Cypriots warm to online property auctions

3 mins read

Online auctions of properties once-owned by banks through debt-to-asset swaps are taking off in Cyprus as property management firms see their digital sales grow during the pandemic.

A private online platform, BidX1, active in Cyprus for the past 18 months, reports that 2020 has been kind to them despite the lockdown and the uncertainty created.

In comments to the Financial Mirror, Head of BidX1 Real Estate Cyprus Kritonas Onisiforou said the company had sold properties worth €32 mln during a coronavirus-stricken 2020.

Onisiforou argued that buyers are exhibiting interest, despite initial concerns over uncertainty during the pandemic.

“We are extremely happy with the results of our auctions and the level of engagement in the market.

“We aim to bring greater transparency and efficiency to the markets in which we operate; we’re delighted that Cyprus has embraced it,” Onisiforou said.

The local arm of Ireland’s BidX1 says it has seen interest for various properties from houses, plots of land to commercial properties.

“Initially, we were sceptical about commercial properties, but we have seen that especially those with tenants already occupying the properties, have been grabbed by investors looking for opportunities with good yield.”

He added office space had seen a fair share of interest.

Onisiforou said the vast majority of bidders are Cypriots looking to buy a home, encouraged by the government’s incentives, such as the interest subsidy scheme.

The Scheme covers housing loans to individuals in Cyprus for which a contract was made from 01/03/2020 and will be approved by 31/12/2021 for owner-occupied homes.

It is specifically, for the primary residence purchase or construction, including purchasing a plot.

The maximum duration of the interest subsidy is four years, and the interest rate is subsidised up to 1.5 percentage points (150 basis points).

The loan amount for which the interest rate will be subsidised cannot exceed €400,000.

“Housing interest rates are also at an all-time low, going from more than 8% a few years ago to around 2.5%.

“We carried out a survey in March that showed 85% of people asked said that they plan to buy a property within the next six months.

“The crisis has affected people’s ability to buy, but there is a significant number of people who have survived the crisis, coming out unscathed with money available to buy, or are credit-worthy.”

The BidX1 official said that buyers are also drawn by the simplicity and ease an online platform offers and transparency.

“All bids, as well as the final sale price for each asset, are displayed publicly on the BidX1 platform, underlining the transparency of the process,” said Onisiforou.

BiDX1 will be holding its next auction towards the end of April, offering plots from €15,000 to a block of flats worth close to €1 mln with a commercial shop on the ground floor and current tenant paying €2,000 rent.

The property is located in a prime location on Nicosia’s Athalassa Avenue.

Interest is growing

Moving into the online auction sector recently, G&P Lazarou has grabbed a chunk of digital property sales action.

“Online auctions provide bidders with flexibility in terms of time and place. One can easily log in to the site and participate in the auction, which helps the user save both time and money,” said the company’s Managing Director Petros Lazarou.

He said bidders do not have to be physically present at the auctions while having the opportunity to take a digital tour of properties.

G&P Lazarou’s portfolio comprises foreclosed properties that the banks wanted to offload and some properties obtained from owners who want a quick sale.

The company is preparing for its second auction on 15 April; since venturing into the sector,  another one is planned for late May.

Lazarou said that the company’s plans were affected by the coronavirus crisis due to the uncertainty it created.

“We opted to hold back and test the waters later on when we had more clarity over how the market would react to the crisis.

“Holding back, we have seen interest in real estate grow.”

He explained that people with money are driven to real estate as there are no real alternative investment options in Cyprus.

“People with money have anxiety over what to do with their money, and as there are no investment options that have proven to be more trustworthy than the real estate, they are essentially pushed to the sector.”

Lazarou noted that the driving force behind online property sales are Cypriots, as 95% are locals in the market buying a home or looking for investment opportunities.

“Usually, they are young couples with money saved aside or are creditworthy.”

He argued that real estate already on the market is attractive to buyers as prices of new properties are being pushed up by higher construction costs due to spikes in oil prices.

G&P Lazarou expects to see around 70% of its properties in the next auction to be sold.

Real estate starting from €25,000 to a block of flats with a starting price of €480,000 will be up for grabs in their next auction.

In the previous auction last September, the firm sold 70% of a portfolio comprised of commercial and housing properties, yielding €6 mln.

“There is no wrong property; there are, however, wrong price tags. This is where auctions can come in handy,” said Lazarou.

The company uses an online mobile application for their auctions, which has built momentum as buyers turn to online sales.

“An online auction application means there is more transparency, while the personal data of people involved are protected.

“There are large sums of money involved, while some cases may involve a foreclosed property. An online auction keeps things simple and to the point.”