Press Centre > Articles
Managing Foreign Real Estate Sales
7 January 2017
It is a fact that foreign real estate sales which represents ±25% of the total in terms of numbers and around 50% in terms of value, has had a most positive contribution to the local building industry and by projection to the Cyprus economy. This sector together with the tourism upturn has created a new era of confidence in real estate investment. As the tourist industry needs organization and planning, so the real estate foreign sales requires careful and targeted planning, since this sector is much less elastic than tourism and disappointed real estate clients will not likely return soon (unlike tourists).
The Limassol skyscrapers development is a worrying development not only because they are crowded next to each other, all having access from a single road, but also because the infrastructure problems (no 4 lane access, traffic congestion, provision of services etc) but also and in addition it is a destination for a town which will most likely develop with projects out of all proportions. And all these with the legal ailing system, as well as the title timely issue, common expenses disastrous law, fire protection, beach access and capacity and so on. If this situation is allowed to continue, very soon, we will be faced with problems, with Limassol, which is now the main attraction of the boom and Limassol, will be the first to take the hit (which is evident that it is coming).
The foreign real estate market demand, be it most welcomed, has caused all sorts of unpredictable reactions, including the E.U. direction, the pending tax harmonization between E.U. states, the Chinese restrictions on foreign currency (with Paphos mainly to be affected) whereas president’s Putin’s new attraction for repatriation of Russian capital must not be ignored.
Be that as it may and in addition to the planning and in an effort to direct real estate demand where it will mostly also help the “local” (per District / use) economy we suggest that over the next years foreign demand should have locational and use criteria and a quota system for foreign non E.U. buyers.
“If there is a goodwill there is a way” and this idea could be explored further notwithstanding that we expect fierce reaction from all directions, with the main objectors being developers (of the non so benefited areas), auditing and legal firms, as well as Municipalities (to an extent).
This plan or an alternative one on similar lines could be placed and operated for a trial period of 1 - 2 years and based on results it can be improved/reviewed.
This is not a new idea of ours, but a projection of what we have suggested 8 months ago regarding the direction of Hoteliers Interest in the mountainous areas, in exchange of tax benefits and including “gifted” building density. As such large hotels in the beach towns can explore this for their benefit in favor for those for the mountains (see last effort between Four Seasons Hotel and Forest Park - Platres which regrettably has failed with the end result that Forest Park is now closed).
Let’s discuss this.