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 6, September 2009
● The number
of tourists arriving in Cyprus decreased by 7.4% over the first six months of
2009 compared to the same period in 2008. Tourist arrivals from the UK were down
16.8% and from Russia 15.6%. In parallel however the amount of money spent by
tourists decreased by 15.8%.
● The Inland Revenue announced that over the first seven months of 2009 there
was a decrease of 11% in total tax collected; the decrease in July alone was
13%. The reduction in the government’s income has resulted in a shortfall of
€30m per month, or 0.4% of GDP. In total, the shortfall in income during the
first seven months of 2009 amounts to €250m which represents 1.5% of GDP.
● The International Monetary Fund (IMF) produced a report forecasting that the
Cyprus economy would have a budget deficit of 6% by 2010, with the amount of
debt rising from 49% to 55% of GDP. The IMF urged the Cyprus government to take
some steps to increase its income and particularly to move forward with taking
action to reduce government spending. The latter includes the abolition of ATA
(Wage indexation to inflation), increase in productivity of public workers,
increase in retirement age, reduction of final salary/payment on retirement,
● The suggestions of the IMF regarding the restructuring of the Cyprus
government (see above) were met with dismay by both the Ministry of Finance, the
various unions, and almost all political parties. In all they agreed that the
IMF is wrong, and that the way forward is to reduce tax-dodging in order to
increase income and to consider modernising ATA and the public sector in general
at some point in the future.
Cyprus Property Market
● The Inland
Revenue announced that over the first seven months of 2009 total taxes collected
from real estate transactions amounted to €44m. This is a decrease of 88%
compared to the same period in 2008.
● The International Monetary Fund (IMF) produced a report forecasting that
property prices in Cyprus will see a reduction of 15-20%, thus reducing the
capital adequacy of banks and creating a need for them to raise new capital. It
also suggested that this decrease will take place over a prolonged period due to
the nature of foreclosure in Cyprus and legal complications surrounding it.
● The IMF highlighted that the size of Cyprus banks amounts to 690% of Cyprus
GDP, which entails serious risks if local banks begin to accumulate losses. In
its report, the IMF makes reference to the increase in loans for consumption,
acquisition of property, as well as corporate loans. It also notes that a
sizeable amount of banks’ capital was leant to companies/activities in Greece
and south-eastern Europe where the various economies have seriously deteriorated
over the past 12-18 months.
● The Cyprus Central Bank announced that the average cost of lending for
property acquisition decreased by 0.32% in May month on month to 6.10%. Compared
to one year ago the average cost of lending stands 0.26% higher.
● Over the past three months we have seen increased activity in the property
market, with a number of acquisitions from mainly Cypriots and some overseas
buyers. The majority of purchasers are attracted by reduced prices for holiday
homes and a sense of “easing” of the doom and gloom. The above needs to be put in
context of the situation at the start of the year in order to appreciate that
the current transaction volume is far off the average of 2006-2008.
● Moving forward we expect the property market to deteriorate further as
developers are pushed harder by banks and defaulting buyers (for whom the
developer acted as guarantor of their loan). In the medium term, we expect
prices to slowly recover as the lack of stock (there are few projects starting)
and a balancing of the economy begins to drive prices upwards.
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. The general belief is that the way forward is to make governments
more efficient and reduce public spending as the public sector continuous to
fall behind the private sector in terms of productivity. The UK’s public
sector productivity shortfall is costing taxpayers £58.4 billion a year, i.e.
not far short of half of the income tax is paying for public sector
inefficiency. This implies that if public sector increase its efficiency, it
may well be possible to make substantial cuts in public spending without too
great impact on the levels of services.
● The number of global property purchases has increased for the first time in
15 months with $62.8bn of sales during Q2 – up 17% compared to the previous
quarter. Distress though remains 'alarmingly' high with $233bn of property now
● The US budget deficit will soar to almost $1.6 trillion (£978bn) this year,
the highest on record, both the White House and Congress have warned. Fuelled
by President Obama's $787bn stimulus package and reduced tax revenues due to
the recession, it compares with a $455bn deficit in 2008. The White House says
the deficit will grow further, predicting it will hit a cumulative $9tn from
● The UK economy contracted 0.8% between April and June, more than double the
figure economists had expected. The latest figures take the annual rate of
decline to 5.6%, the biggest fall since records began in 1955.
● Research in the UK suggests that some people are delaying retirement while
others are still putting more in their pension pot in the recession. A third
of people who are still working and aged over 55 said they would put off plans
● In the UK the number of mortgages approved for house purchases by the major
High Street banks has risen to a 17-month high. The British Bankers'
Association (BBA) said approvals in July stood at 38,181, a rise of 7.4%
compared with June and 77% higher than a year ago. However, the BBA warned
that new lending was below seasonal expectations despite greater demand from
Cost of Debt
||One year ago
||One year ago
Μιαν ιστορία για τόκους θα σας πω….
Παύλος Λοΐζου, MRICS 28/8/2009
Σεπτέμβριο του 2008 αγόρασα ένα μικρό σπίτι στον Άγιο Δομέτιο της Λευκωσίας
για €175,000. Σαν τους πλείστους από εμάς, ένα μεγάλο μέρος της αγοράς
χρηματοδοτήθηκε από δάνειο από Τράπεζα. Στην προκειμένη περίπτωση το δάνειο
ήταν €100,000 με τόκο Euribor τριών μηνών (που ήταν 4,95%) και επιπρόσθετο
περιθώριο 1,85%, δηλαδή με ολικό επιτόκιο 6,80% (€6,800 ανά έτος).
Buy to Let? (Holiday areas)
Antonis Loizou, FRICS 17/8/2009
number of people buy property in Cyprus in order to let either wholly or
partly. With special regard to foreign buyers who do not use their property
the whole year, this buy to let alternative is quite attractive and for
those who wish to supplement their income, it is a good way out. If however
this buy to let is a primary consideration in a purchase care is needed to
select the location and type of property which can be relatively more
attractive to let.
The Governmental Proposals in a nutshell - Title Deeds
Antonis Loizou, FRICS 16/8/2009
Government has submitted 4 white papers in order to help solve the title
deed issue problem. In addition there is a private member’s bill submitted
to the House by Ionas Nicolaou MP.
The Magic Number - 20%
Antonis Loizou, FRICS 9/8/2009
six month experience of drop in property demand, has guided us to observe
the reduction in sales prices. In developed countries demand and supply is
paramount and price adjustments are immediate/responsive to the market
forces. This is not so in Cyprus, mainly due to the following.
You & Us = Disaster
Antonis Loizou, FRICS 2/8/2009
situation regarding the non issue of titles is well known and the complains
and the representations made by various pressure groups (with good motives
or not) are welcomed. We are the first Office to bring up this problem 10
years ago by constantly criticizing the Governments at the time and during
these years we met several keen to study the problem, as well as indifferent
Ministers of Interior and Governments. Our efforts were/are directed in
addition to the Ministry of the Interior, towards members of the House,
journalists and others to the extent that we were misunderstood by some as
to our motives.
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