Cyprus Property News: What is your house worth: Issue 24 | April 2011

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Company Profile

Antonis Loizou & Associates is a professional firm of Chartered Surveyors offering valuation, agency and project management services. The firm was set up in 1980 and is the largest and most comprehensive professional firm of Chartered Surveyors in Cyprus and the Eastern Mediterranean over the last 20 years. The firm employs 60 members of staff across 8 offices in Cyprus and Romania, and is one of the leading real estate advisors for corporations, finance houses, as well as the local government and individual members of the public. About us

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Issue 24,
April 2011

What is your house worth?

What is your house worth? When it comes to property it is important to distinguish between three often used, and misunderstood, concepts – price, value, and worth:

Price is the amount at which a property is actually sold for.
Value is the estimate of what a property could sell for in the open market, i.e. an estimate of price.
Worth is the specific value that an individual assigns to a given property or to use the property for a particular purpose, i.e. someone who wants a two bedroom flat within 50 metres of the beach, is likely to assign a higher value to it than one who is simply looking for a two bedroom flat.

Thus, when it comes to explaining why Valuers are often slightly over, or under, what a property actually transacts at, this is partly down to that theirs is an estimate of price (i.e. a value), whilst the property transacts at a specific ‘price’. Due to our inert nature of always comparing what we have with that of others, and always wishing we had what they have, the neighbour’s house is always better than yours. At the same time, when it comes to our own assets, people place a higher value on objects they own than on objects that they do not. A Valuer looks at any house as ‘coldly’/ impartially as possible and assigns a value to it ignoring any special buyers. After we have bought a house we tend to assign a higher value to our home than to others similar to it, even though more often than not we comment how much ‘nicer’ other houses are. When thinking about how much your house is worth, it is important to be as impartial as possible. As for “keeping up with the Joneses” remember that “a rich man is a middle class person living in a poor neighbourhood.”

Cyprus Economy

• Euro area annual inflation is expected to be 2.6% in March 2011 according to a flash estimate issued by Eurostat, compared to 2.4% in February, 2011. For Cyprus the annual inflation rate for February 2011 was at 3.1% compared to a 3% in January 2011.
• Eurostat announced that unemployment in Cyprus increased to 7.2% in February 2011, compared to a 7.0% in January 2011. The euro area seasonally-adjusted unemployment rate was 9.9% in February 2011, compared with 10.0% in January.
• According to the Statistics Department of Cyprus, the number of unemployed persons, registered at the District Labour Offices on the last day of March 2011, reached 28.401 persons. Based on the seasonally adjusted data this indicates a small increase of 0,9% compared to February 2011. In comparison with March 2010, an increase of 4.065 persons or 16,7% was recorded.
• Standard & Poor's cut Cyprus' grade by one notch from A to A- and warned it could issue another downgrade because of the financial system's exposure to Greece.
• The Marfin Laiki Bank has announced the increase of interest rates for loans by 0.5%, much against the opinion of the Central Bank Governor and much to the dismay of the borrowers. The other Banks will follow, as it is expected, shortly. Cyprus has the one of the highest lending rates and this further increase will make matters worse especially during these difficult economic times.

Cyprus Property Market

• Parliament has passed on the 25.03.2011 the bulk of the ‘town planning amnesty’ legislation aimed at tackling the chaos of title-less properties on the island. Two of the items are still pending at the House Legal Affairs Committee. The new legislation provides for ‘legalizing’ real estate property that lacks a title deed due to town-planning or building irregularities. Some 130,000 title deeds are pending, due to developers not having paid mortgages to banks for property which buyers have already paid for, or to building irregularities such as exceeding the allowed building ratio. Affected people now have six months to apply to the Town Planning Department. The regularisation fees will be determined by a three-member committee, appointed by the Interior Minister, in each district.
• THE AMERICAN Heart Institute (AHI) has been awarded the EU’s Green Building Award 2011 for its role as a high performing, energy saving building. A geothermal heating and cooling system will be used in the building with the AHI being the first public building where this takes place. The award’s ceremony will take place on April 12 in Brussels during the European week of renewable energy.
• DJK Developments has obtained a planning permit for a large scale State-Of-The-Art, International Sports Village and Leisure Destination located in Alethrico, Larnaca. The project destined to place Cyprus on the world sports map. During the first quarter of 2011 a bid will go out for construction tenders and by the end of 2013, beginning 2014 the project will be delivered. The project will incorporate a state of the art tennis court that has a seating capacity for 5000 people, approved by the International Tennis Federation for world class tournaments such as the ATP 500 and WTA. The 14 tennis courts, including 2 additional grass courts, will be utilized throughout the year.

Global Property Market

• The European Central Bank (ECB) raised interest rates for the first time since the 2008 financial crisis from 1% to 1/25%. ECB President Jean-Claude Trichet signalled that it was not necessarily the start of a series of similar steps. Perhaps reflecting the bank's concern that jacking up borrowing costs too fast would harm the euro zone economies struggling with high debt.
• The Bank of England' has kept UK interest rates o at a record low of 0.5%. There has been no change to the Bank rate for 25 months, despite the fact that inflation is currently more than twice the Bank's 2% target rate.
• Oil prices have surged to a two-and-a-half-year high on concerns about supply and a weaker dollar. Brent crude topped $126, while US crude was at $112.79. Other commodity prices were also boosted by the fall in the US currency, as a weaker dollar makes commodities cheaper for investors holding other currencies. Gold hit a new record of $1473.40 an ounce, while silver went to $40.22 an ounce, its highest since 1980.
• House prices rose by 0.1% in March (UK) when compared with the previous month, but are still 2.9% lower than a year ago, according to the Halifax. But over the first three months of 2011, prices actually fell 0.6% compared to the previous quarter. It was the fourth consecutive quarterly fall, and "the best measure of underlying trend," said the lender.
• The UK and Dutch governments are preparing court action against Iceland to recover 4bn euros lost when the country's bank system collapsed. Following a referendum in Iceland which rejected a repayment plan, the UK said it was "disappointed" by the "no" vote, while the Dutch finance minister said the time for negotiations was "over".
• The European Union is to negotiate the terms of Portugal's bail-out after receiving a formal request for aid. The rescue package could reach 85 billion euros and a deal could be reached before a June 5 election, officials said.

Cost of Debt
	GBP LIBOR		EURIBOR
	4/4/2011	One year ago	4/4/2011	One year ago
3 month	0.82%	0.65%	1.25%	0.64%
6 month	1.13%	0.88%	1.56%	0.95%
12 month	1.60%	1.32%	2.01%	1.21%
2 year	1.90%	1.56%	2.38%	1.46%
3 year	2.37%	2.09%	2.70%	1.80%
5 year	3.03%	2.85%	3.12%	2.39%
10 year	3.85%	3.79%	3.67%	3.27%
15 year	4.13%	4.14%	3.97%	3.66%
30 year	4.13%	4.10%	3.90%	3.68%

Sales Contracts across Cyprus - 2009/2010

	Cyprus	Nicosia	Limassol	Larnaca	Famagusta	Paphos
2009	8170	2235	2007	1469	881	1578
Foreign	1761	219	415	314	249	564
Local	6409	2016	1592	1155	632	1014
2010	8598	2537	2202	1389	848	1622
Foreign	2030	320	465	299	290	656
Local	6568	2217	1737	1090	558	966
Inc/Dec '09/'10 %	5%	16%	10%	-5%	-4%	3%

Sales Contracts across Cyprus - January to March - 2010 vs 2011

January-March	Cyprus	Nicosia	Limassol	Larnaca	Famagusta	Paphos
2010	2066	615	522	374	204	351
2011	1749	575	492	240	132	310
Inc/Dec '10-'11 %	-7%	-6%	-36%	-35%	-12%	-15%

English Articles of the Month

Will our Neighbours Misery Help Us?	27/3/2011
Cyprus seems to manage its economy on a “free-wheel” basis, without proper planning, governed by small politics and with numerous other unrelated to the economy factors, as well as the mammoth civil service which is after “more and more”, but working “less and less”. Surely this is not a model of economy management to be followed by others. This particular Government has “inherited” from the previous one, over €500 mil. excess budget and within 2½ years it managed, by the various handouts and bad management, to end up with €2 bil. in debt causing the Cyprus economy to be 2 times downgraded. ... Read Article

Natura V Money Cost	20/3/2011
The Cyprus Government has embarked into the classification of parts of the island into Natura area, where the land remains as is and no development/change of any kind is allowed. So the various “wise team” of planners, pressure groups (including the Green party) and others, suggest all sorts of areas to be included in such a classification, since they do not come up with compensation payments to the affected property owners themselves. Well done and lovely we say. Read Article

Preparing your Property for Sale	13/3/2011
During these difficult times that we are all experiencing, there are numerous sellers of real estate and very few buyers around. For those individuals who wish to sell their real estate/home, one should be better prepared than before, when buyers are knocking at one’s door. For those who wish to sell their property, we have prepared a short list of “things to do”, prior to launching the sale which, we hope, might help to sell the property at a faster rate, or, at least, be better than the competition. Read Article

Has Nicosia a Future?	6/3/2011
Nicosia is the only town in Cyprus which has limited attractions and by projection development prospects. Not only because it is divided, but it occupies a dead end location and attracts no tourists, other than day trippers. The Nicosia property market is based on locals and as such it has a steady demand and by comparison to other regions, limited ups and downs in terms of real estate market flactuations. Indicative of the interest is the following table regarding Nicosia foreign purchases. Read Article

Greek Articles of the Month

Νατούρα + Δυνατότητα Εφαρμογής της	27/3/2011
Πιστεύουμε ότι έχουμε επιλέξει ως πολιτεία, μια πορεία οικονομικής καταστροφής με την ανεξέλεγκτη κατάταξη διαφόρων περιοχών της Κύπρου ως Νατούρα. Ασφαλώς, είναι πρέπον και ορθό να γίνεται η χρήση αυτής της κατάταξης σε ακίνητα, αλλά προσθέτουμε «ως εκεί που μπορεί η τσέπη μας». Η κατάταξη μιας περιοχής Νατούρα απαγορεύει οποιαδήποτε ανάπτυξη ή/και διαφοροποίηση (κατά τους εδώ ερμηνευτές της κατάταξης). Ως εκ τούτου και σε αντίθεση με τις άλλες χώρες, η Κύπρος βάσει των προνοιών του συντάγματος της, θα πρέπει να αποζημιώσει την ζημιά που υπέστη ο ιδιοκτήτης (ποσό ίσο με την μείωση της αξίας λόγω της ... Read Article

Έχει δίκαιο ο Υπουργός Εσωτερικών	20/3/2011
Μετά από συζητήσεις πέραν των 12 μηνών μας είναι πολύ παράξενο που τώρα ο Σύνδεσμος Τραπεζών θυμήθηκε να εγείρει θέμα σε σχέση με την πολεοδομική αμνηστία. Όπως είναι γνωστό, εις μια προσπάθεια να εκδοθούν τίτλοι οι οποίοι τώρα η έκδοση τους δυσκολεύεται λόγω παρανομιών / παρατυπιών κλπ, το Κτηματολόγιο μέσα από κάποιες διαδικασίες, έχει το δικαίωμα να εκδίδει τίτλους με παρατηρήσεις. Ενώ δηλαδή πριν εάν κάποιος «έκλεισε» την βεράντα του δεν μπορούσε να εξασφαλίσει τίτλο, τώρα με την νέα πρόνοια της οικοδομικής αμνηστίας, θα μπορεί να πάρει τον τίτλο ενώ στον τίτλο θα αναφέρει ότι «υπάρχει καλυμμένη βεράντα η ... Read Article

Έχει η Λευκωσία Υπόθεση;	13/3/2011
Η «δύστυχη» Λευκωσία, εκτός του ότι είναι μοιρασμένη και αδιέξοδη για την περαιτέρω της ανάπτυξη, θα πρέπει να ανταγωνισθεί με τις παραλιακές πόλεις, οι οποίες έχουν λάβει την μερίδα του λέοντος από τους ξένους επενδυτές και τουρίστες, χωρίς την Λευκωσία να μπορεί να διεκδικήσει έστω και το 10% των άλλων πόλεων. Οι ξένοι αγοραστές και επενδυτές στοχεύουν τις παραλιακές πόλεις και τα πολλά δισεκατομμύρια ευρώ που έχουν επενδυθεί, τόσο από αγοραστές ακινήτων, όσο και σε υπηρεσίες (offshores), η Λευκωσία δεν έτυχε καμίας επένδυσης ουσίας. Ακόμη και αυτά τα «καλά» Λευκωσιάτικα ξενοδοχεία έχουν πληρότητα σε δωμάτια γύρω στο 35%-38%, σε αντίθεση με τα ισοδύναμα της Λεμεσού του 75% και της Πάφου του 70%. Read Article

Αξία χωρίς Ζήτηση;	6/3/2011
Η ύφεση στην παγκόσμια και στην Κυπριακή οικονομία, έφερε τα άνω κάτω στις τιμές των ακινήτων στην Κύπρο. ΄Εχουμε δημοσιεύσει την άποψη μας για το επίπεδο των τιμών που έδειξαν γενικά μια μειωτική πορεία τα τελευταία 2 χρόνια, με διαφοροποιήσεις από 20% και μέχρι 30%(+). Οι πιο ψηλές μειώσεις κυρίως παρατηρούνται σε τουριστικά έργα, ιδιαίτερα εκείνα τα οποία η ζήτηση προέρχεται από ξένους. Η ζήτηση από ξένους έχει δείξει τις πιο κάτω μειώσεις. ... Read Article

Our News

The Town Planning Department and the Cyprus Tourist Organisation held a Tourist Development Seminar on 23.03.2011, regarding the withdrawal of tourist beds and incentives for quality improvement of existing touristic projects. Members of the firm attending made concrete propositions to improve the said proposals of the Government, mainly urging the Planning Office to look at applications within the spirit of the scheme and to try to conclude the applications rather than providing obstacles to the contrary. The head of the seminar Mrs E. Avraamidou, assistant director of the Planning Department said that “we always listen very carefully to the suggestions made by Mr. Antonis Loizou”. Download the scheme in Greek
The firm was appointed by the Housing Finance Corporation to undertake five feasibility reports regarding the acquisition/development of its new offices. The firm was successful in obtaining the instruction after a tender and completed the work 7 days ahead of the 15 allowed to the surprise and delight of the Housing Finance Corporation.
Antonis Loizou & Associates was invited to a cocktail, which was organized by USB Bank for an introduction of the President and General Manager Mr. Maurice Sehnaoui on the 30.03.2011 at the Hilton Hotel. Mr. Sehnaoui is also the President and General Manager of BLC Bank SAL (Lebanon). It was an ‘unforgettable experience’ as Mr. Antonis Loizou was introduced by Mr. Sehnaouis’ advisors as ‘the best property chap in Cyprus’.
On the occasion of the High Commissioner of South Africa, Ms. M. Marasha, leaving Cyprus, a farewell cocktail was given at the Cyprus Hilton on the 28.03.2011. Mr. Antonis Loizou attending offered a silver plate as a gift/thank you gesture for a notable person who promoted the good relations of both countries.
“Nicosia in the Future”. This seminar was organized by our firm in collaboration with the Nicosia Municipality and all other Municipalities of Nicosia. The seminar is the third in line following a similar one for Limassol and Larnaca organized by our office. The seminar will took place on 16.3.2011 at Pallouriotissa old Municipal market.
A ‘strange experience’. An Embassy assigned a real estate issue to our firm and within two days the instruction was cancelled as there had been a mix-up with the head office in their country, which had already assigned the work to another office. We indicated to the Embassy here in Cyprus that the other chosen office was an illegal real estate agency, but was only given an apology and a souvenir box from their country. We responded by sending a box of ‘Yeroskypou Delights’ and ‘Sylikou Shoushouko’. Our relations are now more than professional.
A presentation was given on 14 March, by Mr. Loizou at the Hellenic Bank Headquerters regarding the current situation of the Cyprus Property Market.
Mr Antonis Loizou was invited at a cocktail by the British High Commision on 18.3.2011, on the occasion of the third anniversary of the Cyprus-UK Bussiness association.