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Tuesday 14th July 2020
Home Articles What a mess: Property valuations

What a mess: Property valuations

THIS new economic situation has had numerous side effects and even we, perhaps the oldest valuation firm in Cyprus, are wondering what next.

In times of recession, there is a drop in demand and a consequential reduction in property values. In countries such as the US, the housing market has shown a drop of 40% in terms of real estate values, the UK up to 30%, Greece 40% and in Spain’s tourist areas 40%.

What is interesting is that these price reductions attract offers from interested buyers. However, in Cyprus the situation is quite different and adds to the whole confusion.

Property prices in Cyprus have now reached a maximum reduction of +-30% in the tourist areas, whereas in residential areas (i.e. where demand is forthcoming primarily from locals) the drop is around 20%. This is a relatively low reduction, bearing in mind that foreign demand has fallen by 70% and local demand by 50% as one would have expected price reductions around these percentages.

property prices are reduced at a lower percentage than demand

Having said that and if, for example, a Cypriot seller cuts the price by 30%, will he find a buyer? The answer is most likely not, at least for the vast majority. So we have the paradox, that property prices are reduced at a lower percentage than demand, whereas at the same time, there are no/very few buyers. This is, perhaps, due to the fact that local banks (so far at least) have not been as aggressive in debt collection as their counterparts in other countries.

Property owners (so far) have been able to “stick it out” and forced sales of mortgages take years to materialise.

So in this situation what is the value of a property? Should we expect prices to fall to levels of 50% plus? Is this perhaps today’s correct property prices? What a scary situation, we must say, since whereas the year 2010 has shown signs of a slight recovery in the first six months, the last three months have shown a fall in interest in comparison to 2009.

If this trend continues, perhaps we may see larger discounts/property price reductions. Yet we still see new projects under development, especially in the local demand areas and we attribute this (not certain) to prior commitment of developers, who are under contractual obligations to carry out part exchange projects.

Another reason is perhaps the stubbornness of locals to grasp a situation not experienced in the last 50 years in the real estate market.

There is a school of thought that the only way to recovery is to leave prices to go down as much as possible and wait for the market correction afterwards. There is an economist’s logic in this but then what misery will this approach cause?

People will stand to lose their homes and have a shortfall in addition, security value for business people who usually place real estate as collateral in order to get loans, will be worth next to nothing etc, etc.

For non-performing loans, at the end, the shortfall of the banks will cause them to have huge provisions for recoveries, affecting their profitability and security value, increasing their financial future risk.

If this happens will foreign investors and depositors (€50 billion from Russia) trust the local banks (?) and if this happens, will the government step in to help and with what cash during a crisis? Will Cyprus become another Ireland, Portugal or, God forbid, Greece?

For these reasons we do not share this “cruel” thought (notwithstanding that the Governor of the Central Bank goes the other way), but on the contrary, we suggest banks show patience in order to give some breathing space to the market to correct itself without huge losses and human misery. The theory is one thing and practice, with its repercussions, is another.

delays in loan repayments are charged by local banks with a 12% interest

What we are very much worried about, is that delays in loan repayments are charged by local banks with a 12% interest (thus helping those in trouble to go under at a faster rate) whereas a recent Cyprus High Court decision (and a decision by the Court of Appeal in the UK) vindicates the banks actions as being part of the contract to grant a loan (the UK case referred to interest charge of 22%!!).

we have the problem of no title deeds

To rub salt into the wound, we have the problem of no title deeds, which even if one offers the property at a discount of say 35%, with the bad publicity that the non-titles owning people have, the buyers will not touch them (in some respects quite unjustifiably, we must say). So at the end of the day, what is your property worth – nothing or next to nothing? Not necessarily, since we have noted that locals are quite happy to step into the shoes of foreign demand in some cases – for example, the recent (2009/2010) sales for holiday home/apartment acquisitions in the Paphos and Paralimni areas.

So ending this, otherwise most depressing article, dear readers, is there hope in the near (11/2-21/2 years) future? (see our previous article on Cyprus attracting millionaires etc). This is a “God protected” country, we think, since during difficult times, something else happens in the world (mostly misfortunes) which helps us. See the civil war in Lebanon, the ex-Yugoslavia war, the Russian era of reform etc.

The recent visit by the President of Russia is one positive sign with Cyprus getting off the Russian black list, the Qatar deal is another, as is the Kuwait interest in the gas terminal. At the end and we hope it comes soon, if we find gas/oil in the Cyprus sea economic zone, it will help us most (see what happened in Scotland and Norway).

Shall we then seek God’s help to help us in a most difficult situation? Going to church, we say, more often, might help!!!

Editors notes

I am grateful to Antonis Loizou FRICS, the Managing partner of Antonis Loizou & Associates Limited for allowing me to publish his articles.


  1. For God to look kindly on the Cyprus property market , the property market needs to be completely overhauled .

    Title Deeds should be issued without further delay to buyers who have paid for their homes.

    Banks need to give assurances that they will only go after the developers who have debt and not innocent buyers who were not informed of mortgages.

    Estate agents should tell the truth.

    Lawyers should act in the interest of their clients and be responsible for their own shortcomings. They should behave like the professionals that they claim to be.

    Hmm maybe hell will freeze over first.

  2. ..Oh, and what about LOANS LOANS LOANS ???

    Example: Your house is worth £300,000CP and the bank lends you £100,000CP. Does the loan now convert to €172,413 Euros?

    What happens if your property after the CP to Euro conversion is now worth less than €300,000.

    The money market is all very complicated and will take years to sort itself out….and there will be losers unfortunately.

    Any money experts out there that can help explain this?

  3. Steve, I apologise if my remarks sound insulting. I’m sure Mr Loizou is well respected in the Cypriot world of valuers & agents and I’m sure he always acts in the best interest of the buyer/seller..

    Speaking of currencies and its complications, would you mind explaining the following to me please?

    Example; When Cyprus had the Cypriot pound, a house was valued and marketed at £200,000CP. The next day, Cypriot pound changes to Euro’s using 0.58 CP cents for the conversion. So a bag of potatoes priced at £1CP is now priced €1.72. Staff wages, pensions, food, cars, bank savings and everything else has been converted into Euros – right?

    Can we apply the same rule for a £200,000CP house?
    It should now be valued at €344,827 – right?

    From what I’ve seen, the house today would be valued at €200,000 and Not €344,827
    Where is the missing €144,827 Euros ? That’s amounts to a drop of 42%

    I’m no expert on currencies and would love to know how it’s all worked out :-)

  4. What a pity that Mr Loizou, one of the best valuers and agents Cyprus has to offer, must suffer insults from some people. The lack of sales in Cyprus, despite falling values, may be due for a large part to the fall in value of the GB Pound, which has been sending out distress signals to expatriates, particularly pensioners, for 10 years, long before the recent financial crisis. Current value for the £CYP is GB£1.50, from around 1.10 in the late nineties. The £/€ rate has fallen in steps since 2000. From 2000 -2003 it was around 1.62; from 2003 – 2008 it was 1.46. Since late 2008 to now it has oscillated, mainly between 1.22-1.08; today it is 1.13. A UK buyer in Cyprus, who currently could have to sell his UK property at a 30% loss to move here, looks at 30% falls in values here and sees that what he must find in GB£ at 1.08 to buy the Euros for a Cyprus property has actually increased by around 5% since the market high in 2007/8! Small wonder almost no one from the UK is buying! Conversely, anyone who can sell in Cyprus at 30% below 2007/8 will be a winner financially if going back to the UK. While the UK politicians were busy fiddling their expenses, they forgot to keep an eye on what George Brown and the Bank of England were doing to the pound. When the Tories have straightened things out, painfully, will the electorate in the UK put the Labour party back in power to go through the same cycle again? UK pensioners and the Cyprus property industry should hope not.

  5. What a joke of a report

    Mr Antonis Loizou, you have made yourself look foolish. A cry for help maybe?

    Oil off the cost of Cyprus….hah hah. No chance.
    And if it’s there, who owns it !!

    Shamrocks, rainbows and little pots of gold really do exist Mr Antonis Loizou – honest they do..

    A debt is a debt and must be paid by someone, not God.

    Title Deeds are everything, otherwise you have nothing!

  6. It’s good to see Mr. Loizou telling it as it is and not insulting our intelligence with the usual spin that has been de rigueur from some of the more ‘creative’ pundits out there.

    As the two previous commentators have so clearly pointed out, in Cyprus it’s not just a simple case of an economic downturn which is affecting the market. With the facts of the title deeds scandal now universally known and, more importantly, understood by the layman, no amount of soft soaping and spin by the Interior Minister regarding his proposed plans to alleviate the deeds mess will prevent what’s left – and it’s precious little – of the housing market from totally collapsing.

    In any business, without trust and goodwill you’re finished. The days of Cypriot developers and their acolyte lawyers wining, dining and seducing unsuspecting punters into buying off-plan, deedless, concrete boxes are over. And NEVER to return.

    Come in number two. You’re time’s up…

  7. For the last 5 years I have been warning all you idiots to stay clear of buying property in Cyprus but you all thought you were smart. They will never go down in value you all said you all looked on me like I was a fool. You showed total disregard for your poor children when it came for them to buy you all wanted to rip them off.

    As for Mr Loizou he too laughed at me at a conference of his in Ayia Napa, well who is laughing now. If you borrow more than you can afford to pay back you deserve to go under.

  8. Mr. Loizou is an authority on Cyprus real estate who is referenced regularly. He is also one of the companies sought by the banks to provide valuations on properties, being one of the “closed shop” licensed real estate agents. I am well aware that one can qualify to become a licensed agent but anyone who has attempted to jump through all the hoops put in place by them will testify to the number of obstacles – not to protect the public but to protect the cartel.

    Under bank instructions they are advised to deduct 15% from the value for the VAT content and 10% from the value representing agent’s commission, whether or not this was the case. The buyer therefore finds that their property is worth 20% less than their purchase price as soon as they receive their keys.

    Of course, Mr. Loizou will tell you that it was the number of unlicensed sellers responsible for this and Cyprus, its agents and government offices are blameless – again.

    If we want honesty let’s not have half a story.

  9. A refreshing dash of honesty from an establishment stalwart! It is in line with views expressed by a number of other columnists and commentators over the past 2 years. It really does sound like ‘Last orders, gentlemen!’ at the Last Chance Saloon.

    Jim is right. The Cyprus market is probably beyond saving now, as there is simply no trust and confidence among buyers (Cypriot and foreign) in the Cyprus property ‘system’. The owner of a Cypriot accounting firm told me that all 8 of his staff (all Cypriots) had not got their Title Deeds despite having paid off their own mortgages. In some cases, their purchases went back 15-20 years. They were, he said, terrified that the various developers had mortgages on the land and might go bust.

  10. Yes, in times of recession, the property market suffers, but that is not the main reason for the Cyprus property market collapse. Prospective property buyers are frightened to buy property in Cyprus. They hear about crooked lawyers in league with crooked developers. They hear of people paying in full for a property & cannot get a title deed because the developer has taken out a mortgage on the land the house is built on. Not only is the bank liable to take your paid for property, it now appears the income tax authorities can also claim off it for the developers unpaid taxes.

    Until Cyprus radically alters the property buying law to ensure people actually do own the home they paid for, I see little hope of the property market recovering.

    With this future scenario, it is perfectly likely that an Ireland type situation will occur, as developers go bankrupt & the banks suffer heavy losses. The reported amount of outstanding developer mortgages is around eight billion Euros. This in a country of only 800,000 people.

    The current round of proposed legislation will do nothing to revive the property market & in my opinion is just window dressing for the benefit of the EU, who were told that the government proposed legislation to correct all the outstanding problems regarding property purchase in Cyprus. The big lie.

    The day of reckoning is fast approaching.

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