An increase of 7.4% in apartment prices and 4.2% in house prices on an annual basis was recorded by RICS’ Cyprus Property Price Index.

Across Cyprus, on an annual basis (compared to Q3 2016), the price of flats increased by 7.4%, houses by 4.2%, offices by 8.8%, warehouses by 4.4% and retail by 4.5%.

The Property Price Index has recorded increases on an annual basis in all cities and asset classes, with significant increases being recorded in all Districts, with Paralimni, on the east, and Paphos, on the west, showing slightly smaller annual increases.

The highest increase was in the southern coastal town of Limassol with 13.2% and 14.3% respectively, for offices the highest increase was in Nicosia with 19.5%, for warehouses and retail the highest increase was in Nicosia with 7% respectively.

On a quarterly basis residential prices for both houses and flats increased on a quarterly basis by 1.7% and 0.5% respectively, with the biggest increase being in Limassol with quarterly increase of 4.1% for flats and 5.5% houses.

The value of holiday homes on a quarterly basis across Cyprus increased by 2.50% for flats and 1.80% for houses. Limassol showed the highest quarterly increases for holiday apartments with an increase of 4% and Paralimni for holiday homes with an increase of 2.9%.

Rental Values jump on a yearly basis

Across Cyprus, on a quarterly basis rental values increased by 4.6% for apartments, 2.5% for houses, 1.5% for retail, 5.7% for offices and 0.9% for warehouses.

Compared to Q3 2016, rents increased annually by 12.5% for flats, 9.2% for houses, 6.1% for retail, 22.4% for offices and for warehouses 1.6%.

Source: Stockwatch

Fasten your seatbelts for a flight departing to Paris, and never leave the ground.

That’s exactly what 12 passengers did at First Airlines in central Tokyo this week, where they relaxed in first and business-class seats and were served four-course dinners, before immersing themselves in 360-degree virtual reality (VR) tours of the City of Light’s sights.

“A real trip is a hassle to prepare for, and expensive, and takes time. So I think it is good that we can enjoy all this hassle-free”, said Takashi Sakano, 39, who was on his first VR trip, adding that he wanted to ‘travel’ to Rome next time.

At 6,600 yen ($62), a fraction of the cost of an actual trip overseas, it’s easy to see why First Airline’s two-hour ‘flights’ to Paris, Rome, Hawaii and New York have been fully booked since the company opened in 2016.

“We have lots of elderly customers, who want to go overseas but are not able to easily, given their physical limitations”, manager of First Airlines Hiroaki Abe said, explaining that the majority of First Airlines’ visitors are older Japanese from around the country.

Abe added that domestic flights around Japan will be added soon, with meals highlighting the region’s cuisine.

Source: CyprusMail

It has been widely recognised that the high level of nonperforming loans (NPLs) in certain European countries is an obstacle to economic growth and a burden on their banking sectors. A loan is classified as non-performing if repayment is more than 90 days in arrears or if the loan is assessed as unlikely to be repaid by the borrower. In particular, high levels of NPLs:

Require high levels of provisions from banks to cover for expected losses. High provisioning consumes banks’ capital and places them at a disadvantage in upcoming regulatory exercises (stress tests etc).

Consume significant existing bank resources (both human and financial). This hampers banks’ ability to lend to healthy sectors of the economy.

Require additional bank resources to tackle the issue, such as the necessity to create special servicing units and to seek specialised consulting services which come at a high cost.

The countries with the highest NPL ratios in Europe are Greece at 47%, Cyprus at 43% and Italy with 18% of total loans. There are reasons why NPLs in these countries remain high, primarily structural/legal impediments (for example retail mortgage borrowers may be overly protected, there are no out-of-court restructuring arrangements, there are limitations on the sale of certain types of collateral etc) as well as the increase in the number of defaults as a result of the economic recession. The European Commission is currently taking a series of actions to reduce NPLs and bring further homogeneity across banks in the EU (the ratio of NPLs as a percentage of total lending in EU banks is 4.6%). According to a report published in January 2018 a comprehensive package for tackling high NPL ratios is being put in place. The package consists of the following measures:

Initiatives to set up Asset Management Companies (AMCs) at a national level. This should be done in compliance with existing EU banking and State aid rules and modelled on best practices adopted by other more experienced countries. In order not to violate EU State aid rules, the transfer of NPLs to the AMC should be done at arm’s length prices, meaning at prices close to market levels.

Introduction of further backstops to prevent the risk of under-provisioning of NPLs. One working paper introduces full provisioning of 100% of new loans as of Jan 1, 2018 after 2 years if it is non-collateralised and 7 years if the loan has collateral.

Introduction of measures to enhance the protection of secured creditors by allowing them more efficient value recovery through the Accelerated Extrajudicial Collateral Enforcement mechanism (AECE). This will provide banks with an out-of-court mechanism to enforce secured loans against companies and individuals subject to a common agreement.

Fostering transparency in NPLs in Europe by improving data availability and comparability. This can be done by setting up a common platform to license loan servicers and loan administrators. This is imperative to further develop the secondary market for trading NPLs that is currently very weak at EU level.

It is further expected that these tools, along with the further improvements in the economies of EU member states will help to further reduce the NPL ratio and bring greater homogeneity among EU countries. For Cyprus in particular, enactment of the securitisation law is expected to further assist in deleveraging the high level of NPLs on banks’ balance sheets. In addition, current plans by the government of Cyprus to create a national AMC company will further facilitate the reduction of NPLs in the banking system.

Source: CyprusMail

Have you ever been in a dome? Picture this: you’re somewhere in the middle of nature, away from cities, traffic, noise and pollution and you’re lying on your back and admiring the sky, the infinity of stars and the dreamy clouds. It’s a wonderful and liberating feeling which reveals the beautiful harmony which surrounds you but which also makes you realize just how small you are in the universal scheme. Then you enter the dome and coziness surrounds you in the most comforting way.

 Source: Homedit

Cypriot banks relaxed their mortgage and consumer credit standards in the fourth quarter of 2017, for the first time since the end of 2014, and are expected to do the same in the current quarter, the Central Bank of Cyprus said.

Standards for corporate loans remained unchanged in October to December and are expected to continue to do so in the first quarter of 2018, the central bank said in a statement on its website on Thursday. The last time banks relaxed their standards for corporate credit was also in the fourth quarter of 2014.

Demand for mortgages and consumer credit as well as corporate credit rose in the previous quarter and is expected to increase further in the current quarter, the central bank said.

Source: CyprusMail

Strong economic growth in Cyprus and the expectation of policy continuity after the outcome of the recent presidential elections “should underpin” improving public finances, Fitch Ratings believes, adding however that very weak asset quality in the banking sector remains a risk to recovery.

In a commentary on Cyprus, the international rating agency also notes that President Nicos Anastasiades “has pledged to re-start reunification talks, although it is unclear how much substantial progress is possible in the near-term.”

“Reunification would create long-term economic benefits but would also entail short-term costs and uncertainties,” it said.

According to Fitch “the recent tension between Turkey and Cyprus over the obstruction of a ship exploring gas fields south of Cyprus illustrates the challenges to reunification.”

“While it can be difficult to estimate how far a post-crisis economic recovery is cyclical and the degree to which it signifies changes in trend growth, the strength of the recovery, and experience in Ireland and Spain, suggest that a medium-term growth rate of 2 per cent is plausible,” it added.

Fitch expresses further expresses the view “coupled with gradually increasing effective interest rates and continued primary surpluses, this would see debt-to-GDP fall to around 80 per cent in 2022.”

The agency comments on preliminary data released Wednesday which show that Cyprus’ GDP grew by 1.1 per cent quarter-on-quarter in the fourth quarter of 2017.

“Overall, GDP grew by 3.9 per cent in 2017 as strong private consumption and solid export growth, including services exports from tourism, boosted the economy,” Fitch said.

It expresses the view that “economic and fiscal policy continuity is likely following the re-election of Anastasiades.

“The main risk to the economic recovery, and a key sovereign rating weakness, is the very weak asset quality in the banking sector following the 2013 crisis,” the credit rating agency says.
Non-performing exposure (NPE) ratios remain stubbornly high, 43% of gross loans at end-October 2017 and constrain new lending, it added.
Fitch acknowledges that NPEs were declining but noted that this was happening “only gradually despite the private sector`s improved payment capacity as the economy and employment grow.”

“Cleaning up bank balance sheets will take considerable time at the current pace, while efforts to speed up non-performing mortgage resolution could weaken household consumption,” it says.
According to the rating agency “high external indebtedness is another structural weakness that will take time to address.”

Source: CyprusMail

Energy Minister Georgios Lakkotrypis said he is meeting on Tuesday with representatives of the Italian energy giant ENI, in order to asses on the highest level the available options concerning developments in block 3 of Cyprus’ exclusive economic zone (EEZ).
 
Drillship Saipem 12000, commissioned by ENI, was halted last Saturday by Turkish warships en route to a location within block 3 of Cyprus’ EEZ.
 
Addressing the open part of the session of the House Committee on Energy, Trade, Industry and Tourism, Lakkotrypis noted that the companies involved “are truly behaving like our partners” and consider Turkish provocative actions to have caused the problem.
 
The Minister also referred to statements made by the Government Spokesman, who said that there are ongoing diplomatic efforts on all levels, at the EU, the United Nations, with neighboring countries, as well as with the company, with which the Ministry is in constant contact.
 
Lakkotrypis said moreover that he talked last Sunday with ENI CEO Claudio Descalzi and added that the company also made representations to the Italian government.
 
The Minister further noted that there are many interpretations of Turkey’s behavior which constitutes “undoubtedly an escalation in comparison to what we have seen until today”. He added that there are many reasons for this behavior and said he would detail them in the closed part of the session that would follow next.
 
Moreover, the Minister said that the drillship has other obligations elsewhere, which must be met. Asked about its scheduled departure for Morroco – the drillship’s next destination after Cyprus – the Minister said he expected Saipem 12000 to leave early March.
 
Lakkotrypis also referred to the recent discovery by ENI in EEZ block 6, at the Calypso target, saying that the findings show a natural gas column of very good quality, but more studies need to be made in order to determine the quantity. More weeks are required in order to narrow the range, the Minister added.
 
Replying to a question by an MP, the Minister confirmed that the structures in the area are similar to those in the Zohr field, in Egypt’s EEZ, however each has its own particularities.
 
The Minister said finally that in October two more drills are expected to take place in block 10 by US energy giant Exxon.
 
ENI announced last week that it has made a lean gas discovery in block 6 offshore Cyprus with Calypso 1 NFW. The well, which was drilled in 2,074 meters of water depth reaching a final total depth of 3,827 meters, encountered an extended gas column in rocks of Miocene and Cretaceous age. The Cretaceous sequence has excellent reservoir characteristics.

An intensive and detailed data collection (fluids and rock samples) has been executed on the well. Calypso 1 is a promising gas discovery and confirms the extension of the “Zohr like” play in the Cyprus Exclusive Economic Zone (EEZ).
 
ENI is the operator of block 6 with 50% of participation interest while Total is partner with the remaining 50%.

ENI has been present in Cyprus since 2013 and detains interests in six licenses located in the EEZ of Cyprus (in Blocks 2, 3, 6, 8, 9 and 11), five of which are operated.

Source: Stockwatch

President Nicos Anastasiades announced on Tuesday the composition of his new cabinet, which includes four fresh faces,

The president appointed government spokesman Nicos Christodoulides as head of the foreign ministry and kept Finance Minister Harris Georgiades at the same post.

Lawyer Savvas Angelides has been appointed defence minister, teacher and education ministry official Costas Hambiaouris got the education portfolio, businessman Constantinos Ioannou assumes the health ministry, and Vasiliki Anastasiadou, currently the director of parliament, takes over the transport ministry.

Zeta Emilianidou remains at the labour ministry and Giorgos Lakkotrypis retains his energy portfolio.

Education Minister Coasts Kadis will be moving to the agricultural ministry and Constantinos Petrides remains at the interior ministry. Ionas Nicolaou will also stay at the justice ministry.

Natasa Pilides, the director of the Cyprus Investment Promotion Agency, was appointed junior minister for shipping.

Former MP and ruling Disy spokesman Prodromos Prodromou has been appointed government spokesman.  Klelia Vasiliou, the head of Troodos Development Agency, will be deputy government spokesperson.

Source: CyprusMail

Where it is shown that a more in-depth investigation is required in relation to a company’s affairs to protect its interests, the court may at the request of a shareholder issue a declaration stating that it should be investigated by an inspector appointed by the Council of Ministers. The discretion of the court must be exercised sparingly, since such an order is a drastic measure deviating from fundamental principles of the company law and has an impact on the company.

The law states these inspectors are appointed if circumstances indicate its activities are carried out with the intent of defrauding creditors or otherwise for a fraudulent or unlawful purpose; that the persons involved in the establishment or management of its affairs are responsible for fraud, misconduct or other misdemeanour towards the company or its members; or that not all the information was given to its members about its affairs. The term ‘company affairs’ has been interpreted to include its goodwill, its profits and losses, its contracts and assets including its shareholding and its ability to control the affairs of a subsidiary.

The Supreme Court examined such a judgement earlier this month in a civil appeal filed by a company indicating that such an investigation of the company’s affairs has the character of an administrative remedy while it does not even constitute a remedy, but a mechanism that can provide useful or necessary information to those seeking a remedy. It added that the possibility to conduct such an investigation is recognised as one of the instances provided in the law protecting the minority shareholders of a company.

The appointment of an inspector is compulsory once the court has issued a relevant order. The case in question concerned a family company, the shareholders of which were former spouses and the wife was a minority shareholder. In that capacity, claiming improper, fraudulent and illegal conduct by the husband as director of the company, she applied to the court for an order for the investigation of the company’s affairs. The court of first instance issued the order and the company filed an appeal.

The Supreme Court held that in the course of issuing the aforesaid order, the court shouldn’t be convinced that fraud or other misconduct has been committed, since the object of the procedure is not to prove such a behaviour, but to carry out an investigation proving whether there was such a misconduct. On the other hand, the court will not act based on mere suspicion, but it should depend on a solid and substantial basis. This procedure cannot be used for fishing for evidence if there is not enough to give rise to reasonable suspicion of fraud or other misconduct. If the evidence adduced is inadequate, then the application must be dismissed.

In the aforesaid case, the evidence adduced by the wife supported by relevant documents convinced the court of first instance there was a need for the investigation of the company’s affairs regarding the conduct of her ex-husband and in particular regarding matters relating to bad management of the company, such as non-convening general meetings, the appointment and the termination of the appointment of directors, omission to prepare and submit financial statements, omission to pay dividends, loans to and from the company by mortgaging its assets without the necessary consent of its shareholders and the increase of the husband’s personal assets.

The Supreme Court concluded that the court of first instance correctly exercised its discretionary power and issued the order for the appointment of an inspector by the Council of Ministers; there was no valid or objective reason for the Supreme Court to intervene in the manner the court had acted, so it dismissed the appeal.

Source: CyprusMail

AS TIME passes so the pressure on Cyprus from the EU increases. At this point the visa/passports scheme is working well for us and has contributed to the expansion of the economy by 4% this year, whereas the net income from these sales of around ½bil is a sizeable amount.

Although based on government reports those who have secured Cyprus passports are around 1,700 but when adding up the family members and those for visas the number escalates. On the other hand, the Cyprus population is not increasing fast enough, raising future problems as the population is ages and lives longer. The population stagnation does not help the real estate market and this is one of the reasons for oversupply among certain types of property. The foreign demand is here however taking up the top end real estate and holiday homes at the lower end. Foreign demand in terms of number of sales amounts to around 26% of total sales (in 2016) and 25% (2017). In terms of value however the percentage is much more.

This is a substantial percentage which keeps the market going but is it a healthy state of affairs to be so dependent on foreign demand? Cyprus is not alone in this ageing population danger and most European countries have a similar problem. It is also a fact that most foreign buyers do not intend to stay in Cyprus for ever. With reference to the passports which require the retention of real estate for three years only (save the permanent residence), we expect that after this three-year period, a large percentage of the foreign buyers will be selling their real estate and at prices well below what they paid. From the announcement date of the measure, the first lot of buyers are nearing the three-year time limit. In addition to this supply there are new projects under design and those that are under construction will create a new worrying state of affairs.

A recent survey in Limassol shows around 400 new apartment units at the planning stage, which will come on to the market over the next one to two years. In addition to the over supply, developers who do not manage to sell their units over the next couple of years, might find themselves in difficulty to complete the projects as promised. The banks, at this point of time, do not seem to be particularly worried since most high end buyers are cash payers and thus the developers require little or no finance.

This foreign demand boom has helped various developers to survive, the banks to get their loans repaid, whereas deposits and business ventures has helped new business and the wider economy. It will be interesting to examine the effects that the new Chinese restrictions of taking money out of China will have in Cyprus and it will indicate the sensitivity of the local market to foreign demand.

The situation is very sensitive and little Cyprus cannot say no to new demands by the big countries requirements. In every sense we will not be liked by the majority of the beneficiaries of this boom but to ignore it will be hiding our head in the sand not following the events that are coming.

Source: CyprusMail