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 now the largest and most comprehensive professional firm of Chartered Surveyors in Cyprus and the Eastern Mediterranean. The firm employs 75 members of staff across 8 offices in Cyprus, Romania, and Russia 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.
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Issue 5, August 2009
● The Cyprus
Central Bank announced that there has been a year on year increase in the ratio
of loans to deposits from 86.0% to 97.8%. The Bank announced that total deposits
in Cyprus-based financial institutions (including the €2.8bn of government
deposits) amounted to €58.13bn and total loans to €56.85bn.
● The unemployment rate in Cyprus increased to 5.4%, compared with 5.3% in May
and 3.5% in June last year. In the EU27 unemployment climbed to 8.9% versus 8.8%
and 6.9% respectively. Eurostat estimates that the number of unemployed in the
EU27 totals 21.5 million.
● There are 5 million young people (15-24 years) unemployed in the EU27. Across
the EU27 one in five youths are unemployed, whilst in Cyprus the ratio is one in
● According to Eurostat, 73% of Cypriots are pessimistic as to the future of the
Cyprus economy over the next few months, whilst 7% have stated that they have
lost their job due to the economic crisis.
● A study by “Teletext Holidays” showed that Cyprus is more expensive than the
UK when one compares weekly expenditure on daily consumer goods. Cyprus came in
at a daily cost of UK£75.39, Italy at UK£75.66, and the UK at UK£71.00.
Cyprus Property Market
● The Cyprus
Central Bank announced that the average cost of lending for property acquisition
decreased by 0.26% in May month on month to 6.43%. Compared to one year ago the
average cost of lending stands 0.88% higher.
● Bankers make an interesting point as to the increased cost of debt; they claim
that this is down to higher deposit rates and higher banking costs. At the same
time however they omit to say that they can borrow funds from the European
Central Bank (ECB) for 1.0% and that the resulting margin, i.e. the difference
between the cost of borrowing money and the amount it charges people to have a
mortgage, now stands at circa 3.0%-4.0% compared to 1.5%-2.0% a year ago.
● The Ministry of Interior has adopted a new law whereby third country citizens,
i.e. non Europeans, who legally purchase property in Cyprus of a value that
exceeds €300,000, will be entitled to apply and receive an immigration permit
(the equivalent to a permanent residence permit). The measure is expected to
boost demand by providing an additional incentive to third country citizens to
choose Cyprus as their investment destination.
● The Minister of Interior has announced that legislation is being formulated
which will create various types of title deeds. The aim of the legislation is to
expedite the issuance of title deeds by issuing deeds to law-abiding
constructions whilst penalising others by issuing title deeds that state the
nature of the “problem” and either don’t permit the transfer of the ownership
(i.e. the disposal of the asset) or penalise the owner.
● The change in the title deed legislation will increase the income of the
Cyprus government, at a time when the government’s total income has decreased by
circa 12%. According to Land Registry data for every 10,000 title deeds the
income for the government will amount to circa €100m; there are approximately
120.000-130.000 properties without title deeds across Cyprus.
● A number of developers has started offering large discounts of up to 30% off
the asking price. Market participants attribute the timing of these on the
expectation that the worst for the industry will come after September when the
problems in the tourism industry become clearer. We expect that real estate
prices will reach bottom at the end of October and that after that panic will
prevail in the areas of Protaras, Avgorou, Xylofagou, Tersefanou and the coastal
areas of Paphos where there is an oversupply of apartments. The main causes of
the reduction in prices are the decrease in demand and that real estate
developers are “in a race” to pay off debt cancellations of buyers, mainly
British, who cannot repay their loans for which the developers acted as
● The global
economy seems to be bottoming out, although numerous hurdles and problems lay
ahead in the form of high unemployment, bad loans, and the high burden on
governments to “save” their respective banking and financial systems. One of
the main drivers of the recovery is going to be China, where worryingly
regulators have warned their banks to scale back lending and not to divert it
into the stock market or real estate markets where officials say fresh asset
bubbles are forming.
● According to the Jones Lang LaSalle, UK real estate returns fell by 1.8% in
the second quarter of 2009, compared with 6.4% in the first quarter. In the
last twelve months to June annual total returns declined by 22.9%. Whilst
prices at the prime end of the market have stabilized and in some areas
improved, the outlook for the secondary market remains unclear given the weak
● The latest European report by Knight Frank notes that occupier demand
remains weak, leading to reduced take-up and falling rents. Whilst yields for
prime property are beginning to stabilise, there are expectations for further
reductions in secondary locations and a drop in rents across the board.
● The Irish government is in the process of creating a “bad bank” which will
buy up €90bn of impaired commercial property loans from Irish lenders. The aim
is to safeguard the already troubled Irish banks from further loses by
transferring the “bad loans” to the government sector and managing these for
the peoples’ benefit.
● Worldwide economic growth is expected to recover to 2.5% in 2010, says the
International Monetary Fund (IMF). That is higher than the IMF's earlier
estimate of 1.9%, with the increase expected to be led by India and China, but
the IMF still expects the global economy to contract 1.4% this year. For the
UK, the IMF has revised down its 2009 economic forecast to -4.2%, and expects
the economy to expand by 0.2% next year.
● The level of people falling behind with consumer loans in the US hit a new
high in the first three months of 2009. Delinquencies - payments that were
more than 30 days overdue - rose to 3.23% from 3.22%, the highest level since
rates began being tracked in the 1970s. Credit card loan delinquencies also
increased, rising to 4.75% from 4.52% in the last quarter of 2008.
● Japan saw unemployment levels reach a six-year high last month, with the
jobless number rising by 830,000 to 3.48 million. The unemployment rate
currently stands at 5.5% and for every 100 people seeking work there are 43
● The global credit crunch has cost governments more than $10 trillion, the
International Monetary Fund (IMF) says. The IMF says that rich countries have
provided $9.2tn in government support for the financial sector, while emerging
economies spent $1.6tn. It estimates that by 2014, government debt will reach
239% of GDP in Japan, 132% in Italy, 112% in the US, and 99.7% in the UK.
Proportionately, however, the rise in the UK is the biggest - with debt more
than doubling from 44% in 2007.
Cost of Debt
||One year ago
||One year ago
Trapped in Mortgages - Free at last
Antonis Loizou, FRICS 26/7/2009
new law that has just been approved by the House of Representatives, gives a
very good boost to the free economy and provides a great help both to
Mortgagors as well as to Mortgagees. As the system exists at the moment, the
finance houses can charge through their fluctuating rate/top up margin just
about anything. On average, the charge for housing loans are on overall
1.80% - 2.5% above the base rate, reaching a total of around 7% - 8%, but in
the event of delayed repayments, the charge can reach as high as +11%.
N. Sylikiotis - New Measures on Titles
Antonis Loizou, FRICS 20/7/2009
Minister of the Interior Mr Neoklis Sylikiotis has declared that the
Ministry’s proposal on solving the title deeds issue problem will be
announced within the 1-2 months in full details. Of what we were given to
understand, the scope of the measures/new legislation, will aim to target
the issue of the 100.000 or so, non issued titles, which is either the fault
of the developers, the buyers, Lands Office (delays) and financiers. In a
nutshell, the measures, most of which are our own proposals submitted over
the last 4 years are as follows...
Panic over Misinformation
Antonis Loizou, FRICS 12/7/2009
we are the first firm that we have pointed out to the last 3 Cyprus
Governments of the emerging danger of the non issue of titles and the delays
that relate to the issue of building and other permits. We have submitted
several proposals to the Governments in power at the time, suggesting not
only the way to solve the problem, but also giving details and costings on
how this problem could be resolved. We placed our bet on the last Minister
of the Interior Mr N. Sylikiotis,
Listening Vs Understanding
Antonis Loizou, FRICS 5/7/2009
22.6.09 we have invited the Minister of the Interior to introduce our annual
(4th yearly) report, on the Building Industry. Because of the problems that
the industry is facing and because of many other factors (new large scale
projects coming up etc) the conference room was packed and out of the
declared 90 would be attendants, approximately 145 people turned up
including the press, various associations, business people, bankers, MPs,
Mayors and individuals.
Pavlos Loizou joins the Board of Directors of
Luciano Capaldo FRICS, Chairman of RICS Europe was in Cyprus during May
visit he interviewed all members who became interested to participate in the
new board of RICS Cyprus as non-executive members, as per the approved new