Knight Frank’s newly-released ‘Global Opportunities: Assessing Value in Housing Markets Worldwide 2014’ report credits Cyprus’ mainstream market as being one of the largest ‘price fallers’ since the onset of the financial crisis.

Rounding out the top ten biggest fallers are Hungary, Spain, Croatia, Greece, Bulgaria, Lithuania, Ireland, Ukraine, and Latvia.

Whilst Hungary and Cyprus’ real estate markets fell by 21% and 22% respectively on the lower end of the scale, Ukraine and Latvia’s markets fell by some 40% and 48% on the upper end.

Regarding second home markets, Cyprus is credited as now having excess supply

The report suggests that for buyers this may be a positive development, providing a wider choice of properties and some room for negotiation on price.

Knight Frank explains that some of this excess supply may be absorbed by the new ‘Golden Visa’ initiative which offers residency to non-EU buyers in return for a capital investment or property purchase.

Whilst Cyprus has adopted such a scheme, the report notes that, as yet, there are few official statistics to confirm the extent to which, for example, the target markets of China and Russia are signing up.

Leaf Research – an advisory firm providing real estate market research, strategic advisory services, and valuations – has released its 2014-2015 Forecast, through which it gives an overview of the market and projections for the future.

Despite the expected stabilisation and minor recovery of the economy, it estimate that in the near-term, real estate prices, especially that of land, will decrease further, as no substantial uplift in the price of the end product is expected, the rate of sale is likely to remain slow, and no debt-finance will be available.

Furthermore, Leaf Research predicts that the gap between asking price, valuation and transacted price will grow further, due to increased uncertainty in the marketplace caused by a lack of market signals (transactions).

Assessing household debt and non-performing loans (NPLs), Leaf Research explains that there has been an annual decrease of 7.1% in the total loans of households in 2013, in comparison to 2012.

Most household loans are housing loans (€11.8 billion), the total of which equals 53% of total loans outstanding. The total of NPLs amounts to €24.1 billion, which equals 147% of the 2013 GDP, with the majority of NPLs recorded in the construction sector, amounting to €4.62 billion.

At the end of 2013, NPLs represented 53% for Bank of Cyprus and 47% for Hellenic Bank, whilst at the end of Q3 2013, NPLs equated to 47% of the Cooperative sector’s portfolio.

Whilst Leaf Research concedes that NPLs appear to be stabilising, the levels of collateral disposal are described as being essential, and thus the need for further recapitalisation of the banks is likely to be necessary.

Moving on to transaction and volume prices, Leaf Research explains that the highest movement in total volume in 2013 (31% or 1,164 sale and purchase agreements) and purchases by foreigners (38% or 445 sale and purchase agreements) were recorded in the Paphos district. Some 27% of sale and purchase agreements in Cyprus (1,017 sale and purchase agreements) involved foreign buyers.

The smallest number of sale and purchase agreements (583) was recorded in Famagusta district (6% of total), whilst the lowest percentage of transactions to foreigners was recorded in Nicosia (13% of total transactions, 92 properties).

Prices decreased across all cities and for all types of real estate, with the largest decrease having been recorded for shops (42% decrease in relation to Q4 2009) and the lowest in houses (26% decrease). The largest decrease by city was recorded in Nicosia, where prices plummeted, due to the capital being the last locale to be affected by the crisis, with its economy being largely reliant on the public and the banking sectors.

Still, Leaf Research explains that the decrease in transaction volume and property prices does not present an accurate picture of the property market. There is a dearth of demand for land purchases (especially fields) and for construction in secondary locations. In multiple cases, especially for ‘mass production’ real estate, even though prices are below construction costs, there is no interest.

Amongst the perceived prospects for 2014, Leaf Research lists the following:

• Privatisation of semi-public organisations according to MoU terms, starting with Cyta, the EAC and the Cyprus Ports Authority;
• Changes in public sector operation, including early retirement schemes and abolishment of mobility restrictions to permit personnel to move across departments;
• Immovable Property Tax revision by adjusting 1980 prices to 2013 values (readjustment of tax rate is expected);
• Amendment in legislation for speeding up the process of real estate foreclosure, ensuring that properties are disposed of within 2.5 years of initiating legal proceedings for someone’s primary residence and 1.5 years for all other properties;
• Launch of casino licensing process, with the Government submitting the relevant bill;
• Formulation of a strategic plan for the exploitation and utilisation of state property (including real estate);
• Completion of town planning and regulations, which will determine the development potential within the British Bases;
• Establishment of NLPs and property management units in all banks and COOPs;
• And reassessment of property taxation method and calculation so as to increase state income, and transfer the tax burden on owning the property rather than on the transaction.

Rationalising procedures and liberalising information exchange between Government departments and financial institutions will increase pressure on borrowers and will allow for the financial system to function more effectively in relation to the management of its multiple problems relating to NPLs.

Concluding with its thoughts and forecast, Leaf Research states that the smaller than expected decrease in GDP disguises the uneven allocation of the effects of the economic crisis. The gap between rich and poor, as well as the tension between locals and foreigners in the labour market, has increased.

Unemployment is likely to begin decreasing or at least be contained. This will not be a result of the stabilisation of the economy, the report notes, but of the Government’s plans/ incentive schemes for companies to employ staff and the increase in the levels of part time employment.

Moreover, there will be an increase in real estate supply, especially secondary residential units and commercial space for rent. This, in conjunction with decreased demand due to a decrease in local’s purchasing power, will subdue any forthcoming recovery.

In the short-term, Leaf Research believes that the biggest challenge will come from the prospect of development within the Sovereign Base Areas, since this will significantly increase the supply of available land in Larnaca and Limassol.

In the medium-term, the economy will face the ongoing challenge of the banks’ deleveraging and foreclosure of real estate assets, while in the long-term there will be multiple policy issues relating to the reckless incentives provided to boost construction by granting additional building density for various developments which has created ‘pent up’ oversupply.

With more than 800 works by major artists from Cyprus, Greece and Europe, the A.G. Leventis Gallery opened in Nicosia last month.

The Gallery, which owns the largest collection of European art in Cyprus, cost over €20 million, making it one of the biggest projects undertaken in Nicosia in recent years.

A long-standing vision of Anastasios G. Leventis was to establish a Museum of Fine Arts in his homeland where people would be able to enjoy the works that he had collected over a period of many years. For this purpose, he established a Trust which would provide the necessary funds for the creation of the gallery and to cover its running costs.

The gallery’s highlights include numerous works by celebrated artists such as El Greco, Canaletto, Boucher, Renoir, Sisley, Monet, Chagall, Utrillo, Volanakis, Rallis, Moralis, Parthenis, Diamantis and Kissonergis. The A.G. Leventis Gallery has already received international attention, including an enthusiastic article in the Financial Times which noted that “It is a handsome building, filled with exceptional art, a place of rigorous international scholarship, of contemplation and…potentially of inspiration too.”

The government must bring before the Parliament a bill reforming Immovable Property Tax legislation and another one introducing the Guaranteed Minimum Income before the end of June.THE PARLIAMENTARY Committee on financial and budgetary affairs has set priorities for the implementation of all actions necessary for the payment of the fifth bailout tranche.

According to a document sent by the Finance Ministry, by the 5th of June Parliament must approve the establishment and operation of a fiscal council and pass a bill that will integrate the Inland Revenue Department and the VAT Service.

By June 19 the House should vote for a bill harmonizing the legislation amongst tax types so that not paying withholding taxes is a criminal offence and tax fraud is prosecuted as a criminal offence. It must also enact legislation to establish self-assessment for all income taxpayers by changing from a pre-assessment verification of income tax returns to post assessment audits selected on the basis of risk and pass legislation to strengthen powers of the tax authorities to ensure payment of outstanding tax obligations, including providing power to garnish assets or prohibiting the alienation or use of assets, including property and bank accounts, by the taxpayer. By the end of June Parliament should enhance the effectiveness of competition law enforcement by adopting the necessary amendments to the legislation on mergers and antitrust. Also by the end of June the Government must, among other things, bring before Parliament a bill reforming Immovable Property Tax and another introducing the Guaranteed Minimum Income.

THE UPDATED Memorandum of Understanding (MoU), a quarterly-updated list of reforms the Cyprus government needs to undertake periodically in order to receive each tranche of a €10 billion rescue loan from the troika of international creditors (European Commission, European Central Bank and the International Monetary Fund), was received by the government and EU-member states on Monday, according to Finance Minister Harris Georgiades.

The updated draft of the MoU was the result of the fourth review by the troika’s Cyprus delegation of the island’s adjustment programme, agreed to between its government and international lenders in March 2013. Consolidating the Internal Revenue and Value-Added Tax departments into a single body, finalising foreclosure legislation on mortgaged properties – but not primary residences – and introducing a Fiscal Council, tasked with monitoring and publicly commenting on the government’s budgetary strategy, were the main prerequisites for the release of the next tranche of aid, totalling approximately €600 million.“The decision on the release of the next tranche will be made by June 19,” Georgiades said, meaning that the prerequisites must have been completed by that date.

But the government-sponsored bill regarding the unification of the two revenue services into a single Taxation Department under a taxation commissioner with a five-year mandate has stirred up some controversy, as civil servants’ union PASYDY objects to the commissioner’s appointment by the government. The union argued that the consolidation of the two departments into a single body is unconstitutional, and that the position of taxation commissioner should be treated like any other hiring to the civil service – following a screening process by the civil service committee.Georgiades defended the troika demand for the departments’ consolidation, citing “international experience” of the inefficiencies two separate departments suffer, as well as the duplication of posts that can be averted by a single department.

The Taxation Department bill, Georgiades told lawmakers on Monday, needs to be voted by June 5, whereas the Fiscal Council bill must be voted by June 10.

Additionally, the updated MoU calls for the government to “implement a general valuation (GV) for all immovable properties,” as well as put together a communication plan to inform the public of the goals of property tax reform, along with a comprehensive “objections’ management strategy” to deal with valuation complaints by the end of June 2014.

But while no provision has been added or removed to the MoU with regard to the proposed “insolvency framework” – legislation to make current law more lender-friendly while protecting solvent but illiquid borrowers – foreclosures for mortgaged properties except primary residences must be enabled by end-June.

“The legal framework in relation to foreclosures and the forced sales of mortgaged property will be amended [...] and adopted by end-June, with immediate effect for all mortgaged properties except primary residences (for which provisions will enter into effect by end-December, in line with the adoption of insolvency legislation), to allow for private auctions to be conducted by mortgage creditors, without interference from government agencies,” the updated MoU read.

“In the context of the amendment, the focus will be on big borrowers who are uncooperative, and will include protection clauses for cooperative borrowers,” Georgiades said.

He explained that current rules allow borrowers to delay repayment with no consequence, whereas the proposed legislation will give lenders the chance to put some pressure on defaulting borrowers who refuse to engage with their bank.

“The framework will also help address public opinion sentiment that banks aren’t doing something about those who owe them the most,” Georgiades argued

By Angelos Anastasiou

Cybarco has made headway with its luxury Sea Gallery Villas project in Limassol, having completed the fourth phase of development.

Four more villas have been completed, each one individually designed to ensure uninterrupted views of the Mediterranean Sea. These four villas have been brought to fruition by the architectural office, Armeftis & Associates, and comprise four bedrooms in 585m² of overall space, set in plots of land of 725m².

Moreover, each villa has a roof terrace, landscaped gardens, and large swimming pools.

In completing the fourth phase of development of the overall project, a Show Villa has also been prepared, through which prospective buyers may take a closer look at the luxury villas in the making.

Sea Gallery Villas will, once complete, be comprised of 20 villas, of which 70% have already been sold. Preparations for the fifth stage of development are already underway, with prices starting from €1.28 million + VAT.

Property sales for February show that the plunge in the market is ‘slowing down’ despite being worse than last year.

According to data released by the Land Registry, property sales in February marked a 12% reduction compared to 2013, with 311 properties sold down from 352 in the same month last year.

However, the situation has improved in comparison to January when the reduction came to 22%.

Property experts say the reduction in demand is gradually slowing down, as confidence in the real estate sector is regained, while prices have dropped which increases foreign interest.

Nevertheless, local interest remains at low ebb due to the lack of liquidity and the difficulty in secure finances from troubled banks.

However, the negative atmosphere is expected to change as the situation with the banking sector improves and some foreign investments are completed.Most towns except for Larnaca and Paphos recorded an increase in the second month of 2014, although total sales for the January-February period dropped by 17% to 604 properties down from 727 last year.

The biggest drop was recorded in Paphos, with deeds dropping to 172 from 306, or 44%, followed by 3% in Famagusta and 1% in Limassol. On the other hand, Nicosia marked a 13% rise from 119 up from 105 in 2013, while Larnaca sales have remained the same as last year.

The Kimon Phinikoudes Larnaca project, belonging to the Lefkaritis family and valued at an estimated €10 million, has been sold to Russian investors.

Meetings held between the parties on June 9-13 concluded on Friday, resulting in the final agreement for the sale of the land on which the project will be built, for an undisclosed amount.

The agreement included the sale of the original plans for the project, which outline the development of a mixed-use multi-purpose centre, built on 5,504 sqm of land.

The project, located on Larnaca’s Phinikoudes beachfront, is expected to comprise of 20 stories, exceeding 70 meters in height. According to the original designs, the development will combine retail, commercial and residential areas, with the addition of a luxury boutique hotel.

The original cost of its construction has been estimated at €100 million.Though the Lefkaritis family has long been in talks with prospective investors regarding the Larnaca project, it remained unclear as to whether Kimon would be sold whole or if strategic investors would participate in the implementation of its development.

You’d really have a hard time finding many folks who enjoy packing for a household move. Still, if you are moving, the packing part must be tackled — whether you do it yourself or hire a crew to do it.

Packing is expensive, time-consuming and stressful

If you’re going the DIY route, here are nine tips to make the task simpler:

Clear out the junk

Get rid of items you don’t plan to move to your new place.

“If you
 intend to give something away to a friend or family member, either deliver 
it to them promptly, or set a deadline for them to come and pick it up,”

For those items that aren’t being handed off to friends or relatives, consider selling them at a garage sale or donating them to charity, or simply toss them. don’t forget to recycle!

Collect free boxes

Rather than forking over money for boxes, check with local grocery, supermarket and hardware stores to see whether they can give you leftover ones.

“Liquor store boxes are ideal for books and heavier items, as they are 
usually more compact, easier to handle and sturdy,”

Label the boxes

Based on the rooms where they’ll go, label boxes on every side.

Buy good tape, and buy a lot of it, It is easy to open 
those boxes later with a knife or even a set of keys.

Don’t forget to pick up a heavy-duty tape 
dispenser made for shipping. You can buy one for 10 EUROS or less at office supply stores and other retailers.

Consider the weight

“Remember, the bigger the box, the lighter the content,” For instance, books should go in small boxes, shoes and clothes in midsize boxes and bedding in large boxes. “It is easier for the movers and won’t break their backs,”

Stay focused

Finish packing each room before switching to the next,

“We tend to get distracted and 
fail to finish,” he said. “All this does is leave you with a whole lot of last-minute 
packing by throwing unrelated things into a box.”

Don’t waste space

To conserve on boxes, you should pack belongings into coolers, totes, laundry hampers, baskets, empty 
suitcases and empty drawers,

Throw in the towel

Save money on bubble wrap by using towels and clothes as cushioning for glasses and other breakables,

Pack the kitchen last

Chances are, all that packing will make you hungry, and you don’t want to be scrounging around for plates, utensils and cups.

“That last farewell dinner in your old home 
just isn’t as memorable if you are drinking out of a red Solo cup and
 eating on a flimsy paper plate,”

The extra time has been afforded to allow for the opportunity for expression of interest from the greatest number of quality investors, as well as for the addition of another two advisors to the issuance.

Further to HSBC and Credit Suisse, Deutsche Bank and the Russian VTB will also become involved in the share issuance, reportedly for the same reason they were involved in the recent issuance of the Government bond: to attract Russian investors.

The amount of issued shares has yet to be confirmed, and is pending the results of the Asset Quality Review, which will be conducted by KPMG at the behest of BoC.

In keeping with reports of the first stage of the review, some experts have conjectured that the issuance will amount to anywhere between €500-800 million, with the goal of strengthening the bank to the degree that it satisfies the 5.5% capital required by the adverse conditions set out by the ongoing EU stress tests.

Regarding the price of the issue for new shareholders, this will depend on the level of interest received. In keeping with this, despite some Board members hoping to price the issue at 40 cents – so as to limit the dilution of shareholders – it is more likely that the issue will be priced at 30 cents.