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Talk by George Strovolides Hilton Hotel Nicosia , 7 October 2011

Talk by George Strovolides Hilton Hotel Nicosia , 7 October 2011. THE PROPERTY MARKET IN CYPRUS – FACTS & FICTION. TOPICS. The property market in Cyprus in the light of the local and world economic crisis Data on government revenues and number of sales Latest developments The future

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Talk by George Strovolides Hilton Hotel Nicosia , 7 October 2011

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  1. Talk by George Strovolides Hilton Hotel Nicosia, 7 October 2011 THE PROPERTY MARKET IN CYPRUS – FACTS & FICTION

  2. TOPICS • The property market in Cyprus in the light of the local and world economic crisis • Data on government revenues and number of sales • Latest developments • The future • Question time

  3. THE PROPERTY MARKET & THE CRISIS • The property market was at the epicentre of the current crisis. • The sub-prime loan crisis in the US in 2007 was directly related to the property market. • The correction was inevitable after the worldwide property boom which followed the stock exchange crash of 2000. • Real estate properties are less volatile than shares but not a safe haven like gold.

  4. THE CYPRUS REALITY • It was unrealistic to expect Cyprus to remain unaffected (de-coupled) from the crisis. • In 2008 both the U.K. and Russia were affected by the crisiswith their currencies loosing a lot vis-à-vis the Euro. • The market for holiday houses/flats came to be over dependent on these two markets. • The fall in property prices was not uniform (Nicosiavs. costal towns, flatsvs. houses).

  5. DATA – Government revenues from real estate (from owners – excl. VAT) Source: Ministry of Finance – Amounts in millions of Euros *2011 Jan-Aug.

  6. DATA – voluntary sales in no and value (2006 – 2011) Source: Lands Registry Dept.Value of sales: in thousands of Euros *2011 Jan-Sept.

  7. LATEST DEVELOPMENTS • The town planning “amnesty”. • The new town plans. • The need for tax reform. • Bill before Parliament for reduction of transfer fees.

  8. DEVELOPMENTS – “Amnesty’’ • An attempt to solve the problem of 100.000 or so pending title deeds. • KSIA’s role was vital. • Recent legislation passed by Parliament. • Deadline for provisional declaration 7 October 2011, to be extended by six months. • “Irregularities” legalized by paying a fee. • Could be a significant boost to government revenues.

  9. DEVELOPMENTS – New town plans • Various town plans revised in 2011. • Public presentations/discussions are held. • Four months from time of publication allowed to lodge objection.

  10. DEVELOPMENTS – the need for tax reform • Current system is overly complicated with large number of taxes/levies. • Cyprus is among the most heavily taxed countries in Europe in property taxation. • KSIA’s proposal is for a single tax/levy on acquisition, another on holding and a third on disposal of property. • Both tax base and bands need to be updated. • Tax incentives could be useful.

  11. THE FUTURE • The property market in Cyprus and abroad is likely to remain volatile for some time, certainly while the recession lasts. • Future events in Cyprus that could have a significant impact on property prices. • Scarcity and cost of finance. • The political crisis. • The Greek economic crisis. • Natural gas. • The Cyprus problem.

  12. QUESTION TIME • The floor is open!

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