By: Nigel Howarth

Over the past year residential house prices in Cyprus have fallen by 7.8 per cent while apartment prices have fallen 10.7 per cent, according the RICS Cyprus Property Price Index for Q1 2014.

The RICS Cyprus Property Price Index, which reports quarterly on real estate values and rents in the major urban areas of the island, reveals that property prices on the island continued to fall over the first quarter of 2014.

Across Cyprus, prices of residential houses and apartments fell by 1.4% and 2.6% respectively during the first quarter of 2014.Famagusta saw the biggest drop with house prices falling by 4.0% and apartment prices falling 9.3%. Across the island the values of shops fell by an average of 1.7%, while those of offices and warehouses fell by 1.4% and 0.9% respectively.

Annualised property price changes

Compared to the first quarter of 2013, the average price of a residential apartment has dropped by 10.7%, while the average price for a house has fallen 7.8% Commercial property prices have fallen even more dramatically, with the price of retail units falling 14.8%, while the price of offices and warehouses have fallen by 10.4% and 11.4% respectively.

Gross rental yield

Gross rental yields recorded a quarterly drop of 1.4% for apartments, 1.6% for houses, 1.3% for shops, 3.1% for warehouses, and 1.2% offices.

Compared to the first quarter of 2013, rental yields have fallen 11.3% for apartments, 12.6% for houses, 23.3% shops, 15.3% for offices and 14.0% for warehouses.

Commenting on the figures MRICS Chartered Surveyor Charalambos Petrides said “it seems property sales in 2013 hit rock bottom but it’s clear that in 2014 real estate sales will move upwards.”But he said property values are expected to continue on a downward spiral for the first six months with the exception of real estate in prime locations

Outline of properties used to calculate the index

Apartments: Residential, two bedroom, 85sqm, Medium quality.

Houses: Residential, three bedroom with garden, Semi-detached, 250sqm, Medium quality.

Retail: High-street retail, 100sqm ground floor area with 50sqm mezzanine.

Warehouse: Light industrial area, 2,000sqm, which includes 200sqm office space.

Office: Grade A, City centre location, 200sqm

(All property types used to calculate the index are: freehold, have all licences and permits in place, have their Title Deeds, are subject to VAT and are in a good state of repair).

Monitoring Process

The estimation of price levels is carried out by accredited RICS property professionals who are active in the relevant markets

Methodology

The methodology underpinning the RICS Cyprus Property Price Index was developed by the University of Reading UK and may be viewed by clicking here.

OUTGOING Central Bank governor Panicos Demetriades said on Wednesday that banks must be allowed to seize assets, and borrowers who intentionally fail to repay loans must be penalised.

Wading into the increasingly polarised fray over non-performing loans (NPLs), the governor supported an IMF report on Tuesday which argued in favour of facilitating asset seizures by banks as an effective remedy. The report diagnosed the issue of NPLs as a “key challenge” to the economy, reporting that they have reached 50 per cent of total loans – at €22 billion, or 135 per cent of GDP.

In an interview with Bloomberg published on Wednesday, Demetriades, who will be replaced at the helm by Auditor General Chrystalla Georghadji on April 10, said addressing NPLs must be the top priority.

“There’s a lot of strategic default happening,” Demetriades said from Athens. “Borrowers need to know that there’s a consequence when you don’t pay. It’s still the case that the banks are not able to basically carry out any repossessions in any meaningful timeframe.”

While political parties said yesterday they agreed on the need to tackle NPLs they resisted Demetriades’ view that facilitating foreclosures was the way forward.

DIKO head and chairman of the House Finance committee Nikolas Papadopoulos argued in favour of extending the non-repayment period that qualifies a loan as non-performing, and proposed that the Central Bank initiate a renegotiation of the definition of NPLs with the troika of international lenders due to the specificities of the economic situation in Cyprus.

“What is considered an NPL in the rest of Europe cannot be considered an NPL in Cyprus, and that is precisely the point we need to drive home – that right now the extraordinary economic circumstances prevalent in Cyprus do not allow for the usual definition,” he said.

“We need to change the definition.”

Opposition parties AKEL and EDEK positioned themselves along the same lines, but ruling DISY’s MP Kostas Mavrides said that borrowers have been offered sufficient time to restructure their loans.

He also said that banks could be in a position to raise additional capital, adding that this could be achieved by the creation of a bad bank that would handle all troubled loans and attract investors, a scenario that would also help boost liquidity

Mavrides said that while the definition of non-performing loans cannot be amended, certain assumptions could be changed so that the number of NPLs can be reduced.

“The economic assumptions made when identifying the bank recapitalisation needs – the property market crash, the increase in unemployment, etc – had set the bar extremely high, which meant that increased NPLs were projected and ultimately recapitalisation needs for the banks were higher,” he said.

Mavrides added that “the definition of NPLs is the same across Europe and can’t be changed.”

The parliament is preparing to pass legislation that would allow temporarily insolvent borrowers to request a court-ordered suspension of loan repayments if their primary residence or small-to-medium business premises came under threat of seizure, but only after all other loan restructuring options have been exhausted

The bill, to be put to a plenum vote on April 10, has been publicly opposed by Finance Minister Harris Georgiades due to the risk of mass appeals to courts by distressed borrowers, with crippling effects to both the banking and judicial systems.

In public statements, Georgiades has conceded that appropriate protection of the primary residence must be provided for, but has also warned of the risk of compartmentalising the issue of NPLs.

In a letter dated March 4, the finance minister informed the House legal committee that a comprehensive government bill is being prepared as part of the reforms mandated in the MoU, which will address all the concerns relating to foreclosures and offer appropriate protection. The bill, Georgiades said, will be finalised and put to a vote later in the year.

By Angelos Anastasiou

The Governor of the Central Bank of Cyprus Panicos Demetriades has resigned citing “family and personal” reasons for his departure and “difficulty in cooperating with the Board of Directors”

CYPRIOT Central Bank governor Panicos Demetriades, whose testy relations with island’s government dogged a tumultuous tenure when Cyprus teetered on the brink of bankruptcy, resigned on Monday.

Demetriades’s resignation was accepted by President Nicos Anastasiades, an official statement from the Cypriot presidency said. Demetriades will work out his notice until April 10. Anastasiades had said in September 2013 he might ask the Supreme Court to rule on whether Demetriades, an appointee of Cyprus’s former communist administration, could be sacked.

Tensions between the two men have simmered for months, bursting into open animosity when the right-wing Anastasiades was elected Cypriot president a year ago.

There was no immediate official word on why Demetriades resigned. Two sources with knowledge of the matter said Demetriades submitted his letter of resignation to Cypriot Finance Minister Haris Georgiades, who was in Brussels for a Eurogroup meeting.

One source who saw the resignation letter said Demetriades cited “family and personal” reasons for his departure, and “difficulty in cooperating with the Board of Directors” at the Central Bank. Demetriades was appointed in May 2012 for a five-year term by then President Demetris Christofias, a communist many blame for misguided policies which led Cyprus to near-economic collapse.

The Central Bank’s board of directors, many of whom were appointed by the present administration, had accused Demetriades of keeping them in the dark on several key issues. Aides to Demetriades said that was a thinly veiled attempt by the presidency to keep the governor in line. But he was also disliked by key partners in Cyprus’s government for a perception that he undermined Cypriot banks before a chaotic bailout last year. Anastasiades had openly accused Demetriades, a member of the Governing Council of the European Central Bank, of mishandling the Mediterranean island’s bailout by international lenders last March. But tensions appeared to have calmed somewhat in recent months. Cyprus had to close a major bank and seize savings held in a second in return for 10 billion euros in international aid from the EU and the IMF. A former economics professor who taught at Leicester, Demetriades faced constant brickbats for subsequent perceptions he was slow in restructuring the banking sector. He has maintained that when he took over, less than a year before the bailout, he assumed a poorly regulated banking system which took excessive risks. The ECB had issued repeated warnings to the Cypriot authorities not to interfere in his work.

Persons close to Demetriades had frequently complained that he was the target of a “well-orchestrated campaign undermining not only central bank independence but an attempt to force the governor to resign.” The ECB had no immediate comment. -Reuters

Although government policy on Immovable Property Tax has not changed, the Inland Revenue has expressed serious doubts as to whether there is sufficient time to complete the work necessary.

ACCORDING to a report in today’s Phileleftheros, government policy on Immovable Property Tax (IPT) remains unchanged, i.e. it will be imposed on a property’s 2013 value, as required in the MoU between the government and the troika of international lenders.

However, Inland Revenue officials have expressed serious doubts as to whether there is sufficient time to complete the revaluation of all properties and carry out the work necessary so that Immovable Property Tax can be levied on their updated 2013 values. The director of the Department of Lands and Surveys is optimistic that the revaluation project will completed by June 30, as required by the MoU. Speaking to Phileleftheros he also said that the Department intends to provide preliminary data to the Finance Ministry in late May, so that a new scale of IPT charges can be prepared for this year. Regrettably it seems that the problem that arose last year by taxing property developers at a high rate for properties that they had sold but which had not been transferred to their buyers will remain. But as previously unknown properties have now been identified, the tax burden should be fairer this year. Another source was reported as saying “unfortunately this year, like last, will be a transition period and a comprehensive reform of this tax will be implemented in 2015.” We await further developments.

Finding an affordable and comfortable apartment can be an incredibly time-consuming process. Add a large dog to the mix, and it’s next to impossible.

That’s what Jan Even, owner of a 90-pound Rottweiler mix, experienced during her apartment search. She was planning to rent and began her search by looking at pet-friendly apartments.

It’s not uncommon for apartment owners — even those that are dog-friendly — to have weight and breed restrictions. So, what’s the owner of a large dog to do?

Look into ground floor apartments or houses with garden rentals

Large apartment complexes are mostly likely to have size and breed restrictions in their pet policies. Landlords of houses or groundfloor properties are more likely to be flexible and accept large dog breeds on a case-by-case basis. Use keywords like “pet friendly” or “dog friendly” in your search filter to narrow down rental listings.

Have all your documents prepared

In addition to preparing documents like obedience training and vaccination records, ask your landlord or veterinarian to write a reference for your pet, vouching for your dog’s behavior.A reference from a previous landlord can be huge in changing the mind of the landlord , One other thing I recommend, in addition to pet resumes and references is a pet interview. If your dog is a great dog, offer to bring them by the rental property for a meet and greet. It’s very hard for a landlord to look at a sweet, well-mannered dog in the eye and say no.

Plan extra time for the search

Understand that finding a rental with a large dog may not be easy. Allot additional time to find the right home for you and your dog. If you’d normally give yourself one month to find an apartment, double that to two since a good majority of rentals won’t be pet-friendly. If you really need extra time, consider getting a short-term rental and boarding your dog while you continue your search.

Be flexible

Finding a rental with a large dog may require flexibility on your end. Understand that you may be required to pay an additional pet deposit, pay extra for insurance that covers your dog’s breed or even rent on a month-to-month basis until your pooch earns the landlord’s approval. Follow the pet guidelines to show that you and your dog are model tenants and willing to work with the landlord.

As you look for a place to rent, above all, sell yourself as a responsible pet owner. The thing about big dogs is that they’re not that different from a small dog in terms of the amount of space they need or damage they’re going to do. “Each dog is an individual.”

Do you have any tips for finding a rental with your large dog? Share your experience with us in the comments below.

If you’re looking for ways to increase your home’s value or boost your asking price when you sell, smart technology can have a big impact on your home’s desirability.

Earlier this year, Google announced its $3.2 billion cash purchase of Nest Labs Inc., best known for its smart thermostat and smoke alarm for residences. If Google is headed in the direction of smart home services, rest assured this trend isn’t going away anytime soon.

Want your home to stand out as an energy-saving, tech-savvy gem? Consider adding one or more of these features:

Programmable energy savers

The pros at Consumer Reports say programmable thermostats can slash your energy bill by about 90 euros per year by automatically reducing your heating or cooling when you need it least. The Nest Learning Thermostat takes this concept a step further by learning your schedule and programming itself to raise and lower temperatures according to your routines. Not only will you be saving money, the next family to live in your home can also enjoy the financial benefits of a smart thermostat.

Smart lighting

Forget to turn off the lights when you leave a room? That simple failure to flip the switch can definitely affect your energy bill. Companies are beginning to offer “smart lighting” options, which allows you to control your home’s lighting via computer or mobile. “Connected” by TCP offers a starter pack that includes three bulbs, a remote and a gateway that controls your lighting. The home lighting kit works with both iPhone and Android devices, so you can easily control your LED lights at home or on the go.

Fiber-optic technology

When it comes to cable and Internet, fiber-optic technology is a green alternative to traditional coaxial copper wires because it is more energy efficient, lasts longer and is safer because the cables produce less heat. With more and more smart devices operating at the same time in your home – not counting your tablets, laptops and gaming consoles – you’ll probably notice a serious drain on your Internet connection if you’re using broadband Internet from cable, DSL or satellite providers.Fiber-optic Internet technology gives you the capacity for greater Internet speeds – meaning you can have more wireless and smart devices in your home operating simultaneously with little to no effect on your online activities.

Tankless water heaters

Heating water accounts for up to 30 percent of the average home’s energy budget, since your standard water heater keeps 40 to 80 gallons of water heated to 120 degrees or higher at all times during the day. Tankless water heaters have been gaining more and more traction in the past few years, since they heat water on-demand, reducing utility costs and environmental impact. The best part? You won’t run out of hot water mid-shower.

Remote-controlled shades

Closing the blinds to your windows is another way you can maintain the temperature in your home. Serena Shades are one remote-controlled product that can help you conserve energy and money each month. The Android- and iOS-controlled shades are also available as part of a whole-home lighting package offered by Lutron. Wireless shades allow you to raise and lower them from your phone – allowing you to easily manage your home’s light and heat from any location.

Those with tax arrears exceeding €3,000 will be prevented from selling or transferring their property under a new law passed by the Cyprus government to help with the crackdown on tax evasion. THE House last night passed a number of laws whose enactment was a condition for the release of the fifth bailout tranche for Cyprus, including two bills empowering the taxman to seize debtors’ bank accounts and assets. Authorities will now be able to seize tax debtors’ bank accounts, confiscate their movable assets and prevent the transfer or sale of their immovable property until the dues are paid.

Following amendments introduced by lawmakers, a person’s movable property will be confiscated or held for tax arrears of €5,000 and over, instead of the lower €2,000 threshold stipulated in the original government bill. For tax arrears of €3,000 or more, authorities will be able to seize bank accounts and to block the alienation of immovable property; the government bill had set the threshold at €2,000. Under another amendment, the amount to be left untouched in a debtor’s bank account – after funds have been taken to repay taxes owed – was raised from €1,000 to €2,000. The measures are aimed at improving the state’s tax collection. A total of €526m is due to the Inland Revenue Department (IRD), of which €165m owed by just 127 persons or business entities. The €526m is the amount established as being receivable.

AKEL MP Stavros Evagorou said that in reality the taxes due come to €1bn, of which €850m is from a small number of persons, whom he claimed are the same people owing the largest amounts to banks. DIKO chairman and MP Nicholas Papadopoulos said the legislation would help the crackdown on tax evasion, but issued a warning to tax authorities that, should they go overboard, parliament would enact new laws restricting their powers. He also noted that whereas the state can now sequester people’s bank funds and assets, citizens owed money by the state could not do the same.

Also passed was a government bill mandating self-taxation by corporations and self-employed persons, as well as legislation specifying the deadline by which the IRD must complete tax returns to wage earners. Parliament also approved a bill making the non-payment of taxes a criminal offence. It makes company directors personally and criminally liable for failure to pay taxes or for providing false data. Another item was a change in the composition of the Resolution Authority for financial institutions.

The governor of the Central Bank of Cyprus (CBC) and two of the CBC’s executive board members will comprise the new Resolution Authority, tasked with implementing relevant legislation, making decisions and issuing decrees or directives.To date, the Resolution Authority was comprised of the CBC governor, the finance minister and the head of the Securities and Exchange Commission. A bill establishing Guaranteed Minimum Income has been submitted to parliament; it goes to committee early next week and is slated to be put to a vote on Thursday, as will a bill providing for the establishment of an agency in charge of settling out-of-court financial disputes. These two items must be passed by the end of the month.

Selling your home in a market where there are more homes available for sale than there are buyers means that you really have to work at it. Buyers in a seller’s market are looking for value. They want the best house for the money. Buyers can be picky and simply won’t settle. You have to get in front of the buyers, have your home showing in its best possible condition and have the home priced right from the start. You must know the competition and see your home as a “product” listed on the open market. Make it stand out from the competition, either in how it is delivered to the market or how it’s priced.

Know the competition

It’s common that a would-be seller will receive “comps” from their agent around the time that they agree to work together. As part of the comparative marketing analysis, an agent will show a seller what is on the market, pending and sold. Oftentimes, it could be weeks or months before the seller actually lists his home. A slow market means more inventory and more competition for sellers. A seller must know what other homes are available and price their home accordingly.

Consider pre-marketing your home

A generation ago, buyers needed an agent to know exactly how long a home had been on the market. Why? Because that data was locked up in agent-only databases. Today, once a listing goes active, the days on market or DOM starts ticking for all the world to see online. The DOM is the best way for a buyer to gauge how your home fares in the market. If the DOM hits three months and your home is still listed, chances are slim you will get a full-price offer. These days, it’s smart to put out feelers before your listing goes live. Work with a good local agent and have them do some pre-marketing of your home to test the price and the market’s response to it. How does this work? In most communities, it’s not uncommon for agents to announce upcoming listings within their firm or on social networks. In some communities, there are entire websites dedicated to “pocket listings”

Make sure your home is widely marketed

Buyers are everywhere today and your listing needs to be where they are. Most are online, specifically on mobile devices at all times of day and night. If your home is not listed where buyers are looking, that’s one less opportunity. In a buyer’s market a seller can’t afford to miss one buyer. If your agent doesn’t understand the concept, you should be working with another agent.

Work with the right agent

Speaking of the right agent. Having the best agent representing your home will make the difference between selling and moving on or having your home sit on the market. A good agent is someone who actively sells in your local community. They know the customs and trends, not to mention governing laws. Agents like to work with agents they know. Work with an out-of-area agent or someone not familiar with your area and you risk being poorly represented.

Photos are key

A generation ago, a photo shoot wasn’t always necessary when selling a home. Today, it is potentially the most important part of the home-selling process. A buyer’s first impression of your home today will likely be online, via an email alert online or a text with the listing from their agent. You should spend as much time and attention on your photo shoot as you would for the first open house. Also, make sure that your listing photos are high resolution and optimized for the web and mobile.

Spend the right money to get the home ready

There is nothing worse than an eager seller spending a fortune to renovate their home prior to selling, only to do so in a manner that is not neutral or buyer friendly. A recent survey shows that the ROI on these projects isn’t high. If you want to get your home ready for sale, take a step back and spend money the right way. The best thing a seller can do is to clean and de-clutter. Investing in storage is one of the smartest things a seller can do. Also, smart cosmetic fixes like painting, cleaning and changing out some fixtures or finishes is money well spent when getting your home ready to sell. Succeeding in a buyer’s market is not simply a matter of hiring an agent and listing your home. You need to do your homework: Know the competition and what is selling. Work with an agent who has relationships with the local community and knows your market. Don’t list your home with an agent who doesn’t have a plan to make sure that your home is widely marketed across the Internet and on mobile devices — that is where buyers are today. Be open to non-traditional means of marketing your home. One misstep in the selling process could set you back weeks or months.

Although property sales in Cyprus remain at historically low levels, latest figures from the Department of Lands and Surveys offer a glimmer of hope that the rate of decline may be slowing.

During February a total of 311 contracts for the sale of commercial and residential properties and plots of land were deposited at Land Registry offices across Cyprus;

A fall of 12% on the 352 contracts deposited in February 2013. Of those 311 contracts 74% (230) were deposited on behalf of domestic buyers, while 26% (81) were deposited in favour of overseas buyers.

Sales in Famagusta increased by 20% to reach 18 compared to the 15 sold in February last year, while sales in Nicosia rose 17% to 69 compared to the 59 sold last year.

Sales in Limassol went up 15% to reach 95 compared to the 83 sold in February 2013. But these increases were more than wiped out by falls in Paphos and Larnaca of 38% and 25% respectively.

Domestic sales

Although domestic sales in January were down 6% compared with February last year, having fallen to 230 from 245, the fall was much less than the 31% experienced last month; an indication that confidence in the property market and the banking system may be returning.

Nicosia, the capital, experienced the greatest improvement with sales up 33% reaching 61 compared to 46 in February last year, while sales in Limassol rose 16% to reach 73 compared to 63 last year.

However, sales in the mainly tourist areas did not fare so well. Not a single property was sold in Famagusta, while domestic sales in Larnaca and Paphos fell by 37% and 10% respectively.

Overseas sales

Sales to the overseas market were down 24% compared with February last year falling to 81 from 107. Eighteen properties were sold in Famagusta compared with two in February 2013, an increase of 800%. Sales also improved in Larnaca and Limassol, increasing by 23% and 10% respectively.But sales in Paphos, the area most popular with overseas buyers, fell 71% compared with February last year, while those in Nicosia fell 39%

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