Cypriot government urged to act over title deeds

The Cypriot government has been urged to take action over the issuing of title deeds which would help to revive the property market. While the Cypriot banks are financially sound the property market in the country represents more than 40% of the loan collateral, and there is concern that the island is not competitive enough when compared with other European countries who have already lowered their interest rates and property taxes to encourage foreign investors.

Property in Cyprus underwent a ten-year boom period until 2008 but has since suffered a decline which can be attributed to a number of different reasons; these include the fact that many overseas buyers were British, and the decline in value of sterling against the Euro has made investments more expensive, and buyers in general are being much more cautious about their purchases. The property laws in Cyprus are not as transparent as they need to be even if the government is now trying to rectify that situation, and Cyprus are currently has about the highest interest rate in Europe.

Property prices in Paphos have dropped by up to 30% of the last three years; although there are signs that the market is recovering property sales are still well below those achieved during the boom. There are some important property developments taking place in Cyprus which include luxury villas and residential properties, golf courses and marinas. While some of these projects are expected to be completed very shortly, others will not be available for another couple of years but can be expected to greatly boost the appeal of the island, especially as a new seaport is planned that will cater for the large cruise ships that cannot currently dock using the present facilities.

Cyprus Property Sales Increasing in 2010; Let’s Try not to Cry

The latest property sale figures from the Land Registry show a 30% increase in property sales in February this year compared to last year, and a 27% increase in January and February this year compared to the same period last year. Respectively the numbers were 558 and 1274 contracts of sale registered.

While this is most definitely positive news, analysts have been quick to point out that sales are still 60% down on 2008 levels. They have been quick to point out also that this is general data, and there is no indication of what proportion of sales are attributable to foreign buyers -- the Cyprus property market has become incredibly reliant on foreign buyers in recent years. Figures on sales to foreign buyers are expected to come out in the next few days.

The most surprising response however came from Solomon Kourouklides, president of the Cyprus Real Estate Agents’ Association, he has been quoted as saying:

“The latest increase is attributable to the opportunities in the market. Many Cypriot individuals and investors have bought properties from non-Cypriots or Cypriots who cannot pay off their loans. But these opportunities will run out

"If the economic parameters remain the same, we believe that the market will remain at the same level as in 2009, while there is a possibility of a slight deterioration."

Talk about looking a gift-horse in the mouth (yes, I know that saying doesn't exactly fit, but until I think of a better one...).

No one seems to have touched on the fact that this is now 2 straight months of increasing sales in Cyprus. In January sales to foreigners were also found to have increased. This would seem to indicate that the mix of government legislation and advice from Cypriot legal officials has cooled some of the negative effect the title deeds issue caused.

Nor has anyone mentioned the potential positive effect the slew of new golf courses scheduled to be built in Cyprus starting from this year could have. I am not saying go out and buy champagne to celebrate the massive increase in Cyprus property prices in advance, but I am saying, let's not be too negative either. 2010 is likely to be a strong year for overseas property sales, and with the deeds issue semi-resolved and the new courses, Cyprus may well get some of that action.

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Cypriot Economy Looks Promising - Makes Property more Attractive

Cyprus is the only Eurozone country expected to avoid the recession, having shown continued economic growth in Q1 and expected to do so throughout this year and next, according to the July Monthly economic and employment monitor by the European Commission Department for Employment, Social Affairs and Equal Opportunities.

According to the report, Cyprus’ GDP has remained relatively stable over the last few months, and growth has continued in the first quarter of 2009, from the 3.7% growth recorded in 2008, making it the only Eurozone country to avoid recession.

The report also said that the commission expects the Cypriot economy to grow by 0.3% this year, and 0.7% next year, which is much slower than previous years but impressive against the back-drop of developed economies like Italy struggling to find growth again next year. However, the EC predictions are moderate given that the Cypriot Finance Ministry has recorded a 1% growth this year already, and the IMF forecasts 2.1% growth for Cyprus in 2010.

"This relatively positive economic outlook is tempered by the substantial decline in tourist activities on the island. Over the five first months of 2009, the tourism sector's income, which accounts for 15 per cent of Cyprus’ GDP, dropped by 11.7 per cent in comparison to the same period a year earlier, and by 17.6 per cent in May alone. The authorities fear a massive 20 per cent drop in arrivals during the holiday high season, which would have dramatic consequences on the island’s seasonal employment,” the report said.

However, the report also stated that despite unemployment in Cyprus having risen continually since September to hit 5.3% in May, that Cyprus still has "one of the lowest [unemployment rates] recorded in the EU".

Cyprus property remains popular with overseas lifestyle buyers and investors, and news like this can only increase its popularity.