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Thursday 6th August 2020
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The Cypriot real estate market will recover when…

NOW is your chance to have your say on what needs to be done to set the Cyprus property market on the road to recovery; what do you consider to be the most important factor?

Property sales in Cyprus have plummeted in recent times and many reasons have been given for their decline:

The economic situation – unemployment levels in Cyprus have reached unprecedented levels having doubled in the past 30 months. The ratings agencies Standard and Poor’s, Fitch, and Moody’s have downgraded Cypriot banks and the Island’s economy. Most recently, the IMF warned that the economic situation “demands a strong and immediate policy response” from government.

If the Island’s economic situation were to improve, would this stimulate the property market?

High interest rates – bank lending rates are now amongst the highest in the Euro zone area and there has been a tightening of credit standards for loans to households for house purchase.

If borrowing criteria and interest rates were to fall, would this help the property market to recover?

Overpricing – property prices increased out of all proportion during the boom years and people were prepared to buy at those prices. But now that the years of frenzied speculation have come to an end, property prices in some parts of the Island have fallen by 30 percent.

Would further price cuts restore the property market?

Lack of Title Deeds – as a result of the Title Deed fiasco, which has led to property unscrupulous developers exploiting property buyers financially, Cyprus is no longer considered as a “safe” place to buy a property unless its Title Deed has been issued and is readily available.

If Title Deeds were readily available on delivery of a property, would help the property market to recover?

Poor build quality – many properties have been built to standards that are less than adequate. Problems with rising damp, leaking roofs, ill-fitting windows, lack of heating, plumbing and electrical issues and are amongst the most common reported.

Would improved building standards and quality restore the market?

More attractions such as golf courses, marinas and theme parks – there has been much talk about providing recreational and other facilities that would tempt more potential buyers to the Island.

Are these key to restoring the property market?

Other reasons – we know that there are many other problems faced by those buying property including lawyers who fail to represent the interests of their clients, the ‘secretive’ nature of the Land Registry and Planning authorities that make it difficult to uncover information about a property and plans for other developments in the vicinity, long delays in getting any form of justice through the judicial system, etc.

Have your say

WE are running a poll to discover what our readers believe is the most important factor in getting the Island’s property market back on its feet.

Just click on the button in the ‘HAVE YOUR SAY’ entry in the right hand column that you consider will have the greatest positive impact on property sales. (As you can only vote once, please consider your answer carefully).

We will be running the poll until the end of November, so check back frequently to see how it is progressing.

27 COMMENTS

  1. Spot on Hani!

    However, we ALL know this. Even the government who are doing everything they can to protect the developers.

    Why, you may ask, are they still protecting the developers? Because the major developers and government ministers and the legal profession are all one and the same. The statistic has been bandied around that 70% of House of Deputies delegates are solicitors…

    So, when the repossessed properties go back to the banks (with the developers being able to keep hold of ALL the assets they have spirited out of the limited companies, like the proceeds from the sales to US, the non-payment of taxes, of estate agents and surveyors and builders fees, and also with no prospect of any criminal case being brought against them as now property fraud is a “civil” matter), what will the banks do (initially at least)?

    History shows that they will blackmail us to pay all the developers debts or we will be evicted. Now, under normal circumstances, this would not work (as if we had any brains, we’d simply say no and be prepared to lose the asset that we are going to lose any way). However, unfortunately, recent history also shows that there will be a good number of expats who will pay, as they STILL cling onto the hope that if they do “the right thing”, and there is a “review of some magnitude and legislation to ensure protection and transparency with harsh penalties for non compliance” or that “this represents an excellent opportunity for the Government to re-examine (their) stance” or that “a big shovel (will) clean up all”, all will work out well in the end.

    The reason why scams work (Nigerian 419 scams, time-shares, pyramid selling, Cyprus property investment) is because there will always be people who fall for them. The only way the government will ever consider changing its tack (like with the recent revision of the timescales for this amnesty letter of intent nonsense), is if they don’t work.

    We need sufficient numbers of people to STOP paying and to say a firm OHI. Unfortunately, we have many people amongst us who, for thoroughly good and respectable reasons, WILL not see it and pay in the hope blah blah blah… So, in the words of Private Frazer from Dad’s Army, “we are all doomed, Doomed, DOOMED!”

  2. 1- Solve the title deed issue.

    2- Stop covering the developers, let them go bust, it will not be the first time, the properties they own will go back to the banks; and can be sold at more reasonable prices.

    3- if we do not do that Northern Cyprus is reaping our failures….

    Hani

  3. @Richard – the unrest in Middle East may well have contributed to the increased number of tourist arrivals in Cyprus this year.

    I don’t believe the unrest will have an appreciable affect on property sales. Some Lebanese did move to Cyprus during the Lebanese civil war, but I doubt if we’ll see many people moving here from the Arab states, which are mainly Islamic. We may get some from Egypt if things do not settle down.

    As for trade – much of the trade heading in and out of the Middle East goes through Beirut (which is well worth a visit).

  4. Good comments.

    One question on one situation that could maybe have an effect on rising prices..

    The instability of the Middle East and the plethora of ‘new regimes’ there..

    A further threat?

    An opportunity?

    Investment / trade / migration / oil&gas ?

    Thoughts?

  5. @ Mr Nigel Howarth,(re;@ Robert) your comment “Common law sets out that developers are liable for the structural stability indefinitley.” If this is so, what is the situation with the likes of the “Paradise Hills” scandal?

  6. Andrew, point taken re: the differences in reasons for the Cyprus and Florida situations, even though, unfortunately, the outcome will be the same. I completely concur that the injustice is many, many times worse.

    Paul, as much as I would love to agree with you on your last paragraph, I’m afraid it’s just not going to happen.

    I mean, how? We have no tools to fight them apart from their own system which will bleed us of money until it eventually ends up in the High Court of the European Union who are probably even more corrupt than the Cyprus system itself! The ONLY countries who ever obey EU directives anyway are the ones whose systems work and don’t need to in the first place! Please see: http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9477.1998.tb00014.x/abstract

    Plus, the EU has bigger fish to fry (like, their very survival!)

    Our only hope of getting justice is by precipitating the total collapse of the system here by withdrawing all of our money from it in whatever way we can. Unfortunately, this would require us to come to the extremely painful and understandably morally reprehensible position of accepting that our property here is lost, then beating a Dunkirk-style retreat (in order to fight this system another day and in another way). However, even people like Lance Hames from Paradise Hills, who has been truly sh#fted by Cyprus is still putting money into it (in the form of the amnesty application, a high-powered international lawyer and attempting to get a completion certificate in the forlorn hope that he may somehow get title deeds, which we all know he can’t until the developer’s debts are repaid to BoC). If even he is throwing good money after bad, I am totally convinced that many others will do the same…

    Having laid out the strategy above though (precipitating Cyprus’ financial collapse), will it work (as in, will we get justice)?

    My view was that eventually, when they need the Brit tourist and home-buyer again after their economic collapse, they would be willing to come to some sort of compromise. Events over the last year have changed my view though…

    Cyprus is so desperate to maintain the status quo that it is pinning all its hopes for financial salvation on the gas and oil explorations. So much so that it feels confident enough to borrow huge sums from Russia (Russia has its own reasons to lend, but we won’t go into that here), that it can never hope to pay off without a major find in the self-declared EEZ. Irrespective of the “reassurances” of the Finance Minister, this offshore exploration is the collateral for the loan.

    As described to me recently (by my 10 year old son – obviously adopted!) “People think the history of Cyprus is about conflict between Greek and Turk. It’s actually about conflict between Russia and America”. Wow, they grow up so fast! We know what happened the last time Cyprus flirted with the then Soviet Union, endangering the future of the major American asset (the Sovereign Base Areas) in the region…

    The Turks, on the other side, have been gradually increasing their influence in the area. With troops on the Syrian border for the last month now (“to aid the Syrian people” is the official line. Yeah, right), a some-say-convenient recent “terrorist outrage” in the States caused by nuclear-arming Iran (next on the regime-change list. I wonder whose troops will be used to invade, if it comes to that?) and Turkish gunboats patrolling Cyprus waters in order to “protect their drilling interests”, as well as two Russian nuclear submarines in the area and an on-its-way Russian aircraft carrier, to “protect THEIR interests”, it all looks like it’s heading in one particular direction.

    So, in brief, my view is that Cyprus is again gambling with its very existence in order to retain its cushy cartels and preserve privileges for its property developer/government minister/solicitor class. We simply do not count.

  7. I agree with all posters here. For what it’s worth, my next book Corporate Risk & Governance includes a case study of the Cyprus property Title Deeds etc scandal. The book’s target readership globally includes CEOs, directors and corporate execs in most sectors including finance, property, tourism i.e. people influential in steering investment decisions.

    The book won’t bring any quick results but should at least propel the problem we have here into foreign boardrooms and provoke tight due diligence on any proposed workings with Cyprus and Cypriot companies.

  8. I cannot understand how you can have a honest survey which assumes the property market will recover. Surely you are missing the obvious reply which is “The cyprus real estate market will never fully recover” – I would then be interested to know the results of your survey, which appear to me to be obvious.

  9. The problem is the deep rooted and endemic corruption that runs through the entire property market. When the Attorney General will not carry out a proper investigation into the conduct of Cypriot lawyers and just accepts their mealy mouthed answers the what chance does any Brit have. When bank staff are involved in the scandal of fraudulent P60’s and forged signatures what chance does any Brit have. When banks and developers work hand in hand to commit potential buyers to sales contracts before the bank even considers a loan application, what chance do Brits have. When banks work hand in hand with Cypriot lawyers to prevent potential buyers from seeing vital documents, what chance does any Brit have.

    BE WARNED BANKS, DEVELOPERS, LAWYERS AND CROOKED UK AGENTS, WE BRITS ARE COMING AFTER YOU AND WON’T LET YOU REST IN PEACE WITH YOUR ILL GOTTEN GAINS. WE WON’T REST UNTIL YOU HAVE ALL HAD YOUR LIVES AND CAREERS RUINED JUST LIKE YOU HAVE TRIED TO RUIN OURS. THE TIDE OF EVIDENCE IS GOING TO OVERWHELM YOU !

  10. @odd- job- bob . A good synopsis indeed.

    However the difference being that most of the foreclosures in Florida are due to homeowners falling behind with their mortgage repayments. In Cyprus most of the homeowners are at risk because of developer mortgages which were not disclosed by negligent lawyers.

    Maybe the outcome will be the same but the injustice in Cyprus (should this happen) is one thousand times worse.

  11. Society as a whole is going in the direction, yes there are the few honest persons but seems the rest are out for the quick buck, no matter how they get it….what needs to change to make things better can’t change overnight alas, peoples mentality and the sense of right and wrong needs to be drilled into people somehow.

  12. The Cyprus Property Market will recover only after the TSUNAMI of developers’ mortgages has destroyed ALL property values.

    All the comments below ring true (including the catastrophic effect on the banks of exposure to Greece, the failure of the Euro and Cyprus’ suicidal flirtations with Russia, which the Americans and their soon-to-be new front-line troops the Turkish Army are eyeing with increased discomfort), but many people don’t realise quite what a developer’s mortgage on their property means. It really is very bad news…

    On the basis that we have no deeds, our properties belong to the developer. His mortgage loans (let’s forget for now his taxes and fines and costs to finish the sites etc) on property that he’s sold (i.e. to us) have now attracted penal interest rates and are vast. These get added to the loans that he has taken out on unsold property, either finished or not. The bank has a free and floating charge on his assets, which means ALL his debts are underpinned by ALL his assets (usually within a limited company so his personal assets are untouched. As well as the assets of his wife, his kids, his parents, who will have now suddenly acquired lots of money from somewhere).

    Now, after the developer’s company declares bankruptcy, the only collateral the bank has in the developer’s company’s name that’s worth anything is what WE have bought (but don’t own). His ENTIRE bank debt will thus be split up between us so we will be asked to fork out huge amounts to the banks to stave off repossession. They have no option other than to repossess, unless someone (the Cyprus government? No chance, they haven’t got the money) gives them a huge chunk of change to stop them going bankrupt (which they probably will anyway).

    Now, some of us will pay them to keep our home-in-the-sun dream alive, but I suspect the majority will just hand in the keys. The banks will thus have a whole load of repossessed property on their hands which MUST go back into the market, at whatever price they can get for it, otherwise, it’ll just crumble into the dirt. I suspect that some of the property developers who built them in the first place will get first pickings, but I may just be being cynical.

    Who, in the main, will buy these properties? Property speculators, mostly in the form of Distressed Property Funds, that’s who, and at rock-bottom prices. Don’t believe me? Just google Florida Foreclosures. We’re talking as low as $12,000 per two bed, two bathroom places. These figures may not apply to Cyprus, but the blueprint for how this goes is there in front of us.

    At this point, prices will begin to rise again. Maybe, by then, even the corruption, the mafia-style cartels, the shoddy workmanship and dishonest lawyers and developers and bankers and surveyors etc may have changed as well and Cyprus’ reputation will be on the up.

    However, before the developers’ loans are washed away by the tsunami, no-one in their right mind will be buying here.

  13. It’s easy to say what needs to be done to see a recovery in the property market. The problem comes when you realise just how much would need to be done to make that happen.

    Also, current ‘methods’ of working, and attitudes of the bad side of influential Cypriots, are so entrenched that it’s not going to happen in this generation.

    Sorry to be so gloomy, but can anyone else (especially Cypriots reading this website) see any reason for optimism, even in the medium term?

    @Nigel: it’s a good idea to have such a survey, but practically impossible to name one thing which will deliver any any major change on its own.

  14. The reason is simple CORRUPTION! And we the British public have found out about it all. We are all standing up to them now, and all the bad publicity and lower sales is what the lying Cypriots deserve (obviously not all Cypriots lie). Those people who have caused us so much harm can rot in Hell.

  15. Collusion between banks , developers, lawyers and land registry. All coming together to deny rightful ownership and full title to the hapless buyer. Throw in a generous helping of hyperbole from real estate agents and you have the perfect recipe for a failed property market.

  16. There is a missing link for people when “things” go wrong and this should be filled with an “Ombudsman” independent of the government also all documentation/paperwork/forms etc. should be in English as well as Greek.

  17. The poor build quality of many new properties will become more of an issue in the coming years.

    The 14 month old house we rented in 2008 had severe problems regarding drains both internal and external.

    The houses on either side of us both had problems, one was starting to tilt according to the survey engineer, the incomplete house on the other side looks like it will have to be demolished due to serious faults already showing.

    If you employ Syrian and Sri Lankan builders you will get a house built to their standards.

    The house we rented in 1966 is still standing so is the dowry house they built for their daughter, I wouldn’t be so confident about today’s houses.

    John

  18. I have just sold my apartment at Paralimni which I have had for the last six years. The main reason why I have sold it, is the continuous thieving the the eastern block people that are being let into Cyprus are doing and the Police doing nothing about it, obviously it is easier to catch a motorist for speeding, as there is always plenty of speed traps between Ayia Napa and Paralimni.

    Cyprus has certainly gone down hill quite a lot in the last couple of years between that and prices going sky high. Going out for a meal in Cyprus now is exactly the same as the UK, price wise .

  19. There is little doubt in my mind for the disastrous decline in property sales (in both north & south Cyprus) is as a result of:

    the lack of legal protection for buyers;
    the delays and avoidance schemes for issuing title deed;
    the ease with which builders/developers can skirt around the few legal safeguards and avoid their contractual obligations;
    the fraud that has been committed and the perpetrators allowed to escape justice;
    the double selling;
    builders/developers loans taken out on already sold property;
    the corruption and incompetence of the legal profession;
    the lack of building regulation to ensure safe and good quality builds;
    and the lack of local & central government action to resolve these issues.

    The world recession has brought this into sharp focus together with the spreading of the word about the dangers of buying property in Cyprus. The question is ‘Do the politicians have the motivation to resolve the problems or does corruption run too deep?’

  20. @Fred – one of the problems is that only a handful of the developers actually build houses themselves – construction work is put out to tender – and contractors cut corners to maximise their profit.

    I have brick drains but they have been ‘plastered’ and then coated with a waterproof bitumen ‘paint’.

  21. We are presently looking for a house and the biggest problem I can see, apart from the legal side is simply that most properties are grossly overpriced and the prices seem to bear no relation to each other, prices for similar houses in similar area can vary by €100 to €150K sometimes more, the one’s with a sensible price seem to sell.

    I have looked at several and must admit I have had many different reasons why the title deeds have not been issued that I don’t bother asking anymore, I will let the lawyer (one from the British consulate list work that one out for me).

    Many houses seem to have been built with the holiday market in mind, yes great for a 2 week vacation but not really suitable for permanent living and built so closely to each other you are nearly living with neighbour, some building standards are not that great.

    Before Cyprus was selling on the investment angle and how much your house would go up in value but think that is now finished, people are now buying as a lifestyle option and they want something to the same standards as they have back at home.

    I was in Argentina in 2001 just before the crash, when the peso was pegged 1 to 1 with the dollar, and felt something was not right with the prices then and I get the same feeling here at the moment.

  22. Poor build quality is one reason why properties for the foreign market do not justify the prices asked for.

    An example drains are built with ‘holey’ bricks that leak and the need for inspection lids to be greased to stop smell, and internal traps that DO not satisfy European sanitary standards (18 mm traps instead of 50 or 75 mm in Britain)

  23. Based on my own experiences the Cyprus property market may recover when…

    – the developer builds a property as per the contract signed as opposed to taking the money and leaving you with a concrete shell.

    – the “independent” solicitors acting in your interest actually do act in your interest.

    – the bank providing the finance adhere to the Association of Cyprus Banks code of conduct relating to pre-contractual information to be given to customers prior to signing up to loans.

    – overseas property agents selling Cypriot properties take their duty of care to their clients seriously and do the appropriate due diligence on the products they are recommending and gaining significant commissions on.

    – Obviously Title deeds are issued at point of sale as in most civilised countries.

    – when hell freezes over.

  24. Perhaps the market will eventually recover when:

    Title Deeds issued at point of sale,end of story!

    IPT replaced by a form of Stamp Duty based on original sales contract price at a modest %, not at a rip off rate!

    Structural Warranties based on 10 years, & no quibble guarantees,

    Building quality/workmanship & insulation factors to be improved. Full and complete infrastructure to be installed before properties are placed on the market,

    Buyers Solicitors to show total Duty of Care to their Clients, enforced by local & EU Laws, & not to be in collusion with the developer/seller!

  25. The Cyprus property market will recover when it stops getting such a bad press.

    The ball I think is in their court.

    Only they can reform their Lawyers, Banks, Developers Etc, Etc.

    But they wont; lets put our heads in the sand and everything will be OK.

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