubt – This is the period of indifferent civil service of Cyprus – See the Halloumi Trade mart disaster as an indication (and for which disaster nobody had any repercussions).Staying with the happy go lucky holiday spirit we must report to you our encounter with a prospective film producer from the U.S.A. He was exploring the possibility to produce films in Cyprus with our (Cyprus) main attraction being that 30% of the cost is for Cyprus to participate, plus the tax benefits etc. It was explained to us that the setting up of such film studios comes with a “whole village” of people and trades, from electricians to carpenters, car vehicles to rent, make-up and hair artists and so on. Being on the beach we got exited suggesting to the unsuspecting film producer the film theme and proposing the participants role in them (for my part I have offered to become the new Corleone godfather!!). We ended up to Cornos/Shia area, where there is an operational studio. Having had lunch there, at a local restaurant and on our way back we had a call from our Cornos/Shia associate who informed us that the asking prices for real estate have shot up, whereas the local priest voiced his objections that the village will be occupied with mini skirted women, upset the local population and family living. The deal is not yet off, pending Governmental approval for the license, but it shows you also how local attitudes, be it antiquated, can prevent the export industry (next time we will take such prospective investors to the Archbishopric real estate office!!).

September 10th 2019

Upgrading Tourism & Real Estate

The upgrading of the hotel industry over the recent couple of years is noticeable. Both in terms of buildings, as well as staff quality, quality and size of food and service.You must have noticed the young, mainly foreign waiters, as well as some imaginative chefs who have made eating out more enjoyable. The older “traditional” generation is gradually fading out (with their many advantages mind you) and a new generation of tourist industry employees are created, to the extent that various local colleges that train such potential staff are running out of vacancies. Restaurants with a “theme” such as Italian, Mexican, Chinese (very few Indian we regret to say) are a preference to tourists, in addition to the local meat and fish taverns and despite the rather short tourist season they have a profitable business. One Mexican restaurant at Ayia Napa has daily 3 sittings, another hamburger place on the 5th floor of a hotel 2 sitting dining and another steak house 2 sittings, and with a booking waiting period of 7-10 days at least. Quality is the main attraction, as is the public relation of the man in charge towards the diners.This upgrading however brought about the increase in prices, which, now, on average is approximately €30 p.p. plus drinks. The latter (drinks) is unacceptable regarding charges with the average charge being 3-4 times the supermarket acquisition cost. What is also shocking is that local Cypriot wines are sometimes difficult to be found in the wine list, with the average charge lowest at €25 per bottle (cost €8 per person at least).Quality tourists and high income group clients seem not to be deterred by such costs (if value for money) and despite the locals initial negative reaction on the cost, it seems that the higher charges are becoming more acceptable than before for the locals. We exclude Limassol from this since there the cost is around €70-€100 p.p. Having said that, small tavern style establishments out of the tourist areas or in the suburbs, do not exceed the cost of €20-€30 p.p. (including drinks).We write this article based on a Greek TV reporting about Mykonos and the living cost there. It compared a Bougatsa (Greek sweet) at Mykonos which sells at €47 p.p., in Athens for the sum of €7.0 p.p. and in Salonica €5 p.p. They recorded that although such Mykonos charges are unacceptable, they are in accord with the house prices which show a sales rate of €10.000 per square meter at Mykonos, for Athens €2.000/sq.m. and Salonica €1.500/sq.m.Holiday home prices in Cyprus compare favourably with most holiday destinations which are on average (in Cyprus) €2.000-€2.500 for average quality homes save the Limassol and Larnaca seaside locations, which range from €7.000/sq.m. (Larnaca), to €15.000/sq.m. (Limassol). When one compares the infrastructure facilities provided here, the low cost of property taxes and stamp duties, as well as the other tax benefits (e.g. death duty) to go the cost is not excessive. Owning a property in cyprus is not as costly as in other tourist destinations. Staying with Greece, the property tax equals almost that of the rental income, but then very few countries have the problem of the common expenses that we have here. The problem regarding holiday homes is the lack of direct flights at airports in close proximity to large European towns. So compared with our competitors such as Spain/Portugal/Italy etc a huge part of a potential market (e.g. Germany) is lost. To have direct connections with some European/Russian destinations is a problem since we seem to think that “we have a connection” – Yes but from which town bearing in mind the distance when a potential buyer/tourist has to travel almost 3 hours to the airport and 3 hours back plus travel time to Cyprus, losing almost a whole day out of the 7 days precious holidays.Yes, we are getting there at the end with the numerous infrastructure projects under way, such as the 2 new marinas (we do not count Pafos and Larnaca) with the casino (again in Limassol) as well as the lack of public frequent transport (governed by the taxi Mafia – unknown in other countries). Imagine if we have taxis cost from the Larnaca town airport to Nicosia of €20/trip instead of the thieving €40-€60 (similar high charges also within the towns) how more attractive the island could be.Airbnb is coming into the market with an increasing demand and the comparative cost vis-à-vis hotel establishments are half the price (with many limitations mind you). These sort of lettings are attracting real estate buyers, since the returns on such an investment is in excess of 10% p.a.What is important to note is the upcoming in Nicosia’s hotel industry, with 4 new small scale hotels being now erected in the centre. When one compares the ex-Cyprus Hilton charges, these hotels may be an alternative, whereas based on press reports, these boutique hotels earmark gourmet restaurants as an attraction.So we expect that Nicosia will benefit from the expected tourist increase with a positive result for the local real estate market.

August 27th 2019

Lost in Communications

A good percentage of the real estate sales in Cyprus are concluded towards the foreign market with average around 44% of the total sales. The percentage refers to the number of units and not on the values of property sold. As such and bearing in mind that the foreign sales are on the upper-top scale, the percentage is much higher.In addition E.U. members are considered as locals, so if they are taken out the percentage, at the end of the day foreign buyers will be in excess of 55% and in terms of value over 70% of the total sales value.The foreign market up to recently comprised mainly of the British and Russian buyers, but more recently over the last 3-4 years we have demand coming from Chinese and other eastern/Asian countries nationals, whereas developers in their effort to expand their sales, are promoting their product in countries such as India, Vietnam, Korea etc, markets unknown to us up to very recently.Whereas there is a certain level of common understanding between Cypriots and Europeans and a slightly lesser one with the Russian speakers (and we took some time to understand each other) in terms of the legal system, understanding the contract terms, as well as the common expenses law, with the more recent “arrivals” we are having problems both in the translation and the attitude/understanding each other minds. So there is an added difficulty in the meeting of minds here.Ourselves we have originally used translators in our correspondence and other communication, but Chinese and other languages not being a commonly spoken language, we have ascertained after some time, that the translators translated whatever they felt like and at the end having a bigger appetite, they introduced for sale other properties than those which we were offering. In this way the translators were getting at least 5% commission, as opposed to our own offer of 2%. A large difference and a lucrative scam job (it may be only our experience since we understand it is not widespread).Another problem that we have met, is the measurement system where some nationals are knowledgeable of the metric system (meters etc) others are not (being more familiar with the imperial system (and the quoted sq.mts. extent are sometimes mistaken by sq.feet). On one occasion our client was delighted to get to know that having 200 sq.mts. apartment was not 200 sq.feet but 2.152 sq.feet (and this after we have concluded the deal mind you). Imagine if it was the other way round?Communication of minds is a major prerequisite for any buyers, but since in this case (real estate) we refer to a relatively large investment capital, it becomes more important. This becomes also important when trying to open a bank account for money transfers to Cyprus and the newly introduced KYC and laundering of money investigation are most provocative and time consuming for buyers. This coupled with the personal data restrictions makes one wonder how a much sought after sales deal can be concluded. In a recent case of ours regarding a sale in the Famagusta region (around €400.000) to a Dutch potential buyer and having his loan application approved in a preliminary form, we are still waiting for the deal to go through by bank officials (delay of over 3 months). On another occasion a Belgian millionaire sent his down payment for a deal of €1 mil. to a Cyprus bank. The local bank informed us that this was a scam (transfer from HSBC bank). A furious client objected and as a result of this, we duly received an apology by the banks, but we almost lost a sale. If one adds to the “negotiations” the translation confusion, one can appreciate the problems that we are facing in the market. In a past report of ours and based on actual facts at our Possidon Gardens project that we manage with an Ukrainian client, we had some difficulty in communication that was however by passed with the consumption of our local zivania and his vodka (with sougla to go). “Our” Chinese clients are not necessarily influenced with food and drink and this makes life more difficult.Communication of minds involve also personality issues (even amongst the locals) and recent buyers from the foreign market have personality problems (with ours) regarding “arrogance” with the higher the budget the bigger the problem on this count.In ending some of the problems are created by the buyers advisors, such as advocates who have other ideas in their minds, such as trying to sell themselves directly real estate that we provide clients to them in order to carry out the legal work involved (one of them has even a website of his own to promote – so in such cases in addition to their legal fees there is a hefty commission which they can claim from the seller (quite illegal mind you).Regrettably the money involved is large, making these 3rd parties involved creating a big money appetite.So there you are dear readers, so that you do not have the impression that real estate sales in plain sailing in calm waters.

August 20th 2019

Public vs Municipalities Rights – Seashore Protection Zone Developments

Under the Cyprus constitution, dear readers, everybody is equal in their obligations/rights, including the Government (vis-à-vis the general public). The High Court decision on the statutory tenancy was quite informative in that the Governmental owned buildings do not differentiate from those let by private investors. That is understood. So everybody is equal: authorities and the public.What we will refer in this article is the illegalities that are being undertaken by the Municipal Authorities and even their encouragement of the illegalities and the cover up “protection” that such authorities offer to the illegal structures be it undertaken by themselves or by third parties within the seashore protection zone, where any structures are not allowed to be built.On the one hand we can understand and excuse certain intrusion of the local authorities regarding the widening of small sandy bays to accommodate an increased number of visitors including the installation of sanitary facilities, the construction of seaside footpath for the enjoyment of the walking public etc, we can also understand developments within the seashore zone which is for the benefit of the public/economy in general, such as the development of marinas, private boat shelters, the provision of beach facilities for all etc.On the other hand there are provocative actions by the Municipalities which include the construction of so called kiosks within the seaside protection zone, where no structures are allowed at all which, even worse, are developed in Governmental owned land presumably with the tolerance of the Governmental authorities.These kiosks which should have an average extent of around 30 sq.mts. in order to serve the bathers by providing of cold water, juices, newspapers and take away coffees etc are turned into restaurants with full kitchen facilities, illegal extensions, of a temporary nature, full blasting music, sale of alcohol, which extends to night parties and so on.So here we are at the location known as MAAD at Paralimni, a kiosk of 50 sq.mts. was turned into a 400 sq.mts. restaurant, the placing of six containers at the Protaras beach area (duly converted into houses which are let) and another at the Nishia location where a kiosk was turned into a Grill Bar (with the appropriate signs, kitchen etc) whereas a similar situation is reported at Peyia Municipality, where the same situation exists with numerous beach kiosks in Limassol (turned into very popular cafeterias with food etc).In one occasion that we have more information regarding the Nishia kiosk at Paralimni within the seashore protection zone, we have ascertained that the kiosk/come Grill Bar has:No planning and building permitNo CTO approvalNo license to sell alcoholic drinksNo w.cs.No license for musicNo electricity/waterNo public access. A public footpath is used for the purpose with the suppliers using it as access, parking etcHaving spoken to the kiosk/café bar operator where we have indicated to him that he is operating illegally, he informed us that the local Municipality has informed him that he can do what he is doing and he is okay!So one wonders for those of us who believe in good governance of this country, what is this all about, since the public cannot carry out any structures within the protection zone, whereas Municipalities do just exactly the opposite in a provocative manner. Are we equal, public and municipalities or do we differ in terms of rights?So we are unreasonable to suspect that this may be:Corruption of the local authorities?Cover up by the some local authorities?Non-belief that we are all equal?The lack of information, simple stupidity (the last is a weak arguement on our part since we understand that such illegalities produce a hefty income for the local authorities).So, on this occasion (Nishia) we have reported a outrageous illegality of the Paralimni Municipality to the District Office, the Ministry of Interior, the Ombudsman, the Auditor General etc and we have received no reply other than the District Officer who has informed us that the Municipality is acting illegally, but the Municipality is the authority to undertake corrective action what is not doing. So? At the end the authority which is in charge to enforce the law, is the same one who is the “criminal” on the subject.So, what can we do relating to the public, where one person buys a house on the beach and pays dearly for it, but it fronts onto the seashore (what belongs to the state) and suddenly finds out that his house is not on the beach and far from it, it is behind a restaurant/ night club, creating nuisance, block of views etc what can they do?So what we can do? Apply to the Attorney General and seek a permit to undertake a private criminal law suit against the Municipality/users in order to place those to prison, not only for the examples given, but in order to discourage others with such schemes in mind.Having said this, is it the job of any individual to take private actions in order to reinforce the laws or that of the state?So at the end, is this a country where one can rely on the laws/planning zones on which one can rely upon? It seems not.

August 6th 2019

It is easy to go under – Tourist Investments

A lot of investment has been undertaken for touristic development ranging from hotels to places of entertainment (of good quality) and even more important addressing the upgrading of staff, food and quality service.Indeed during the years of 2017+2018 with the tourist numbers increasing (by approximately 8% p.a.) and this coupled with the planning relaxation given by the Government, almost all the hotels and tourist establishments have expanded and/or upgraded to satisfy both the increased demand and the competitiveness of Cyprus in the international market. Loans have been secured as well as advance payments (loans) provided by the tour operators in the hope of the mid-term (at least) bonanza to come. The upgrading is notable as we have reported in our previous articles on the subject, but then the international tourist market regarding Cyprus has suddenly changed. Our competitors such as Turkey and Egypt have bounced back reclaiming their share of the tourist trade. To this end and in addition to the discounted prices offered by these countries, as well as the lack of direct flights from major European cities to Cyprus and the closing of some of the airlines, the lower exchange rate of the currency in relation to our competitors have not helped, as well as the lack of labour in the tourist industry. These circumstances have encouraged the tourist tour operators to ask for more and more discounts in order to reduce the gap between Cyprus and the other countries. Notwithstanding the above, Cyprus distance from the urban European destinations with limited direct flights, 1 hours to Spain and 3-5 hours to Cyprus affects Cyprus arrivals, whereas based on the statistics the tourist spending power, as well as the length of stay are reducing. Competition is appearing in an increasing rate also form the Turkish occupied areas at lower prices.So, there we are dear readers and after so many years of stagnation in the quality of the tourist industry and having succeeded to upgrade our Cyprus product to an extent, we are now facing problems. So it is not unreasonable to say that profitable (to an extent) tourist projects, as they may be, it is easy to go under, since the tourist trade is not based on the local demand/circumstances alone, but the international scene (including politics) for which there is nothing much that we can do about it. As if this is not enough and being a member of the E.U. we are restricted by the E.U. policies that we cannot provide subsidised national airlines (or subsidised others) to provide cheaper air fares, whereas the climatic conditions with the so far notable increase in temperature for the northern European countries do not help our attraction of “sun and sea”.Hotel returns vary from time to time but on average the Cyprus hotels show a 10% return based on the G.O.P. of the hotel which is a reasonable target. In cases of an increasing profitability with projections and with positive prospects this can be reduced to around 8% and on the opposite side (negative prospects) of around 12% (reducing their value).Any business plan is based on projections based on reasonable assumptions and data, but the local tourist market is so volatile that the risk is relatively high. It is not like real estate which can be sold at a later date, since hotel businesses costs must be secured within the certain season of the year notwithstanding the income. Having said this, real estate is directly related to the success or otherwise of the tourist industry (bearing in mind that 70%in real estate sales (in terms of value) comes from the foreign market. The Chinese market is moving towards touristic/hotel investment and the various (3) hotels at Larnaca, as well as one large one at Sotira village area is an indication.You might consider that the returns shown above are high, as opposed to the lack of alternative investments in Cyprus, as well as the low deposit rates (0.5% max.) and with a number of the local banks not having a secured future. So there is no win-win situation dear readers and bearing in mind the relatively large amount of investment required for such projects, the quoted returns are at least a reasonable expectation. “It takes one seaside bomb in Egypt to turn around the tourist demand and as such benefiting other countries, as it will take one accidental air fight with Greece/Turkey to have the same affects, causing Cyprus to suffer”, a tour operator told us.To the various problems that the Cyprus hotel industry has, we have now the “fashionable” Airbnb and private lets which amount to approximately 30%-40% of the visitors (much of this is the fault of the hotel operators for not responding at an earlier warning of ours the 3-6 years go when we warned them through our publications and direct contact with their association of black clouds in the horizon caused partially by the Airbnb).Yes, international circumstances can cause such investments to go under, but then part of the blame is on the shoulders of the hotel investors as well as is for the unions who are out now for additional claims.

August 2nd 2019

The Old Larnaca City and its Prospects

It is noticeable how city centres can change from “one day to another”. Larnaca town, the “poor” city of all towns, which is partially due to its unfortunate vocal pressure groups and some Municipal corruption, has been left behind in its development.What are the recent developments in Larnaca?The very recent upgrade of the original town with numerous infrastructural projects, the development of parking facilities, the Makenzy area/Ayios Lazaros square and the extensive sandy beach is an attraction as are the other commercial projects which are being developed. The Quality Group (see recent exhibition on the multiple project across the Police State), Cyfield, as well as others on a smaller scale are doing wonders in the market with near the beach apartments now selling at high prices and with limited supply (whereas the Larnaca port/Marina does not seem to be happening).Which parts of the city may experience an upgrade?A lot of hope is placed on the Larnaca eastern development area (where the oil tanks are just moving) and the local master plan (the much awaited planning parameters) in order to turn this downgraded location into a Limassol type seaside promenade with high rise buildings (and high building density) ranging from hotels to offices and quality apartments. Things are moving very slowly for this project however and one of the main limitations for us is the seaside road which needs improvement, now with no lights/pavements/bicycle paths etc and again it is being held back for years due to the local people objections (no excuse at all).What is notable is the development of small boutique hotels within the old center, which are close to the beach and the establishment of trendy cafes/restaurant areas (whereas the most expected Russian multi storey hotel at the Phoenicoudes road will help to a good extent). The old town due to its stagnation over the years has retained part of its charm and character and although we have our doubts on the feasibility of such boutique hotels, they seem to be helped by the “fashionable” and profitable Airbnb lets.Larnaca is the only town “on” the beach within walking distance to a wide and sandy beach, the apartment buildings sell at reasonable prices, as compared to other towns, some which are and have been renovated, whereas those residents who are mobile with a car can visit some more distant villages, such as Lefkara/Hoirokitia/Vavla etc for the more culture explorers. A recent TV program by an international channel on the more distant villages of Larnaca – approximately 20 minutes’ drive, devoted itself to a local dish “ttavas” and the program presenters gave the “well done” to local restaurants home cooking with some of the “old girls” cooks being invited to teach the dish preparation abroad. With the new high scale projects under way, when completed (approximately 1-2 years’ time) the commerciality of the old town should improve, but it is noticeable the difference of demand for shops with differences for the very heart of the town area (e.g. St. Lazaros) to the more traditional high street units.What about food and restaurants in Larnaca?Larnaca has the lowest price range of real estate in its periphery, such as Mazotos/ Pervolia/Oroklini/Pyla etc, whereas living at Larnaca and with reference to food and drinks (our favorite subject) there are some notable trendy bars and other establishments at the St. Lazaros square and some classic quality restaurants along the seaside road not necessarily touristic in nature as such. We paid particular attention to the local Italian restaurant as well as the one with a Greek cuisine (not widely known in Cyprus – see fried fetta with nuts and honey on top etc etc) worth paying a visit at the Archontiko restaurant. For the fish lovers pay a visit to the Makenzy beach area, but as it happens in most successful places and especially during the summer holidays, make a reservation. Larnaca has also the most known Japanese restaurant (Nippon – more like a sushi-Japanese), whereas with the number of Chinese real estate investors (their favorite town) it will not be long when Chinese restaurants will appear.Apartment and House prices in Larnaca.In terms of real estate prices quality apartments range from €2.000-€5.000/sq.m. (the higher end closer to the beach and almost €7.000/sq.m. on the seaside road) and for individual houses in the periphery having a sale price of €2.000-€3.000/sq.m. Comparing these prices with Limassol (beach units at €15.000/sq.m.) and at the Protaras region on €6.000-€7.000/sq.m. and of €3.000/sq.m. (near beach) the difference in prices is evident.Is Larnaca a real estate investment opportunity?So Larnaca has good potential for further development much of which will depend on the execution of the described projects, but more particularly the Larnaca marina-port long awaited development (which seems that there is no development prospects at this point of time). These lower prices and the town proximity to the airport and Nicosia has only recently attracted the attraction of the foreign market in volume, whose interest comes from Chinese visa seekers, an increasing interest by Nicosia town’s people (limited demand) and others such as the ex-eastern block countries. At some point of time Iranians paid particular attention to this town, but with the embargo their interest has died down.The new Larnaca Mayor and his Council seem to be quite proactive in tidying the town and pushing for restoration of the aged, but architecturally interesting buildings such as the old Municipal market, whereas if some attention is paid to the Turkish sector which resembles Greek island comprising small terraced housing development, will bring new life to the so far somewhat dilapidated area. On the subject, Larnaca seems to have a good percentage of real estate ownership to the Turkish Cypriots and this is one of the obstacles for renovation (politics and other parameters apart).So pay some attention to Larnaca and if things move upwards as they have been for the recent years, the town will experience a fast improvement, faster than other towns, making it potentially an attractive investment.

July 31st 2019

Education for Real Estate Agents

Sales staff in real estate, we find, do not really pay particular attention to educate themselves and to become professionals at the level that we wish to see. There are something like 400 registered estate agents around, plus another 270 assistant agents who are allowed to be involved in sales. Bearing in mind that only registered estate agents/assistant agents can sell, as well as the owners of a property, the agents must be well educated on the subject.The level of knowledge of real estate agents is not what it should be and most of them (we will guess around 70%) know the basics with most important details left out and the potential buyer/seller who places a trust on them may find difficulties during and after a sale. In a recent case of ours, after 38 years of experience and numerous instructive memos, lectures etc, we let a flat for 6 months by sales person, but who entered into a contract without 2 witnesses per party (4 in total). End result the contract is not valid and in order to avoid problems we did not charge our usual fee (less than 12 months lease, requires 2+2 witnesses).On another occasion a client (not ours) was “promised” by the agent (not ours) that he can build on an agricultural plot of land. The potential buyer came to us for advice and we told him otherwise. A deal of €300.000 fell through and we have the other agent and the seller blaming us for it. Yet upon our encouragement and having visited the Planning Office the Buyer was informed that he will need a “deviation” from the zone in order to build (a never ending procedure of a doubtful success).Others and including developers eager to sell permanent residency visas, declare that permanent residency visa holders can travel in all E.U. countries without visa. This is wrong. Visas for E.U. countries will be still required.On another occasion estate agents registered as such, can charge a sales commission up to 3% (+VAT) on the sales price. Yes they can go higher provided there is a written agreement between the seller and the agent. If an agent is not a registered one, any level of commission is not acceptable (illegal), neither is tax deductible by the Cyprus Tax Authorities.These and others are the simple things in life and it gets more complicated and difficult when you start being involved into more complicated matters you will be amazed to find out what some agents will come up with and the misinformation that a buyer/seller gets.Some agencies have sales staff based on no salary and a 50% commission with all sales expenses being charged to the sales staff. End result is “who cares” and with a large percentage of turn-around of staff with constant newcomers with no/little knowledge.Basic knowledge for the sales staff is a must as is the supervisors higher level of knowledge. Recent examples is VAT (of 19%) when it is charged on land. If for example a plot of land has a building on, it may not be subject to VAT. This is so, provided that the building density of the building (based on the prevailing zones) is more than 10% than the plot/property density is allowed. Did you know about this? If less than 10% VAT is applicable.On the subject of house/building insurance, Insurance Cos “tricks” have been reported in our two previous articles, whereas the troublesome common expenses bills and the project administration is a case in hand to note.Estate agents should make clear to the buyer whether a property has a title or not, since this is of a major importance, (if not available and depending on the circumstances of the non-issue the sellers may lose a sale).If a comprehensive development project with common expenses etc sales staff is recommended to examine the status of the balance sheet of the project and of course to have comments on the general agreement. Does everybody bother?If we come back to the visa/passports, the parameters are changing as are the requirements of securing them. For this reason sales staff must be kept constantly updated.These and other matters are of major importance and which may be left behind by some agents and for this reason our Office has recently extended its education program by introducing a series of seminars regarding real estate details and including the matter of the statutory tenancy, common expenses regulations, the buildings insurance etc etc (ALA Academy).The lack of education and correct or not presentation is not a Cyprus phenomenon and it happens to all countries, including the U.K., where a client of ours who bought an apartment at central London, he found out that there was another person living there under a previous sales contract (not common mind you and we suspect that our client did not follow the due diligence procedures), whereas getting an eviction/repossession of real estate, for non-paying tenants in U.K., it takes time from 3-12 months (non-payers abusing the U.K. court system).At this point of time and with market moving upwards for urban properties, matters get a bit lose and the exercise of more strict control on the sales process became more important.

July 19th 2019

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