Notwithstanding our 42 years of operation in the real estate market in this country, we are still learning from the wrongdoings and bad mentality that we all seem to share.
We got a negative reaction from some after we wrote that the main cause of the prevailing economic situation is our mentality and the brainless politicians we have.
A small country such as ours could have been a jewel and an example to the EU; here we are, in the state that we are.
Thank God we are not as bad as Greece (no one can understand the Greek Government’s position), Hungary, and even Italy.
A champion of “who cares” is Iceland (not an EU member) but others seem to follow its path.
So, we have huge funds from the local provident funds in Cyprus, mainly from the semi-government authorities, who manage their funds and their administration and decision making.
Suddenly, we found out the con job at the Dromolaxia project and various other investments in real estate by the Cyta provident fund, exceeding €100 mln.
In addition, the Cyprus Electricity Authority fund investing huge amounts in shares went wrong.
Some fund officers went to prison, but the wrongdoings remain, and we were shockingly informed that we, the remaining taxpayers, will be called upon to pay for their provident fund losses.
So, if the funds make a gain on an investment, it is to the benefit of the funds and if not, say a loss, the rest of us have to compensate for their loss!!
Who on earth in this world could have come up with such an idea?
Don’t you think it is most reasonable that the public has every reason to push for the privatization of those funds/authorities since we will get rid of their unacceptable situation?
So far, we (taxpayers) have to foot the bill for the Dromolaxia scam, plus another €50 mln for other real estate investments).
The Electricity Authority provident fund, having incurred a loss in their shares investment, got a prime building plot on Spyros Kyprianou avenue in exchange for their loss.
But then, do our politicians dare to raise such matters in public?
Votes dear readers is the main cause, and who cares about the economy.
Have you noted any MP raising such matters?
Considering the semi-government sector has around 12,000 employees (plus their families), it is one of the reasons.
Is this not sickening, we ask you?
Well-done for the funds that have invested in real estate (provided they were honestly and correctly managed), and there is a great opportunity for the same funds to invest in the real estate market, especially now that loan packages are going to come up for sale, at expected prices of around 50% cheaper.
We have even come to know that some funds are “playing” with exchange rates and foreign shares.
Under normal circumstances, it is not a particularly bad idea, especially those who bought dollars and now converted them to Euros, but is this the goal of provident funds that are supposed to be grade-A secured?
There are all sorts of attractive real estate investments in the region of €5-€10 mln regarding commercial buildings let to grade A tenants having a return (yield) of around ±5% p.a.
Considering what their bank deposits earn ±2% p.a. (minus 30% tax) nowadays, the above yield is quite attractive.
In addition, certain locations seem to be on the up; other types of investments, including distribution centres (let), showrooms/garages of top quality, are also up for sale with similar returns.
Bank distress sales are another source of increased real estate attractions.
In contrast, regarding housing, these funds could buy in bulk and sell the units at reduced prices to their members, using their excess liquidity (funding of their member’s purchases for their projects).
Whatever direction these funds decide to follow, what is unacceptable is the guarantee that we offer them.
The situation in the real estate market is still fluid at present.
Still, opportunities are gradually emerging, a circumstance that will appear more regularly over the immediate future.
Private or direct deals with distressed real estate firms are also advisable.
