A DRAMATIC slump in property sales over the past few years has left thousands of unsold villas and apartments littering the Island’s once popular hot-spots with some developers offering 30 percent price reductions in their attempts to attract buyers.
The monthly statistics published by the Department of Lands and Surveys reveal the extent of the problem:
In 2006, sales of property to overseas buyers accounted for 49.3 percent of the total market; and in 2007, more than half the number of properties sold were bought by buyers from overseas. As well as keeping the construction industry humming, overseas sales brought in billions of Euros of revenue to Cyprus, adding significantly to the Island’s economic well-being.
But during the first quarter of 2008, property sales to both local and overseas buyers started to decline. And in 2009, overseas sales had dwindled to a mere 1,761 compared to the 11,281 sold during the heady days of 2007.
So what has caused the spectacular decline in Cyprus’ once prosperous and thriving overseas property market?
- The fall in the value of Sterling against the Euro over the past two years means that British buyers, who account for some 50% of foreign buyers, have less equity at their disposal. At the beginning of 2007 a pound Sterling would buy you €1.47; today it will buy you around €1.20, making investments in the eurozone that much more expensive.
- The worldwide economic turmoil has also changed the characteristics of the ‘typical’ overseas property buyer. British buyers are now being much more cautious about their investment decisions. Many have little confidence in the sales brochure marketing hype and developers’ off-plan deals and have all but deserted Cyprus in favour of safer places to invest their money.
- Reports about the potential problems faced by buyers have become more widely publicised. Details of the Title Deed fiasco and developers abusing the island’s antiquated property laws have appeared on UK national television and made headlines in the press and elsewhere around the globe.
- Having been contacted by many disgruntled buyers, MEPs and the European Commission are focussing their attention onto the goings-on in the Cyprus property industry and the government’s attempts to rectify the situation.
- Where some other countries have lowered their mortgage interest rates and property taxes to encourage overseas investors, mortgage interest rates in Cyprus are amongst the highest in Europe and the government is talking about increasing property taxes it charges large land owners; a charge that will no doubt be passed on to those buying property. This approach is an anathema in other countries where governments have taken steps to reduce the costs associated with property ownership to encourage investment.
A major factor in reversing the collapse in the overseas property market is the ability of the Cyprus Government to develop, introduce and enforce effective legislation to deal with the many problems in the Island’s real eastate, banking and legal sectors.
Although the Cyprus parliament is discussing legislation, pundits believe that its scope is too limited and that it suffers from inherent defects.
In the meantime Chairman of the Estate Agents Association of Cyprus, Solomon Kourouklides, has stressed the need to find new markets for Cyprus, such as China, the Arabic countries and Iran.
@Steve – I doubt very much that Arabs would be interested in buying tiny properties aimed at the European market.
I was in Lebanon earlier this year where many Arabs have bought property. In Beirut ‘small’ apartments targeted at the market were 250m2. These went up to more than 2,000m2 and included accommodation for maids and chauffeurs.
In the mountains we visited a very up-market development targeted at rich Eastern Europeans and Arabs. All individual and very well designed properties unlike the concrete boxes built here.
In Beirut they have even gone as far as building a mosque next to the cathedral (in fact it is attached to it). I cannot see anything like that happening in Cyprus.
@Martin Law – If you wish to make a complaint against a registered estate agent, I suggest that you contact the Estate Agents Registration Council via their website at http://www.rearboard.com.cy/ or give them a call on 22 666377 or 22 518451.
Perhaps they will be more responsive.
There was a time when the British were welcomed here, amongst other reasons as insurance against the Turks. Since accession to the EU in 2003, Cyprus has no need of this reassurance and has proceeded to treat British tourists as a cash cow to be milked dry. In recent years the standard of property and service that tourists have been offered for their money has gone down and down.
There is rubbish on the market that is an insult to British buyers and, sensibly, much of it they are not buying. In hard times value for money counts above anything else and Cyprus does not offer that any more. Left with masses of mediocre property developments on their hands the building industry has come up with a solution that allows them to continue peddling the rubbish already built or under construction. Offer it to the eastern block and the Arabs, who have low standards set by decades of poverty and adversity. This approach will turn a beautiful island into a horror story if it continues the policy of screwing the foreigners.
The situation is the same in North Cyprus. Totally out of date property laws, complete lack of legal protection for buyers, banks granting mortgages to developers knowing they have already sold properties either to be or already built on that land, lawyers who owe no duty of care to their clients, politicians who don’t care, gravy train job for life and pension civil service etc. etc. The Orams case and now Geoff & Mary Day nightmares are a huge warning to anyone thinking of living or buying in North Cyprus.
I agree with Paul Ruse
We are all in the same boat. A sinking ship called Cyprus Property Market. They will seek out new victims and swindle them out of their money. Just like us.
We need to constantly put pressure on our UK MPs and Euro MPs why not try and involve the local press and radio stations where you used to or still do live.
Club together and rent a Bill board very close to the Cyprus embassy , Air ports. Not just in the UK but those countries they are targeting for new customers to rob. The dishonest in Cyprus won’t like it and they will complain. But we are just telling the truth.
The Cyprus Government CAN do something to alleviate the concerns of overseas property buyers quite apart from the timely issuance of title deeds.
A law needs to be rapidly introduced that a contract of sale is binding and that once the purchaser has paid for the property from the developer the property belongs 100% to the purchaser and may not under any circumstances be used as collateral by the developer for whatever purpose and that banks do not have any legal access whatsoever to the property in question. If a developer owes the bank money then the risk must be strictly between the bank and the property developer and not the property owner.
The banks must shoulder risk. All contracts of sale must clearly stipulate this and title deeds MUST be issued within one year of property purchase. Failure to receive the title deeds must require the Developer and/or banks to reimburse to the purchaser the full purchase prices, interest and damages. If this is taken into law the problem of the property market in Cyprus will disappear overnight and purchases will be back. Cyprus could be a great place to live but at the moment it is hell. It is time the Cypriots as well as the foreigners rally together.
The European Community can no longer turn a blind eye by considering this is a matter that is not covered by European Law. There are provisions in the EU law that require member states to act responsibly. For a start the EU should freeze any further infrastructure investments from the European Union member states pending a satisfactory resolution of this problem.
I believe Solomon Kourouklides words are without credibility. I have written to him on three separate occasions regarding a so called reputable Estate Agents based in Paphos, and a member of his Association, from whom I bought a property off-plan. I believe the Agent was aware that the Developer/Builder building my property was in fact in serious financial difficulties at the time of purchase and the property was in fact registered at the Land Registry to another buyer. I HAVE NOT HAD THE DECENCY OF A REPLY FROM MR KOUROUKLIDES TO ANY OF MY CORRESPONDENCE!!!
Incidentally the builder/developer ceased trading within 6 months of me registering my Contract owing several million of Euros to many of his clients. He is now trading again in Paphos under another name.
SUCH ACTIONS ARE THE MAIN REASON WHY THE CYPRUS PROPERTY MARKET IS IN SUCH A STATE NOW.
Without decisive quick action, inactivity looks like compliance. Even though house prices affect us all I’m happier Cyprus is not turning into a concrete jungle. Long term slow growth is needed rather than an economy driven by quick turn around greed. The greed has become transparent with increasingly packed in congested developments. Perhaps the Government can introduce more plazas, pedestrian areas & parks into its urban areas and beautify them particularly now empty lots are cheaper hey ?
Read article “Why Title Deed legislation cannot work”
Therein lies the answer to the new Cyprus Problem.
Hear Hear!! Solomon Kourouklides is living in cloud cuckoo land.
He should be sorting out his agents, a more corrupt bunch I have yet to meet.
All this guff in their literature about “buy from a recognised agent you are protected by the Government” is a load of old rubbish.
Solomon Kourouklides and his dept. do not care.
Buying in Cyprus is currently not clever.
Ha ha ha…
“Chairman of the Estate Agents Association of Cyprus, Solomon Kourouklides, has stressed the need to find new markets for Cyprus, such as China, the Arabic countries and Iran”.
Does Mr Kourouklides think these potential new investors are stupid enough to part with their cash without Full Title Deed & Final Certificate of Completion? Why does he not stress the need to fix the current dirty scams?
I doubt very much these potential new investors can be easily stitched up.
Conclusion – καληνÃÂÇÄα (Good Night) to the Cyprus property market. You’ve had your fun for the past 15yrs.
No more….no more