DEMAND for properties in Cyprus by third country nationals has slumped, but it is not clear whether this resulted from the introduction of stricter controls of applicants for investment in exchange for passports, local media reported Thursday.
Yiannis Misirlis, deputy chairman of the Cyprus Land and Building Developers Association (LBDA), told financial news outlet Stockwatch that he expected a clear indication as to the reasons for the slump by the end of the year.
(correction) He said that nowadays, we need an annual demand for 600-700 units at the so-called ‘super-prime’ market (high rises, above €1 million etc). And since all these high rise projects take at least 5 years from conception to delivery, the market should be able to absorb most of the units that are on the market today (if not all of them).
This kind of supply does not exist today. So there is quite a good demand for luxury apartments.
Following criticism by the European Union and bad international publicity, the Cypriot government announced the introduction of stricter criteria as of this month.
Applicants for investment must be vetted by one of three international firms chosen by Cyprus which will check the source of the income of applicants.
In addition to an investment of 2 million euros (2.23 million U.S. dollars), applicants must also make two additional contributions of 75,000 euros each to the Institute of Research and Innovation and to the state controlled Land Development Organization.
President of Land Development Organization, Marios Pelekanos, said that it collected contributions from just three applicants under the new rules. The money will be spent to provide accessible housing to low income people.
Pelekanos said that he expected at least 300 applications to be submitted within a year, by July, 2020.
The President of the Cyprus Association of Property Owners (KSIA), Giorgos Mouskides, said he was concerned that foreign investors will turn to other countries with a less demanding program for passports.
“There has been an increased interest in the investment for passport program up to May, in anticipation of the stricter rules and the additional contributions required. But the introduction of the rules and the demand for additional contributions amounting to 150,000 euros resulted in a reduced interest for investment,” Mouskides said.
“Certainly there were very few more applications in June and July and this will be made evident when accumulated data will be announced at the end of the year,” he added.
In about six years since the investment for passport program started, an estimated 1,350 applications have been processed, which correspond to just 0.3 percent of passports issued to third country investors by all EU countries.
However, the 4 billion euros invested in the properties section was enough to help the small economy of Cyprus recover from its 2013 meltdown, thanks to the revival of the construction sector.
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