By Antonis Loizou FRICS
It would be a mistake to consider that our banks/financiers are doing okay, especially bearing in mind the increased strict standards that are introduced from time to time by the ECB. This point is worth making now we are in an election period and politicians are outdoing each other to promise relief to debtors.
There is a lot of discussion regarding the protection of the permanent residence (be it quite a humanitarian measure) but then we have expensive villas in the millions range, which have a very limited demand and are most difficult sales prospects.
Although it is easy to blame the banks for everything, the question remains are the financiers up to this unpredicted situation? Some financiers are trying to resolve the situation – see Bank of Cyprus which is still searching to find a way out of its own financial situation and the loss of the investment by incoming new investors. The Co-Op Bank is troubled by the small politics of the parties, whereas other financiers seem to be doing little about the NPLs.
Some of the foreign consultants that have been taken on board to handle the NPLs and sale of securities, notwithstanding their six-month appointment are still not properly set up and time passes as nothing is happening.
Sale of NPLs: this is a must since the financiers’ job is not to sell real estate but financing. An attempt has been made by the Bank of Cyprus of group sale, whereas the others are still at the preparation state.
Buyers Funding: The taking over of projects/properties be it on an individual basis or otherwise is another option. An NPL say of €5 mil which cannot sell, but given added funding on behalf of the financiers to complete the project under its own Co or the banks supervision is another solution.
Group Investments: Say sale of an attractive investment (property) for €3 mil. plus €500,000 for one not so attractive, is another option in order to get rid of the non-attractive properties.
Financiers Cooperation: There are plots/land that are adjacent to each other, but are under mortgage by different financiers. Such properties, provided there is a cooperation by the various financiers could offer a better deal if sold as one. This is especially so regarding agricultural land.
Financing the new buyers: Not a must as such but financing worthy new clients is a point in hand. The financiers have excess deposits which must be given out. Attractive terms and long repayment period is another solution which will help.
Administration Quality: Are the financiers up to the quality of the administration required regarding real estate? Based on our own experience they are not all.
The real estate market will improve once the financiers improve and the two go hand in hand and by knocking the banks we are knocking the Cyprus economy and the real estate market.