First line and third line beach properties

If we are to look at Limassol front line properties (on beach) they have a sales price of around EUR 18,000/sq.m., whereas the north of the seaside road EUR 10,000/sq.m. max., so a difference of about 50% be it that some buyers do not want to know of second/third line properties, notwithstanding the difference on the sales value (we refer to residential units).

In a recent case coming up in the District Court, the owner of a beach plot is claiming compensation from the government (the plot is abutting onto governmental land) and from there on to the beach. With a subsequent division by the government, the state land has produced a beach plot with access in front, causing the ex-beach plot to become a second/third line property. The claim is for 40% reduction in value.

A most difficult situation to establish, interesting to know the Court’s opinion.

The on and off on the beach plots have a difference whose level depends on the quality of the beach. The better the beach quality the larger the difference beach and non-beach properties have which might rise to more than 50% (whereas for offices, etc. the value based on the beach quality is not as much, more the views that counts).

People from far eastern countries such as China, even Vietnam and others are enquiring about Cyprus for passports, etc. The main reason of this new and lucrative market is the state of the political situation in their countries and the ever tax changing system, the political affects at the time, whereas security and climate conditions is another major reason.

The never ending smog that Chinese urban centres are experiencing is another good reason, whereas on a recent visit to Cyprus, a Chinese visa agent, asked us to provide him with smog masks! He could not believe the quality of the weather (it was one of those days that we did not have the desert dust mind you!).

The problem (curse we call it) of non-common expenses payment has recently come up from a Lebanese investor who enquired how we deal with this. We gave him our opinion and the expected problems that we are facing under an unworkable law. He came up with the Lebanese law, which stipulates the non payment of common expenses does not allow the “apartment” to be sold, mortgaged, or let (unless fully paid). If not, the committee has the right to secure a court order to sell the apartment with the first claim being that of the common expenses debt. He quoted a recent example where an apartment was sold by the committee for EUR 1.2 mln in order for the committee to get the EUR 8,000 common expenses due! We passed on this and our own ideas

but

it

will

be to the last three Ministers of Interior, but with no result, notwithstanding that they all agreed that the situation in Cyprus is not healthy, causing the deterioration of buildings, causing problems amongst residents, etc. There is some sort of reaction by the left wing political parties, claiming that “we cannot do this now that people are out of work and reduction of incomes”. So we asked them who will pay the common expenses? No reply.

Based on the C.T.O. report 16% of the incoming tourists (approximately 480,000 visitors) use the villa-to-let (or their own) as opposed to hotels. Lets are concluded through the internet, villas do not pay income tax payments since the income is undeclared (loss of taxes of around 25 mln), but it seems that these visitors are big spenders (per person) in the local economy (eating out, car hire, supermarkets, etc) as opposed to the all inclusive holidays (where the income goes mainly to the tour operators and the hoteliers).

The possibility of having the visa/passport measure restricted has caused an upsurge of demand from those nationalities that have shown interest for Cyprus. Larnaca in particular is showing a sharp increase in demand (which has the lower prices of real estate) and having visited a developer’s office, we could not believe the number of prospective Chinese buyers going through (like a supermarket).

The required commission fees of 15%-25% to visa and estate agents has prompted various developers to set up their own office in the foreign countries. The upcoming political situation in the Gulf countries, Saudi Arabia, etc, is a case of an increasing interest from them.

I was informed that the high percentage of commission is not without cause. Clients are brought over on business class (2-3 persons) air fair, hotel stay in 4-5 star units, hosted for seven days, constant entertainment and including provision of accountant/advocate for the visa passports fees and procedures. “The buyers just have to sign,” a developer told me.