WHILE thankfully Cyprus has not been tainted by mega-cases of international corporate scandals, nevertheless it continues to suffer on the world stage from the collective sins of its property sector.
Many buyers have been hit by fraud and thousands still cannot obtain their Title Deeds. Despite much vaunted government plans to rectify the property mess, even if they work it could take up to two generations for the global stigma and its marketplace consequences to fade.
The arrogance being shown by developers towards foreign buyers is scandalous
As a leading estate agent confided to me recently: “The arrogance still being shown by developers towards foreign buyers on the Title Deeds issue is scandalous. They don’t seem to be aware just how much lasting damage they have done to the market and to Cyprus“.
The risk of Cyprus developers going bust is exemplified by the A&G Froiber collapse last September. A large number of buyers who had already paid for their property but had not received their Title Deeds have found themselves in conflict with the bank who issued mortgages to A&G on the same properties.
The outcome is unclear but at one stage a bank spokesman was making it clear that liquidation could well result in buyers losing their property and, at best, receiving only a percentage of the liquidation money.
developers are desperately struggling to survive in a flat market
Other developers are desperately struggling to survive in a flat market and rumours of particular developers being in serious financial trouble abound. Such rumours harden when one reads press advertisements by agents inviting offers on significant numbers of distressed properties.
The ‘high prices, no buyers’ problem is exacerbated by the banks continuing to extend developer loans rather than instituting 90-day recovery procedures. This encourages developers to think they can sit out the recession with artificially high prices and await the return of mass foreign buyers. As this may take another 5-10 years or more, much of the current new stock will be distinctly old by then and sellable only at knockdown prices.
developers have allegedly sold the same property several times over
In a number of recent cases reported to Risk Watch, it has been alleged that developers have sold the same property several times over and inexplicably all the contracts of sale appear to have been lodged with the Land Registry. While the majority of the victims are foreigners, some are also Cypriot citizens.
Since the government through the Attorney General has determined that cases of this kind are civil wrongs and not criminal offences, the police will not accept information laid before it and will not proceed with a criminal investigation. Perhaps it is felt that there are so many potential property fraud cases that to accept one as warranting criminal investigation would open the floodgates to hundreds if not thousands of others that would both swamp the police and add to international embarrassment.
However, an official blanket denial that property fraud is a crime may not be effective in quelling angry buyers, investment boycotts or international reaction. It may simply throw fuel on the fire.
About the author
Dr Alan Waring is an international risk management consultant with extensive experience in Europe, Asia and the Middle East with industrial, commercial and governmental clients.
Contact: waringa@cytanet.com.cy
©2010 Alan Waring
The more articles like this are published and the voices of those that have been unjustly treated and manipulated by the system are heard, more pressure will be applied and change is inevitable.
Shout it from the rooftops. Over and over again.
A close friend of mine recently (Feb 10) viewed a development in Paphos, with one of Cyprus’s major developers.
At the point of discussing details, they where told that the buying procedure is exactly the same as the British process and the deeds will be available at completion GUARANTEED. and this would be looked after by the developers lawyer. Luckily I spoke to her first before she signed anything.,…
Sound familar and still happening.
Why Cyprus was allowed to become part of the EU, while all those criminal like property transactions, were, and are allowed, is beyond belief. The interaction between Developers, Banks, Solicitors, and the Government for allowing it to happen is criminal in the extreme. The sooner a test case is brought to court the better, and if the Cypriot courts cannot deal with it, then the ECJ will “HAVE” to adjudicate on this.
People are entitled to protection under law, but when that very system is in cahoots with swindlers, and are allowed in law, then what does that say about a country.
There is talk of Greece being temporarily suspended from the EU, well we can be sure that the other lying country that considers itself half Greek, will not be far behind. In the name of decency, I hope Cyprus sorts this banking/developer scandal.
“Arrogant developers damaging Cyprus”
The developers can afford to be arrogant towards its clients because they know full well that the “assistance” given to them by the Land registry /solicitors/government offices in accepting the fraudulent contracts makes them feel that they are untouchable/above the law. Indeed at the moment they are, but hopefully time is running out for those responsible in helping them ruin Cyprus when the EU legal system takes effect here?
It’s very easy for the government to glibly state that no ‘criminal offence’ has taken place. By doing this they are just compounding the problem. Of course a criminal act has occurred; fraud is fraud. It’s just a lazy way out of a difficult situation that has been made worse by government ministers being in the pockets of the developers. How else can anyone explain the contemptuous mess that passes for a government department.
If the government want to gain some credence they need to act responsibly to the people who are bringing in the money they so desperately need. And that ranges from the unsuspecting tourist to the buyers who, by and large, would not repeat their actions.
How long must we wait till we drag this government, kicking and screaming in front of an EU court? A court that actually upholds the law rather than bending it to suit the highest bidder.
And what makes this debacle all the more galling is that in 18 months time, this shower will strut about in Brussels when they take their tenure as EU presidency. Can you imagine the political manipulation emanating from Cyprus? The trouble is that they actually believe their own propaganda.