Losing out in indifference?

октября 8 2019

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.

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