CHINESE buyers are helping to rejuvenate the stagnant property market in Paphos where sales have risen by 25 per cent in recent months, industry professionals say.
The once booming Paphos property market, once dominated by British buyers, collapsed in 2009 as a result of both the worldwide recession and the title deeds scandal in which buyers who had paid in full for their properties were left years later without possession of ownership documents.
The collapse has had a serious knock on effect on the local economy which had long relied on tourism and property sales as an economic mainstay.
“There has been a 25 per cent increase in Paphos sales according to recent official statistics and part of this increase is due to the Chinese purchasers,” said George Leptos of the Paphos-based developers the Leptos Group and head of the Paphos Chamber of Commerce (EVE).
Billboards along the main roads of Paphos are now advertising properties for sale in Chinese while developers have been actively targeting the Chinese market for some time.
Their perseverance appears to have paid off.
“We have various offices in China and we regularly attend various property exhibitions. All of our sales in recent months have been to Chinese clients,” said Sophia Charalambous of Korantina Homes.
She said Chinese clients are keeping the company busy, and are choosing to purchase top end luxury properties.
“We have many Chinese clients, mostly business people and families. Most of our clients have a budget of around €1,000,000,” she said.
“The British market has almost dried up for us. We have the occasional Russian client but we are mainly working with the Chinese. Next week 12 prospective buyers are arriving and we will see how many make purchases.”
The property professional added that even though China was a ‘new’ market, it wasn’t a ‘phenomenon’ as such, as investors from China should be expected in Cyprus.
“China has a large population and has a rich economy. It’s doing better than a lot of other countries,” she said.
House sales in Paphos are just one example of the stronger economic links between Cyprus and China. The Chinese company, Far Eastern Phoenix, is eager to lease the old Larnaca airport from the government to turn it into an exhibition space. On Friday Communication and Works Minister Efthymios Flourentzou said an oral agreement had been reached over terms, but a written agreement was still needed. China was also one of the countries approached to provide a loan to the government before it was forced to go the EU for a bailout in June.
Charalambous said that most of the developers in Paphos are dealing with the Chinese market and that the definite upward trend in Paphos property sales was due to the Chinese.
George Leptos was equally optimistic.
“Generally there are good prospects regarding this market and it should be explored further,” he said.
The Leptos Group has participated in exhibitions, generated Chinese business contacts and undertaken product promotion in China.
Leptos said that the company’s Chinese clients are interested in ready or almost ready properties, of a value ranging from €300,000 to €800,000.
As non-European nationals, prospective Chinese buyers need to make a minimum property purchase of €300,000, and prove they are of an adequate financial status to stay in Cyprus.
“The Chinese as well all other non-European property buyers are entitled to apply for and receive a permanent residency permit for themselves and their family, providing that they fulfil certain pre-specified standard conditions,” said Leptos.
“Once the permit is obtained, they can reside in Cyprus for as long as they own the property. They become what I would call ‘permanent tourists’.”
While Chinese buyers are apparently boosting sales in a depressed market, Pavlos Loizou, board member of RICS Cyprus (the Royal Institution of Chartered Surveyors) said that the latest figures were far less impressive when put into context.
“Whilst it is correct to say that there has been an increase in property sales in Paphos since 2010, very few transactions actually occur every month and so when these figures are turned into percentages terms the increase appears greater than it actually is.”
While Loizou said he couldn’t specify if Chinese buyers were purchasing properties in Paphos, he noted that in March only 90 properties were sold in Paphos, 36 of them to foreign buyers. In April the figure dropped to 84, 36 of them to foreign purchasers. In May, sales reached 165, 82 of them to non Cypriots.
“Paphos was the first town to experience a fall in sales as well as the largest decrease in sales, but it is beginning to stabilise, whilst other towns are still falling. You could say that Paphos hit the bottom first.”
Paphos has been most affected by the property slump in Cyprus because it had a far greater reliance on foreign purchasers and now has the highest number of completed units which remain unsold.
The Title Deed fiascoBut the decline in sales was also due to the title deeds fiasco. Commonly in Cyprus, developers take out mortgages on land or property, the liability for which may then be placed on the purchaser of a property on that development, if the developer or landowner becomes bankrupt. It also meant title deeds were held by the bank who granted the mortgage.
After years of outcry by misled owners, in 2011 the government introduced a ‘specific performance law‘ which grants a contract of sale precedence over any pre-existing mortgage (providing that the buyer pays the mortgage lender the amount of the mortgaged debt attributable to the property they are purchasing).
Purchase a property with a Title Deed
Even so, buyers should still purchase a property with a title deed (and use the services of a competent & independent lawyer to check everything is OK and to draw up a watertight contract – and ensure the title is ‘clean’; i.e. free of any mortgages and other claims) to ensure a buyer is protected from the numerous pitfalls; this will also enable the resale of the property without encountering any problems over ownership.
However, according to Korantina Homes, their Chinese clients are purchasing a mixture of properties, some off plan, some with title deeds and some where the deeds are “almost ready”.