Sales data: an untapped wealth
Since 2000, the Land Registry publishes monthly property sales by district, separating sales into local and foreign (based on title deeds). This information is very useful and is a market instrument, showing trends and fluctuations in demand.
But it is time this data is extended through further analysis and which will provide a very good indication of the real estate market development, especially now with the interest by foreigners, foreclosures, forced sales, etc.
Therefore, it would be good for the transactions submitted to the Land Registry to include the following:
• The number of foreigners to be broken down by nationality. This will help both developers and the state to see where demand is coming from, and thus to be able to target the source of that demand.
• The reference to the purpose of the sale will be an additional component, whether these are for the residency and passports schemes, as holiday homes, for investments, etc. A short questionnaire with 5-6 questions during the transaction will greatly help.
• The value of the sale is also critical. Sales to foreign buyers may be in the range of 30% of all deals, but in value terms this may be 70% of the total (including sales of hotels, malls, etc. which are classified as a single unit equivalent to an apartment worth EUR 100,000).
• The statistical report should also refer to the type of the property, eg. residential, commercial, office, agricultural plot or field, house, hotel, shop, etc.
• In the preparation of such questionnaires, the Statistical Office should also help, while the total amount and the quality of the real estate sales will be an indicator for the state in terms of capital inflow from abroad, and the behavioural trends of the locals.
• There remains, of course, the problem of sales by some companies that may be based in Cyprus, but shareholders are foreigners.
• Finally, the sales by type and value will give very useful market information guiding both developers and banks, as well as the state to focus better on attracting investors depending on the type of properties that are in demand.
What I am proposing is nothing new, but should be similar to the information that the Cyprus Tourism Organisation collects in its monthly Passenger Review, regarding statistics for all arrivals and departures, not just tourists.
As for the cost of such efforts I don’t think that it should be more than EUR 50,000 a year (since the data exists, but merely needs to be classified), but the benefits to the economy will be enormous. An economy that depends to a large extent on the construction industry worth about EUR 2.7 billion so far based on foreign buyers in the last three years and with a growing trend. The industry needs to be supported by such tools in order to ensure its proper operation, while apart from market guidance, it could also help the Government design its future policy on land development and tax revenue.
It would also be very useful to analyse the data from the foreclosures. If there is interest, it is important to determine the prices of these sales, even based on values determined on 1.1.2013, the type of property for which there is the demand and the intensity of demand. Perhaps lenders should hire a common firm that will analyse the foreclosures, as it will become a very useful tool, both for the further development of foreclosures, and for any new loans. If all lenders or financiers contribute even the annual amount of EUR 3050,000 (around 7,000 each), this new tool will inform of all developments, the rate and type of disposal, value, etc.
Perhaps an initiative of the Interior or Finance Ministries and the Association of Banks would be a start.