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Cyprus property agents talk up Chinese interest

Although Chinese interest in the Cyprus property market is undoubtedly increasing, mainland investment in the island is still a trickle, according to the South China Morning Post.

ONE hundred home sales in as many days on a tiny island in the Mediterranean? For sale signs being hurriedly translated into Chinese?

While the goddess of love and beauty, Aphrodite, might have bestowed those gifts on her birthplace, Cyprus, reports that the island has suddenly become a magnet for Chinese investment appear a little mythical.

According to the latest figures, real estate prices have tumbled by 7.6 per cent year on year, while the number of completed sales last month was down 15 per cent since 2011. That is an annual decline of 47 per cent and the biggest fall since foreign and domestic buying habits were first recorded back in 2000.

With such a cloudy outlook, who can blame some agents in Cyprus for perhaps embellishing the interest being shown by Chinese investors, following an acceleration of the terms some overseas buyers can gain residency permits.

Cyprus, which has long been considered as occupying the crossroads of Europe and the Middle East, and a trading post to Africa, revised its law in 2007 to allow non-European Union (EU) nationals who buy properties worth over €300,000 (HK$2.98 million) automatic and permanent, yet flexible, residency permits.

Now the policy has been accelerated and, with Spain and Malta tightening their residency rules, Cyprus is one of the few places in Europe where Chinese nationals – provided they invest €50,000 in a bank account for three years – can automatically get permits. Cyprus, which joined the EU in 2004, has long been a favourite for Russian investors, but there are signs that Asian investment is stepping up.

Property developer Cybarco, which is developing several luxury builds on the island and selling the portfolio with the respected global player Knight Frank, is behind the country’s first residential marina development in Limassol, which is offering docking for 650 yachts and apartments from €428,000. It is also working on a project along the unspoilt northwest coast of Cyprus, Akamas Bay Villas, which is already 70 per cent sold, many to buyers from China.

CEO Michalis Hadji­panayiotou says: “The Russians are not moving out, but the flow from China started recently. The Chinese are mainly interested in seaside locations; Limassol, in particular, remains the ideal city for purchasing permanent or holiday homes, but also for investing in commercial properties or office spaces.”

A bonus to investing in Cyprus is that Chinese nationals can get their children into universities with a lower number of credits, and that Chinese Cyprus permanent residence holders have unrestricted travel rights to Hong Kong and Macau.

The island, with its 330 days of sunshine a year, low crime rate and lowest European corporate tax rate of 10 per cent, certainly has much to offer, admits independent property adviser Nigel Howarth.

“It is certainly a lovely place to live. But reports of a mass influx of investment should be read cautiously. And at the lower end of the market there are thousands of holiday apartments that have not been completed and values have fallen, in some cases by up to 50 per cent.”

Howarth, who publishes reports and advisories on housing and economic news from the island, says that the geographic location of Cyprus is critical. “It is an important axis point for East meeting Europe, there is an excellent port and some lovely parts to the island, but you would have to be very naive to believe all the reports of a boom.”

There clearly is something going on in this tiny island. Although a multimillion dollar plan by a Chinese consortium, Far Eastern Phoenix, to develop the old Larnaca airport into a commercial showroom for Chinese products and a logistics centre has collapsed, there is a major charm offensive under way.

One of the most spectacular developments ever seen on the island has already attracted interest from China. Although the price is only an application, rumours abound that you will need over €20 million to buy the Santa Barbara Residence, being built by Cypriot developer Country Rose.

The director of the development is coy about interest, and the price, but says that a number of Chinese buyers have been in touch. Situated at East Beach, a short distance from Limassol, the residence may have five floors named after mythical gods, but is a showcase to all that a modern and discerning owner may desire. The residence has its own spa, complete with a snow cabin and steam geyser, a wine cellar carved into the rocks and a dining room that has wrap­around views of the sea.

But, as Howarth warns, even the most astute investors should be careful. Estimates put the number of properties in Cyprus without title deeds at up to 130,000, staggering considering there are only 900,000 people living on the island, and that it is far from unusual for the unsuspecting to buy homes which are built on land which is not owned by the developer.

Readers' comments

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  • andyp says:

    Vaggelis. Any particular reason The Chinese should not be warned of the scams and frauds associated with the Cyprus property market?

    Are the stories about corrupt lawyers false?
    Are the stories about Lawyers not acting in the interest of their client’s false?
    Have people paid in full for properties that have never been completed?
    Have developer’s left mortgages on sold properties that are now the responsibility of innocent buyers?
    Are many properties sold that do not have completion certificates?
    Are there many people who cannot get their titles because of a combination of some of the above?
    Are banks repossessing homes bought and paid for due to developers not paying or defaulting on their loans?
    Are stories and articles on this site and many others false?

    Do tell.

  • Vaggelis says:

    I hope this comment will assist all the bitter Brits who post negative comments about Cypriot developers and also attempting to “warn” or intimidate Chinese investors.

    No developer or no country is perfect all over the world. That is a fact. The same way are or are not in the UK stands in Cyprus.

    Nobody from the UK or any other country lost a property when a developer went bankrupt. Delayed yes but not lost.

    The point for all of you who decided to retire in our country and not your colony any more, since 1960 for those who forgot, is to enjoy your free time and advantages that this country provides.

    For its shortfalls and disadvantages apart of being critical you can do the step and move out. I am certain you will not though because it is definitely one thing to moan on the internet and another to materialize moaning into action.

    I stand by our clients who came to our offices with the idea to organise BBQ nights to their houses when Chinese clients come to visit so they can encourage them to acquire from us.

    These are the true Brits who have definitely benefited this country with their investments and in return got a life on a beautiful island with 260 or 330 (does it really matter?) days of sunshine.

    Please enjoy your swim on the wonderful beach like today (yes it is October 4th by the way) and bless God for the opportunity, and yourselves for the decision to live in one of most beautiful areas of the world.

    Warmest Regards,

  • andyp says:

    John Swift.

    As someone who does rent out I would be delighted to receive a €6000 rent but quite frankly you do not Cypriot/non Cypriot alike.

    By the time you take off tax, management, fees, pool costs, repairs, replacement furniture, chasing rent arrears etc, etc, etc unless one is desperate it is simply not worth renting out at a silly rate.

  • Richard says:

    The Chinese are probably buying up the most distressed assets at rock-bottom values. The Chinese are anything but stupid. Many wealthy Chinese also want to move their money out of China too.

    The Cypriot folks involved in selling property should beware though – the Chinese won’t stand for the daft nonsense the Brits have.

    They’ll get one warning from them.

    The second will come in the form of being scraped off a large, heavy and very hard boot heel!

  • John Swift says:

    Quoting the obvious upsets many expats and holiday home owners but the reality still is that Cyprus property prices reached unsustainable heights and until reality kicks in with prices returning to sensible levels things won’t change.

    Property in Cyprus is still more expensive that in the UK.

    House rentals are the same with the strange Cypriot mentality of “If I drop the price from 600 to 500 per month I’ve lost 1200 in a year whilst ignoring the fact that they would have made 6000 in a year at 500 per month.

  • Ken of Kiti says:

    I wonder where the next mugs to get conned into buying here in Cyprus will come from. Maybe Mars? The poor Chinese buyers have no idea what is in front of them if they invest here at the moment. Ignorance is bliss but it won’t be for long…

  • Curmudgen says:

    ‘The island, with its 330 days of sunshine a year, low crime rate and lowest European corporate tax rate of 10 per cent, certainly has much to offer, admits independent property adviser Nigel Howarth’.

    This just has to be a ‘cut & paste’ from yesteryear.

    What determines the claim of 330 days of sunshine a year? Half hour per day, one hour? Over the last 365 days Cyprus certainly never exceeded 265 days of sunshine if that!

    Low crime rate…..last year the police could not keep up with the reported burglaries.

    Corporate tax of 10%…..not for much longer.

    (Cyprus) certainly has much to offer…..but it’s not the above.

  • Eddie Smyth says:

    The future of Cyprus now entirely depends on the deal under discussion by the Troika, Russia and hmmmm Government,,,,any conditions attached to an agreed bailout can only make Cyprus a better, more conformed location for investment. I would imagine the 10% corporation tax will be up for grabs for the EU element of the threesome.

    Estate agents being dishonest,,,,never lol. Easier to sell an ice lolly to an Eskimo or a bucket of sand to an Arab that property now.

    Actually, I would be quite optimistic about Cyprus’s medium and long term future, the bailout conditions, a new government and a regulated and re-jigged admin system,,,,Holding on to a low C T % rate will be a vital part of progress though.

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