I re­cently had the op­por­tu­nity to dis­cuss the cur­rent state of the real es­tate mar­ket with the IMF con­sult­ing group which is re­view­ing progress in the Cyprus econ­omy and its re­cov­ery.

Financial Mirror (Cyprus) - - FRONT PAGE -

I have laid down my own sum­marised as fol­lows:

The visa/pass­ports scheme is a case to con­sider and to bear in mind that notwith­stand­ing that other coun­tries have sim­i­lar schemes, we seem to overdo it in the pro­mo­tion. It is on the one hand, not as se­ri­ous as it sounds, since only 0.3% they used this sys­tem in Cyprus, as op­posed to the to­tal of 99.7% of the to­tal EU coun­tries. But then, Cyprus is small and the only coun­try that has adopted the bail-in with our EU part­ners aban­don­ing us. Why not to tar­get Cyprus again for this scheme as an ex­am­ple for oth­ers?

The valu­a­tion prices (Li­mas­sol as a bench­mark) of EUR 15,000/sq.m. for beach units and 10,000/sq.m. for near the beach is ex­ces­sive by cur­rent stan­dards, but it does not com­pare with other cities such as Lon­don, Paris, French/Ital­ian Riviera, Monaco, etc. whereas it is higher than that of our top com­peti­tors in Spain/Por­tu­gal.

Sales of high-end prop­er­ties are fast and de­vel­op­ers can­not build fast enough, but there are many other de­vel­op­ers wait­ing to climb on the golden band wagon and per­haps at some time Cyprus should re-ex­am­ine the re­lax­ations given.

The lim­i­ta­tion of three years’ re­ten­tion of own­er­ship is not sat­is­fac­tory since the ex­ist­ing buy­ers will most likely sell their prop­er­ties within a short pe­riod of time there­after. Who will ab­sorb the EUR 2 mln/prop­er­ties? Not the lo­cals, with the ex­am­ples of the Pieris Es­tate sit­u­a­tion as a given.

The time bomb of the “sick” sys­tem of the com­mon

thoughts on


sub­ject, ex­penses is an is­sue which has been ig­nored by the last three gov­ern­ments en­tail­ing huge prob­lems es­pe­cially for the high­end new­com­ers who pay in­creas­ing at­ten­tion to the good main­te­nance of build­ings. Now that oc­cu­piers are not will­ing to pay EUR 100 p.m., how will they pay the 1,000 p.m. com­mon ex­penses for those high end prop­er­ties?

The red tape re­gard­ing the ti­tle is­sue is still with us. What is needed is a brand new pro­ce­dure and not patch­ing up of the ex­ist­ing sys­tem. I have told the IMF of­fi­cials that “Cyprus is like an old car which is not work­ing, yet we have given it a new paint job leav­ing the car with the same en­gine”.

Banks should take spe­cial care on the fund­ing of these projects that tar­get the new high end prop­er­ties.

I have ex­plained to the IMF that Li­mas­sol is “an­other coun­try” and must not be com­pared with the real es­tate sit­u­a­tion in Cyprus in gen­eral.

I also pointed out the con job in the cre­ation re­gard­ing the value of EUR 300,000 (for visas) or 500,000 (pass­ports) since we have now the phe­nom­e­non of hav­ing a sales of a unit say for EUR 400,000, but the ap­pli­cant claim­ing that its value is 500,000. This will block the sys­tem and the word “value” should change to “cost”.

The side ef­fects on the Greek side in the event of a po­lit­i­cal so­lu­tion, the re­turn of Varoshia to its Greek Cypriot own­ers, etc. were also dis­cussed (in­clud­ing the re­turn un­der the Turk­ish Cypriot ad­min­is­tra­tion).

I have dis­cussed in ad­di­tion to the tax at­trac­tion that Cyprus of­fers, also its very low crime rate and the at­trac­tion for fam­i­lies.

Cyprus does not at­tract only Chi­nese and Rus­sians, but oth­ers as well from all over the world. The sta­tis­tics that the Lands Of­fice pro­duces is ba­sic, whereas there is a wealth of avail­able in­for­ma­tion on which the Cyprus and busi­ness peo­ple can rely (de­tails re­gard­ing na­tion­al­i­ties of buy­ers, type of prop­erty and value bought, lo­ca­tion by type, etc). The data is there but it is an un­ex­plored wealth.

The le­gal sys­tem in a sum­mary was dis­cussed in­clud­ing the ser­vice of a law suit, de­lays in hear­ings and non-ef­fec­tive de­ci­sions.

The cost of liv­ing was also dis­cussed to a small ex­tent and I re­ported that food cost is go­ing down, as is the re­sale ac­com­mo­da­tion, cars, elec­tric­ity, etc (be it that ex­pen­sive cars are on the up em­a­nat­ing from the for­eign buy­ers pri­mar­ily, as well as the doc­tors who do not is­sue re­ceipts, as well as au­di­tors and some lawyers who deal with for­eign­ers).

For these and other mat­ters we had an ex­change of views, but I do not know what the IMF im­pres­sion of all these is.

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