Over the last couple of months we have noted a slow revival of the property market, which has its base demand the locals. Residential units set in residential town areas have shown an increased demand, which is mainly directed towards apartments and to a lesser extent for houses. Apartments (2 bed) in the region of €140.000 are the most beneficiaries of such a small revival and for houses in the region of up to €600.000. Beach properties of up to €1 mil. (houses 3-4 bedrooms) are also picking up (demand again mainly from the local source) whereas the more expensive luxurious beach units whose market had the Russians, is still very slow. Ordinary touristic units have shown a reduction in prices ranging from 20%-30% (the less competitive the project/location, the higher the discount). On the whole we will say a reduction of 10%-15% in the residential areas and 20%-25% in the touristic areas in the norm.

This is a paradoxical country which it seems that it goes the other way from other European countries. The reduction of prices is one of the causes of this lilliputian revival, as is the reduction in the interest rates for housing loans and the gaining of some confidence in the market from the initial shock. The increased confidence that in particular local people are showing for the economy is noticeable, notwithstanding the fact that the signs are negative for the Cypriot economy (increasing unemployment that has reached 5% from its 3%, the increasing deficit from +3% to -3% etc etc). For the locals, including the middle/upper middle income groups, their economic situation has not been affected to any noticeable degree, whereas the “do what the neighbours do” (regardless) attitude and the dowry system (expressed in all sorts of ways) as well as the family support to the young couples, have their own positive role. The local Banks in Cyprus are not as aggressive as abroad (see Spain where within 3 weeks once property is repossessed) and in most occasions the Banks are ready to negotiate a rescheduling of loans. For those who are in difficulty (especially the British buyers who also suffer from the difference in sterling V euro, the situation is worse (both in terms of repayment of loan and cost of living increases due to the exchange difference). For those who are in difficulties we say, do not become desperate of the situation. Local banks have serious difficulties to repossess, both, due to the archaic system that we have (thank God for this), legal complications where there is no title (a benefit for those without title) and to the attitude of local Banks (they do not want to gain the “name” of kicking out from peoples’ home and then lose future clients). So do not be afraid particularly when you get a warning letter from the Bank, since knowing their (the Banks’) approach is to renegotiate the loan repayment, both in terms of interest, the instalment and timing of the repayment.

If the global “good” signs of the economies continue and if you can stick it out, your loss will be less on the whole rather than having the risk to sell at a loss of 20%-30% (+). There was an interesting report in the Sunday Times, that foreign buyers in Dubai are abandoning their homes and cars at the Dubai airport (at present there are 1200 unwanted cars), since in that country a delay in loan repayments, can end the unfortunate debtor to prison. So and this is what we report regularly in this column, we (as Cyprus) have many bad points, but there are other countries which are worse, at difficult times.

Having said that, the main problem remains the non issue of titles, which, based on the information available to us, it has become widely known in Europe, causing difficulties in sale even for the best developments with no problems. This difficulty is met particularly in Paphos (excuse the expression “Little UK”) where everybody speaks to everybody (why not) and each one exaggerates a bit the situation, ending with all sorts of correct/incorrect information. In this District, the building permit, the certificate of final approval and even the deposit of all documents at the Lands Office, for the title deed issue makes no major difference since people want titles. Thus in this District in particular, units with titles have now an enhanced level of value. For those who have difficulty with the titles and wish to sell, offer the buyer a Bank Guarantee for the issue of title with a certain date. The cost of a Bank Guarantee varies from .25% to 1.8% on the loan amount (on the amount of the guarantee) yearly. In such a case however the Banks will require the guarantee amount to be deposited in a blocked account, so you might sell a property and get actually nothing in cash, but at least you pass the repayment problem to someone else. Make sure however that the Bank Guarantee must stipulate that in the event of your buyer demanding the amount of the Bank Guarantee, he must return the unit back to you with vacant possession and in the condition he bought it (less wear and tear). At least in this view you will pay the guaranteed amount, but you will have your unit back, hopefully at the higher value at the time. The cost of the guarantee is high, but at least you will get some interest back from the blocked account deposit.

The new legislation proposed with 4-5 white papers submitted by the Government, is not an immediate solution as such for the title issue, but it will speed up the issue of the titles and provide also a cover for those who had done all sorts of alterations in their homes contrary to the building permit.

We are trying in this article not to offer false hopes for those who are in difficulty, but to stress upon them not to despair since the situation here is not as bad as e.g. in Spain, where local authorities offer “hot soups” etc to the desperate British and other foreign residents who are in distress, to try and stick it out to the extent they can. However the psychological state, we appreciate, it can become unbearable.

In this “game” (!!) of desperate sellers, we note that we do have all our share of “Al Caponian Attitudes” with various developers asking 17% commission for cancellation agreements and all sorts of other monetary compensations. For these newcomers in Cyprus we do suggest to follow our “10 Building Commandments” when buying, since a good sales contract will cover you for all sorts of eventualities.

Difficult times are difficult for everybody. We do admit that we have a particular “soft spot” for the British buyers who address to us all sorts of letters and for which we sympathize not in theory but in practice.

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