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Weakening property sales

Cyprus property sales have fallen significantly following the introduction of stricter criteria for acquiring passports in May highlighting the real market’s dependence on the ‘citizenship by investment’ scheme.

Weakening property sales in Cyprus PROPERTY sales in Cyprus have fallen by 6.6% since June following the introduction of stricter criteria for the Citizenship by Investment scheme, which critics claimed undermined the fight against corruption in Europe and increased the risk of money laundering.

Earlier this year property sales surged as foreign investors rushed to buy property in Cyprus before the government introduced stricter criteria. But now, following the reduction in sales, economists are sounding alarm bells over the real estate industry’s reliance of foreign investors seeking Cypriot passports.

According to reports, tens of passports have been issued since May compared to the hundreds issued earlier. (Cyprus has issued around 2,000 passports to foreign investors since the scheme was launched in 2013.)

Economist Marios Clerides told Stockwatch that the decline since May could be attributed to the tougher criteria as many foreigners wanting passports could no longer comply with the conditions necessary.

“The evidence shows that the real estate sector would be in trouble if not for the crutches provided by the passport scheme,” said Clerides.

He added “The industry is not viable without the investment scheme, and we have to be cautious as the EU and other institutions are keeping a close eye on the scheme.”

He also argued that the economy has to find real sources of revenue and growth rather than relying on “artificial and transient” sources of revenue.

The impetus given by foreign investors in construction and related services has kept the growth of the Cypriot economy at relatively a high level.

Figures from the Cyprus Statistical Service show that around half of this year’s growth in the economy during the first six months of the year came from the construction, professional, scientific and technical services sectors.

Readers' comments

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  • Richard says:

    @Ed – thanks for the breakdown of shareholders @ Hellenic Bank. The information I was given about the church wholly owning the bank (last week) was clearly bogus. Where can I find the stats for property ownership? I wasn’t sure the land registry published the owner information – though that was a while ago.

    @Matthew Humphries. What contrast did you observe and where? The paradigm that you outline does cut two ways. I remember a case some years ago where a British couple refurbished a home in Cyprus, only to have a local Cypriot family then come ‘claim’ they owned the land (or something) and sued them to re-obtain it. That struck me as both indolent and corrupt. Overseas investors have purchased property extensively in the UK (including Cypriots) often leaving those properties empty for years and then qualifying for VAT @ 5% to develop them. Cyprus operates a free market economy system (as does the UK).

    Ed: The British couple you refer to featured in a Channel 4 documentary – Title Deed Cyprus Title Deed Nightmare Reported on Channel 4. Unfortunately their marriage collapsed and I believe that both have returned to the UK.

    The other chap in the video paid out mega bucks and eventually got his deeds, sold up and let the island earlier this year. Twelve YEARS later.

  • Matthew Humphries says:

    I’ve just returned from Cyprus and was shocked by the contrast between the houses of expats in the tourist areas and those of many local Cypriots. I believe that there may be a real danger of a backlash from marginalised Cypriots if something is not done to improve their living conditions.

  • Richard says:

    Just returned from a trip out there and was surprised at the level and intensity of construction still going on. Not only on the coast resorts where one may expect it (even though its still not good) – but also well inland – right up into mountain villages. You get these small unspoiled little communities and then a ‘ring of bling’ around them that stands out like a sore thumb. It may be Cypriots making good, but the economic indicators only suggest aggregate modest growth for the last few years (and they have borrowed substantial money from the E.U and the I.M.F)?

    The Cyprus church has a BIG ownership stake in banks out there (I think it actually wholly owns ‘Hellenic Bank’)? Presumably they have a plan for the island’s future? Russians are now focusing more on Turkey. Chinese cannot buy an E.U passport as easily. More Brits are now either accepting re-possession deals or leaving and selling up as fast as they can.

    Cyprus economy isn’t doing too badly though? GDP growth was 3.2% to mid 2019, and unemployment under 7%?

    Are buyers mainly island residents?

    Ed: You can see from the statistics who’s buying property. As for the owners of the Hellenic Bank, here’s a pie chart of shareholders.

    Pie chart Hellenic Bank shareholders

  • Deanna says:

    Marios Clerides is quite right; the island of Cyprus is collapsing under the weight of concrete; open/natural spaces are disappearing under buildings.

    Cyprus Government wake up! Can’t you see that soon no-one will want to come here – because it will be like going to London-by-the-Thames.

    It’s disgraceful how your greed has destroyed this paradise island.

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