After the government’s decision to revoke 26 passports given to investors who failed the tighter criteria test, real estate stakeholders are uneasy as they feel the Citizenship for Investment scheme is at risk.
Cyprus decided to revoke 26 citizenships granted to investors after the government came under intense pressure following allegations that members of Cambodia’s political elite and a fugitive Malaysian financier received Cypriot EU passports.
These cases led to increased criticism of Cyprus’ Citizenship for Investment which was already under scrutiny from Brussels.
Those to be stripped of Cypriot citizenship include Malaysian businessman Jho Low who is wanted by Malay authorities, the US and Interpol in connection with a multi-billion scam that broke in 2015 when he was managing an investment firm named 1Malaysia Development Berhad headed by the then prime minister of Malaysia Najib Razak. He denies any wrongdoing.
The Real estate sector is concerned as it fears the emergence of more negative cases will further discredit the CIS scheme to which “the economy owes part of its recovery to”.
A boom in the construction industry, especially luxury high-rises, is credited to the passport scheme which seriously took-off after the 2013 financial crisis.
Developers of luxury homes are also facing external competition from countries like Greece which is preparing to launch a similar scheme.
Outgoing president of the Association of Land Development and Construction Entrepreneurs Pantelis Leptos told Stockwatch the programme should be shielded as it has largely contributed to all sectors of the economy.
He said the new stricter criteria that began to apply in the summer protect the scheme from being exploited by criminals.
Korantina Homes CEO George Ioannou agrees that the project should be protected pointing out that the CIS was the only scheme to offer work to all families in Cyprus, directly and indirectly, from lawyers, accountants to cleaners and hoteliers.
He also warns that "losing the scheme will have serious consequences on the economy" urging politicians to leave it out of their political disputes.
Defending the government’s handling of the issue he said, "we definitely do not want criminals in Cyprus".
He argued that "these are old cases of investors who took advantage of the programme at a time when it was the only lifeline for the country".
Antonis Loizou, CEO of Antonis Loizou and Associates said even developers “were advertising the sale of Cyprus passports instead of promoting their properties”.
Loizou argues “the scheme must continue based on sound criteria. Not all investors are cowboys. On the contrary, many foreign investors have been active in other sectors such as the hotel industry, marinas, golf."