By Antonis Loizou FRICS
WE HAD the opportunity to discuss with the IMF consulting group examining the Cyprus economy and its recovery, the matter of real estate market. A summary of our thoughts on the matter is as follows:
- The visa/passports is a case to consider and while other countries have similar schemes we seem to overdo the promotion of it. It is, on the one hand, not as serious as it sounds, since only 0.3% of third country nationals using these scheme to get an EU passport did so via Cyprus.
- Sales prices (Limassol) of €15,000/m² for beach units and €10,000/m² for near the beach is excessive by Cyprus standards, but it is not in comparison to other cities such as London, Paris, French/Italian seaside Riviera, Monaco etc whereas it is higher than that of our top spot competitors in Spain/Portugal.
- Sales of high end properties are taking off and developers cannot develop them fast enough but there are many other developers waiting to climb on the golden bandwagon and perhaps at some short time Cyprus should reexamine the relaxations given.
- The limitation of three years retention of ownership is not satisfactory since existing buyers will most likely sell their properties within a short period of time thereafter – who will absorb the €2m properties? Not the locals, examples of the Pieris Estate situation given.
- The time bomb of common expenses is an issue which has been ignored by the last three governments entailing huge problems especially for the high end newcomers who pay increasing attention to the good maintenance of buildings. Now that occupiers are not willing to pay €100pm, how will they pay the €1,000pm common expenses for those high end properties?
- The red tape regarding titles remains with us. What is needed is a brand new procedure and not the patching up of the existing system. We told the IMF that Cyprus is an old car which is not working, yet we have placed new paint on it, leaving the same engine.
- We have explained to IMF that Limassol is “another country” and must not be compared with the real estate situation in Cyprus in general.
We pointed out the con job regarding the property value of €300,000 (visas) or €500,000 (passports) since we have now the phenomenon of having a sales of a unit say for €400,000 but the applicant claiming that its value is €500,000. This will block the system and the word “value” should change to “cost”.
- The side effects on our side in the event of a political solution, the return of Varosha to its Greek Cypriot owners etc were also discussed (including the return under the TC administration).
- We have discussed in addition to the tax attraction Cyprus offers, its low crime rate and attraction for families.
- We have stated that Cyprus does not attract only Chinese and Russians but others from all over the world. The statistics that the Lands Office produces is basic, whereas there is a wealth of available information on which Cyprus and business people can rely (details regarding nationalities of buyers, type of property and value bought, location by type etc). The data is there but it is an unexplored wealth.
- The legal system in a summary was discussed including the service of a law suit, delays in hearings and non-effective decisions.