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By Antonis Loizou F.R.I.C.S. – Antonis Loizou & Associates Ltd – Real Estate & Project Managers
I would like to refer to a few examples of the mess in the Cyprus real estate sector that is derived, in my view, from the incompetent civil service and to some extent the indifferent government. Let us also consider that not all members of the civil service fall into this category of "weak" officials, but only one member in the whole chain can undo the good work of others.
Foreign Investors
(i) There is the case of an unlucky Hungarian investor who believed in the invitation of the Republic and has spent several million to date for his project in Yeroskipou, and was forced to come out in the newspapers with full-page interviews to complain about the unacceptable situation. He said that the Land Registry alone took three years to draft the rent agreement for the state land, while even the President made an effort to speed up the process. But what was the result? When a president cannot interfere or get any results, what can the others do?
(ii) A foreign investor in Larnaca is waiting for the ambitious hotel project at the Castle Hotel (Mackenzie area) to go ahead, but he is still waiting for some kind of permits, while the schedules set up in September 2015 have now been abandoned. Will he be disappointed as well, just like the Russian investor who wanted to build a luxury hotel on the Phinikoudes seafront?
(iii) Then there is the foreign investor for the Adventure Park in Troodos which was established on a preliminary rent of EUR 3,000 / year, who now finds himself entangled in a mess by the Auditor General and by sensationalist reporters who will also probably abandon the project.
(iv) The investor for the crocodile park, despite initial promises of local authorities and after he was sold the properties at high prices, is also baffled as the local authorities have now changed their minds and have turned from supporters into opponents.
(V) The casino resort license is another story altogether. From the three finalists in the bidding process, two did not find land at reasonable prices, while those who were did find properties, including some state land, are now barred from using the land as the House of Representatives decided to put a ban on the sale or lease of state land.
Following pressure, the government finally gave in, but ironically now only the private land owners will benefit and the state will lose millions again in potential revenue.
(vi) Golf – Luckily, the Shacolas project managers have patience, despite the antics of the Environment Commissioner who reported the “violation” to the EU regulators and now we have to wait, once again, while such projects deprive the opportunities from the 40,000 or so unemployed who could benefit from new ventures.
(vii) The smart Egyptian investor who is pumping EUR 200 mln to build the Ayia Napa marina, having got tired of waiting, gave the state an ultimatum – either you approve my proposals or I leave (and magically he secured licenses from various authorities, including from nearby archaeological sites up and protectors of migratory birds, while we have heard that "there are not enough rocks for the construction of breakwaters."
(viii) Let’s look at the other golf courses which now face strict time limits (within 2016) otherwise the conditional planning permissions will expire. But in a vulnerable economy which has only just begun to show some stage of recovery, which investor in his right mind would be interested to invest now? More time is needed as various efforts are undertaken to attract investors (even Bank of Cyprus has undertaken three courses, so will they lose?). There are other reasons for the delays as the state insists on including 7,0000 holiday homes in the gold resorts.
(ix) The relaxations of 20% more in the building coefficients that were allowed in the tourist areas were provided with the condition that these will be concluded by the year 2017. Why? It’s not that we are overwhelmed by investor bidders. Why not extended the relaxation to 2020, and why not forever?
(x) The real estate purchases by banks (debt to asset swap) with a limitation of only up to three years (that some are attempting to increase to five years), has visible risks for the housing market if lenders dispose of these properties quickly, which will simply help in the collapse of the market. They can not absorb these properties under the present conditions of either 3 or 5 years. Why not 10 years to give them a smooth and gradual disposal margin?
(xi) The sleeping nightmare of the Common Expenses Law shared and which were not tackled by any governments, will be the worst blow to the market which will condemn the smooth operation of existing and new large-scale projects.
(xii) Finally, there are the luxury beach beds – a new proposal by the ingenious municipalities of the Famagusta are that admittedly needs further discussion. We have suggestions on identifying certain areas that will operate the new scheme. Surely we do not have the status of the island resort of Mykonos, but such proposals cannot be rejected because "the people are suffering."
We should be making an effort to attract a highest quality tourism .
So much for now, as I have run out of space with this column. More later.
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