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Key findings of Cyprus real estate conference

Key findings form a real estate conference to discuss the state of the Cyprus property market recently hosted by RICS (Cyprus) at which the management of REOs and NPLs were also discussed.

RICS Cyprus real estate conferenceUNFORTUNATELY I was unable to attend a recent real estate conference in Nicosia that discussed the state of the Cyprus property market and the management of REOs and NPLs.

But I received a summary of the event and key findings from Liana Toumazou, RICS Country Manager for Cyprus and Hellas, which I have published together with the presentation material below:

The event brought together real estate professionals, banking executives and regulators to explore and discuss the state of the Cyprus real estate market as well as strategies for the management of REO and NPL portfolios.

Shifting fundamentals in Cyprus real estate market

Pavlos Loizou MRICS Chairman of RICS in Cyprus and Partner at Resolute Asset Management, highlighted that the new ability of financial institutions to create large real estate portfolios will attract overseas institutional investors seeking large portfolio purchases.

In light of the upcoming stress tests for financial institutions, the size of the NPL and REO problem in Cyprus will result in more scrutiny on real estate professionals.

Mr Loizou called for improved data analytics and the need for strict standards in preparing valuation reports.

Download: The shifting fundamentals of the Cyprus real estate market

Cyprus real estate market and expectations

Thomas Dimopoulos MRICS Lecturer at Neapolis University Paphos, expressed optimism that the market is picking up pace towards full recovery.

He identified Cyprus as one of the top performers in Europe and attributed this success to the various naturalization programmes introduced in recent years.

However, Mr Dimopoulos emphasized that a potential termination of such programmes in the future would be detrimental to the real estate market and would have repercussions on the banking sector as well.

Download: Cyprus Real Estate Market & Expectations

Valuations for owners of real estate assets

Jennifer Sharpe Manager Property Valuations at Philoktimatiki Public Ltd, outlined the requirements that real estate valuers must follow when producing valuation reports.

She emphasized the need to have complete information and limit assumptions, so as to ensure the accuracy of the valuation.

Download: Scrutinizing, assessing, and utilizing valuations made for owners of real estate assets

Regulations governing NPL management

Vassilios Vrachimis Partner at PricewaterhouseCoopers, discussed the changing regulation which will allow banks to foreclose assets more quickly and transparently, thus accelerating recovery.

He also noted that external monitoring will become increasingly intrusive and will cause banks to look at collaterals with much more scrutiny.

Download: Regulations Governing NPL Management

Asset management platforms for REO portfolios

Jon Hodnett Partner at Resolute Asset Management, outlined the advantages and the challenges banks face when managing large portfolios of real estate, which are one of the highest risk categories for banks.

He presented Resolute’s framework approach for converting non-performing exposures to cash recovery.

Mr Hodnett also demonstrated the REO management platform developed and used by Resolute to manage their clients’ portfolios.

Download: Setting up asset management platforms for REO portfolios

NPL management at Bank of Cyprus

Anthi Exadaktylou (Bank of Cyprus) praised the success of the Bank of Cyprus to deleverage its non-performing exposures from €15bn in 2014 to €10.5bn today.

Consensual debt for asset swap was cited as the most preferred method for resolution because it delivers immediate relief both for the bank and the client.

Ms Exadaktylou assured the audience that the bank does not intend to foreclose on primary residencies. She invited struggling customers to reach out to their banker and find a reasonable, mutually beneficial solution.

Editor’s note

Real Estate Owned (REO) is property owned by a bank that it has acquired with the mutual consent of its owner (e.g. debt for asset swaps) or without the owners mutual consent (enforcement).

Readers' comments

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  • Mike says:

    Gavin and Costas seem to have highlighted the obvious. When will the ‘mutual admiration society’ of developers, bankers, lawyers, politicians and agents ever admit the problems that exist and more importantly solve them to permit this country to achieve its potential.

    As it is all the hype in the world will only serve to convince those ignorant of Cyprus and our ‘artful ways’ or those blinded by greed and the promise of untold riches. The title deed fiasco needs total reform as does the rest of the process in order to facilitate growth and prosperity. The peoples of this world we are able to con is a finite ‘resource’ and will exhaust in time.

  • CostasApacket says:

    Elephant in the room?

    Title deed transfer at point of sale?

    Head in sand?

    Ed: This problem was highlighted yet again in last autumn’s post-programme surveillance report on Cyprus by the European Commission:

    “The currently dysfunctional Title Deeds issuance and transfer system is deterring potential investors and thus, weighing on the liquidity of the property market. Although some measures were taken to streamline the issuance of Title Deeds for new properties, no new measure was announced to provide for a sustainable system of transfer of Title Deeds.”

    Action: Find brick wall, bang head!

  • Gavin Jones says:

    Seems that hype concerning the Cypriot property market is very much alive and well. I refer to the second section entitled ‘Cyprus real estate market and expectations’.

    I note that the presenter was a lecturer at the Paphos Neapolis University. As this establishment is part of the Leptos empire, he was hardly likely to say otherwise by playing down real estate prospects, thus upsetting and alienating his employer!

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