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.
Issue 9, December 2009
two years for people to realize that property prices have fallen.
about the bounce-back?
was probably not the best timing to announce a request for debt rescheduling by Dubai World, just on the eve of the markets’ closing for 4 days for the Eid Middle East weekend. But the world’s financial markets seem to have taken the hit in their stride so far.
The decision, however, has implications for the world economy in 2010, for some
indebted economies and for the Middle East in particular. For the world economy,
it highlights the fact that corporate problems tend to lag the economic cycle
and many will reach the surface in 2010 and 2011 when bonds have to be rolled
over or borrowing facilities renewed and the easy cash from running down
inventories has been absorbed. In most Western economies, corporates have been
repaying debt over the past 12 months. This will be less easy in the coming 12
months; with downward pressure on profits as inventories are no longer being run
In the same light finance houses and developers will come under increased
pressure as the rising unemployment and slow economic growth lead to a decrease
in savings and an increase in non performing loans. In parallel though, with
interest rates remaining at historic lows and finance becoming slowly available,
many will be temped to return to the real estate investment market for
“cherry picking” given the lack of investment
alternatives as the public has lost its faith in the stock market and in the
investment community at large.
The bounce-back will be slow and protracted, but there will be many
opportunities along the way as the two sides “compete”
against each other.
arrivals recorded a decrease of 14% during October compared to the same month
last year. Tourist arrivals from Britain were down by 19.1%, from Russia 22.6%,
from Sweden 9.5%, and from Germany by 2%. Tourist arrivals from the UK, Cyprus’
biggest tourist provider, are expected to remain as low as 2009.
• The director of the Cyprus Central Bank has expressed concerns about the
worsening of the country’s economic conditions which are expected to be lower
from what the European Commission forecasted. The real GDP is expected to
decrease by 0.7% in 2009 and remain at this level in 2010.
• According to the European Commission, Cyprus’ public deficit is expected to
follow an increasing trend for the next two years. For 2009 it is expected to
surpass the 3% limit. Even more alarming is the expected 5.75% of GDP which is
expected to reach during 2010 and the 6% during 2011, despite of the then
expected economic rehab.
Cyprus Property Market
• Antonis Loizou
& Associates has recently carried out a series of informative talks to key
clients and groups regarding the status of the Cyprus property market and our
expectations going forward. We attach this presentation for your reference.
Cost of Debt
||One year ago
||One year ago
• UK house
prices rose for a seventh month in November as the labor market showed signs
of improvement and the recession eased, Nationwide Building Society said.
Prices rose 2.7% percent from a year earlier and are now 13% lower than at
their peak in October 2007.
• London and the South East have led a strong recovery for UK house prices
during the past six to eight months and average house price growth for 2009
could reach 5% by the year end. However, according to Jones Lang LaSalle there
are already signs of this growth slowing and average house prices across the
UK are expected to fall by 7% in 2010.
• It’s interesting to note that overseas buyers now account for 80% of
London’s market. Buyers from the US, Lebanon, Oman, Korea, Libya and Ireland
are among the cast of non UK players that make up the vast majority of those
currently investing in real estate in central London
• Luxury-home prices in central London rose on an annual basis for the first
time in 17 months as bank and hedge-fund executives bought houses and
apartments in anticipation of bonuses. Values of properties costing more than
1 million pounds ($1.6 million) were 1.6% higher in November than a year
earlier, the first annual increase since June 2008. Still, prices are 15
percent below their peak in March 2008.
• According to Barclays Plc individuals with more than $800,000 to invest plan
to increase their property holdings because they foresee better long-term
returns than from stocks and bonds. Real estate investment among wealthy
individuals is set to rise to 30% of the average portfolio for the next few
years from 28% now, according to the survey.
• The recent announcement of a debt restructuring by Dubai’s developer “Dubai
World” came at a bad time for Middle East investors who hoped for
stabilization in property prices. Investors have already seen a peak-to-trough
price declines for both commercial and domestic property of at least 50 per
• Greece has been rebuked for doing too little to cut its budget deficit as
impatience spreads across the European Union with the chaotic Greek public
finances. Commission experts estimated that the Greek deficit would be above
10 per cent of GDP this year and above 12 per cent next year as the financial
turmoil takes its toll on.
• Compounding the problem is the astronomically high level of Greece’s public
debt, which the Commission estimates will rise to 112.6% of GDP this year,
124.9% next year and 135.4% in 2011. Fitch credit ratings agency downgraded
Greece’s debt last month. Moody’s put it under review for a possible downgrade
since they doubt the country’s ability to deal with the public debt and
inherently achieve growth in the decade to come.
• All 27 EU countries except Bulgaria are expected to have budget deficits
next year in excess of 3% of gross domestic product, the limit under EU rules
for normal times. The Commission is expected to allow France and Spain one
more year – until 2013 – to reduce their deficits to below 3 per cent. The UK
will also be granted one more year, until 2014/15 fiscal year.
• In the USA, unemployment continues to increase reaching the symbolic level
of 10.2%, the highest since the April of 1983. For October, 190,000 jobs more
than expected were suspended.
Cancellations & Resale Agreements
Antonis Loizou, FRICS 22/11/2009
the lack of titles for many properties, those people who have bought and
wish to sell their property, but have no titles, find themselves trapped, in
the sense that they cannot realize/liquate their investment. This is
especially important now with many people being affected by the economic
recession, requiring an easy/speedy sale, in order to cover themselves for
their financial obligations (other reasons apart). This unfortunate
situation has been exploited by a number of developers, known and unknown. A
Pafian developer for example (quite known) requires a fee of 17% on the
sales price, in order to consent to a ...
Administrating the Common Expenses
Antonis Loizou, FRICS 15/11/2009
is one thing buying real estate and adopting a correct sales contract and
another having such clauses in the sales contract for the correct
administration of the common expenses after delivery. The law regarding the
common expenses, as is at the moment, stipulates that the Administrative
Committee can sue anyone who is not paying. In order however for the
Committee to take the legal action, it must cover first itself the unpaid
expenses of the defaulting party!! So not only the defaulting party is not paying, but all the others who are, are called upon to pay the deficit, plus legal expenses, plus a lot of court hassle and perhaps after 2-3
... Read Article
Antonis Loizou, FRICS 8/11/2009
that the year comes to an end, it is interesting to compare the sales
statistics/ buyers of real estate in Cyprus. Local and foreign buyers are
separated per District and it is noticeable to see demand trends and the
different changes in terms of percentage. Even Nicosia where there is no
heavy/noticeable foreign interest, the change of demand/sales is noticeable.
The statistics have been based on the Lands Office records and it refers to
sales contracts deposited at the Lands Office – not transfers. The deposited
sales contract (given below as a total of locals and foreign buyers) is the
most reliable way to provide a comparative demand.
Watch Out: Shares + Rentals + Management
Antonis Loizou, FRICS 1/11/2009
E.U. members may acquire property in shares either as land or as a share in a project, with the specific share indicating the particular unit in the project. This innovative way of selling real estate, has been adopted mainly in the Larnaca-Famagusta region, as an easy way out to by-pass the title (lack of) issue. The problems that will be met by the share ownership, as opposed to whole share title, are numerous. It is a “good” thing on the one hand to have a title (e.g.) of your villa as opposed to nothing (other than a sales contract deposited at the Lands Office), but then the seller gets most likely off the hook to proceed with the title issue...
Μελέτη: Εξασφαλίσεις Δανείων & Υποθήκες
της μελέτης είναι η καταγραφή των διαφόρων επιλογών που έχουν
σήμερα οι χρηματοδοτικοί οργανισμοί στην εξασφάλιση των δανείων τους και
στις επικρατούσες μεθόδους εκποίησης της ακίνητης υποθηκευμένης ιδιοκτησίας.
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In the News
Non-performing bank loan restructuring
suggest that the Cyprus banks are restructuring unpaid loans to avoid them
having to be classified as ‘non-performing’ as required under the Basel II
Accord. In an attempt to prevent the “fictitious restructuring of loans” that
might affect the level of Non-Performing Loans that the banks include in
their accounts, the Central Bank of Cyprus issued a circular asking the
banks to register new loans granted for the restructuring of existing ones
some weeks ago.