Press Centre > Articles
Chinese Buyers & Others
5 March 2017
It is a fact that part of the foreign buyers of real estate in Cyprus comes from China. China is such a huge country that one cannot pin point the particular locality that demand comes from. The Chinese are mainly interested for the visa acquisition (not so much for the passport measure) at the lower end budget. They are after the minimum €300.000 residential units and by tradition they direct their interest towards Pafos and to a far lesser extent to other areas. Having said this, there are Chinese Cos who showed interest in large scale investments and developments. At Larnaca two hotels are under development by a joint venture with Chinese, whereas another 5 star hotel is also under way in Sotira village with Chinese involvement. These developments by themselves are encouraging for the building industry, but long term though, hopefully, the introduction of the Chinese market will project Cyprus to China to attract tourists.
What we came to know is that “clean air” is one of the major reasons for the Chinese to look for property market investments (save the days we have dust and regrettably they are increasing) the security and locals hospitality play an important role to this market source. Regrettably there are no clear indications on the number of units bought by Chinese over the recent years (estimated to be around 500 units with a value of €1½ bil.) but we expect that market demand is anticipated to increase as the small Chinese community (see Pafos) becomes more involved in local activity becoming themselves promoters for our real estate and tourism. To this end the much awaited direct flights between Cyprus and China by Cobalt Airways (and others which we expect to follow based on results) will help. Why on earth the Chinese with such a diversity in their own country wish to visit and even reside in Cyprus it is difficult to pinpoint. A Chinese client of ours informed us that “we feel at home, people welcome us as part of the family, the limited crime and no racism, as well as the established community at Pafos, are some of the attractions”.
What one must be careful with is the Chinese visa agencies which have been developed as estate agents, supported regrettably by various local advocates riding on the golden bang wagon of high commissions. The average commission required by this market source agents is 20% on the sales price, a large amount, but it seems that so far they are getting away with it. Such high commissions are not illegal, but then is it honest? So an apartment which is for sale for €250.000, the price is inflated, say, to €300.000 and sold as such. The visa/Chinese agents provide a commission/advertising/ introduction bill to the seller for the €50.000. so in this case the seller is not liable to pay tax on this extra €50.000 (if accepted by the Income Tax people) but the Chinese buyer in addition to the extra €50.000 he has to pay added transfer fees on the €50.000 difference. We had recently an enquiry from a Chinese investor (through a local advocate) for the amount of €4½ mil. with the required 20% addition. As in other occasion we refuse outright to cooperate for such a scam. On another occasion a Chinese bought one apartment in Larnaca for €300.000 with ordinary 5% commission included and another next door neighbor bought similar apartment for €230.000. They got together and the scam was realized and we hear that the case will lead to Court.
We have written to the Chinese ambassador 3 years ago and we have published 3 times of this situation in this column, but it seems that not only no one wants to listen, but we “collect” a lot of enemies on the way.
It reminds us of the early years of the British market demand with such scams (be it at a much lower scale) and which for various reasons lead to the creation of the Property Action Group with all sorts of bad publicity. We hope that this experience will not be repeated in the future, but it is doubtful and we consider it inevitable. Increasing greed is a sickness in all countries and individuals but it seems Cyprus is a champion with all sorts of back handed procedures, leaving with no chance to the buyer. We would have expected that the advocates which are supposed to advise the Chinese buyers accordingly and carry out a due diligence, would have advised the buyer, but, alas. No wonder in a recent property exhibition in China, some Chinese (presumably buyers) appear with placards objecting to Cyprus etc.
We are told of the following procedure (by a Chinese buyer):
Too late by then”.
Does this not remind you the goings on with the British market 15 years ago with the various British and local cowboy agents who when the going became difficult they left, closing their Cos, leaving their clients alone in the cold?