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By Antonis Loizou F.R.I.C.S. – Antonis Loizou & Associates Ltd – Real Estate Valuers & Estate Agents
It is a fact that foreign real estate sales which represents about 25% of the total in terms of numbers and around 50% in terms of value, has had a most positive contribution to the local construction industry and by extension to the Cyprus economy. This sector, together with the tourism upturn, has created a new era of confidence in real estate investment.
As the tourist industry needs organisation and planning, so the real estate foreign sales require careful and targeted planning, since this sector is much less elastic than tourism and disappointed real estate clients will not likely return soon (unlike tourists).
The Limassol skyscrapers’ development is a worrying development not only because they are crowded next to each other, all having access from a single road, but also because the infrastructure problems (no 4-lane access, traffic congestion, provision of services, etc), but also it is a destination for a town which will most likely develop with projects out of all proportions. And all these with the legal ailing system, as well as the title delay issue, the common expenses’ disastrous law, fire protection, beach access and capacity, and so on. If this situation is allowed to continue, very soon, we will be faced with problems, with Limassol, which is now the main attraction of the boom, the first to take the hit (which is evident that it is coming).
The foreign real estate market demand, be it most welcomed, has caused all sorts of unpredictable reactions, including the E.U. warnings, the pending tax harmonisation between E.U. states, the Chinese restrictions on foreign currency (with Paphos mainly to be affected), whereas president’s Putin’s new attraction for repatriation of Russian capital must not be ignored.
Be that as it may and in addition to the planning and in an effort to direct real estate demand where it will mostly also help the “local” (per district/use) economy, I suggest that over the next years foreign demand should have a locational and use criteria and a quota system for foreign non E.U. buyers.
· For Limassol and Paphos the prevailing system regarding passports/visas to remain for the next two years maximum, so that under construction projects are not faced with problems and from there on the town/and the surrounding area to have some sort of quota, a ratio between local and foreign sales, say 25% (foreign) for sales in terms of value/number.
· For projects for which no major interest has been shown, but are important to the local/area’s economy, such as golf projects, marina, no quota to be imposed for any district.
· For towns such as Nicosia which has/is experiencing very low foreign demand not to have a quota for the next 2-3 years.
· Larnaca a quota of 25%, Paphos a quota of 30% and Famagusta area 40%.
Easier said than done, and a lot of discussion and new enriched ideas are required to enrich this, on principle suggestion.
So, in this way the various vacant plots and other properties for sale in the mountain resorts will have a sporting chance to “come into the game” helping at the same time the local communities. There is already some increasing foreign demand in the mountain region of Moniatis-Platres with high end (abandoned in most occasions) luxurious villas, whereas Prodromos-Kakopetria and nearby villages will have some sort of interest.
Projects that are not related to housing should have no quota limit such as hotels, entertainment, conference halls, etc. which are helpful for the tourist industry – Also business of an innovative nature should have no quota.
The quota should apply also to Cypriot companies which are controlled by foreign (non E.U. citizens) – a matter which is difficult to monitor.
“If there is a will, there is a way” and this idea could be explored further notwithstanding that we expect fierce reaction from all directions, with the main objectors being developers (of the not so benefited areas), auditing and legal firms, as well as municipalities (to an extent).
This plan or an alternative one on similar lines could be placed and operated for a trial period of 1-2 years and based on results it can be improved, reviewed or extended.
This is not a new idea of ours, but a projection of what we have suggested eight months ago regarding the direction of hoteliers’ interest in the mountainous areas, in exchange of tax benefits and including “gifted” building density. As such, large hotels in the beach towns can explore this for their benefit in favour of those in the mountains (see last effort between Four Seasons Hotel and Forest Park-Platres which regrettably has failed with the end result that Forest Park is now closed).
Let’s discuss this.
