The ongoing financial crisis has hit Dubai hard and the rather silly approach being taken by the authorities is to pump out press release after press release claiming that there is not a problem. We have gone through phases with these press releases. First – there was no problem and Dubai was immune to the downturn. Then, Dubai was affected, but only slightly, next up – OK, Dubai has a problem, but we are now at bottom.
There is only one word to describe these press releases, advertorials and outright lies coming from the developers, the government and the media – which – in the UAE is owned by the ruling classes and very much not a free press. And the word is Bollocks.
Sadly, we are now in the fourth phase which is – “prices jumped xx% last week/month/year, signaling a return to boom times!”November 3rd, we reported that property prices in Dubai had jumped 7%.
Dubai property prices have risen for the first time since the market crashed last year , up 7 per cent in the second quarter as demand revived and lending conditions eased, consultancy Colliers International said. Property prices in Dubai up 7%
In October, we were able to report that Dubai property prices rose 30%.
Property owners in Dubai have been increasing the asking price for their properties in the past two months and some areas have witnessed appreciation of 20 to 30 per cent in the past few weeks. Dubai property prices rise
Both of which were utter bullshit. The latest “news releases,” this week have similar headlines:
Completed properties see a rebound in sales, says Emirates 24/7 and go on to spend the entire article pointing out that off-plan sales have collapsed completely as a model.
Completed properties are starting to show signs of life while off-plan sales have become “unsustainable”, according to a property developer. “Off-plan property sales have proved to be unsustainable. Sales enquiries for off-plan properties have been stagnant now since the third quarter of 2008 – completed properties are, however, starting to show signs of life,” said Mohammed Nimer, CEO of MAG Group Property Development. Emirates 24/7
At the same time, the claim that, UAE economy to see sharp rebound in 2010, which is odd, seeing as there was never a downturn.
Lower oil production will ally with slowing construction activity to try and depress the UAE economy in 2009, but the economy is expected to rebound by nearly four per cent in 2010, the Economist Intelligence Unit (EIU) said yesterday. In a statement sent to Emirates Business, the London-based information unit said it had cut its earlier forecasts about the contraction in the UAE’s gross domestic product (GDP) this year from four to 3.5 per cent following an improvement in oil prices and expected rise in the country’s crude output. 24/7
A few days before, Secondary Market Prices in Springs and Meadows Surge, according to Zawya
Secondary market prices of properties in the Springs have increased in the range of 11-33 per cent since the beginning of this year, while prices in the Meadows have surged in the range of 16-19 per cent in the same period, according to a real estate firm. Vineet Kumar, Head of Sales, Asteco said: “In Springs, two-bedroom villas currently sell for Dh1.5 million onwards, up 36 per cent from Dh1.1m at the beginning of this year. Three-bedroom villas start from Dh2.8m from Dh2.6m in January.In the Meadows, current prices for four-bedroom villas start from Dh3.8m, up 18.75 per cent from around Dh3.2m at the beginning of the year. Five-bedroom villas, meanwhile, are around Dh4.4m now, up 16.5 per cent from Dh3.8m on January prices.” Zawya
All this does is serve to confuse the market and persuade smaller investors they would be better served looking to a more mature market, because the latest UBS forecast suggests Dubai property prices will fall another 30% and may take as much as ten years to “rebound,” and the market will be as much as 25% over supplied throughout 2010.
“We expect it will take at least a decade for property prices to return to previous peak levels, and see only modest growth in real estate asset prices subsequent to the market trough in 2011.” UBS reiterated its view that the emirate’s population will shrink by 8 percent this year and by 2 percent next year, based on the assumption that nearly 50 percent of the workforce is employed in real estate or construction, where it said 70 percent of all projects have been delayed or cancelled. Arabian business
Much like the UK housing market, sales volumes are so depressed that it is impossible to draw any price data. The government Inc has been pouring money into the developers to allow them to hold property rather than sell at distressed prices. How long it will take for this excess to work through the system is anyone’s guess – but ten years sounds about right.
Could the pain in Spain being caused by declining tourist arrivals finally be coming to end? The latest figures just released for the holiday island of Lanzarote by the Spanish airport authority AENA certainly suggest that this may be the case. With the decline in foreign tourist arrivals halving last month and the German market actually recording small but positive growth. Whilst occupancy levels in hotels and apartments in Lanzarote are also showing some signs of improvement.
Lanzarote´s tourist industry has been ht hard by the credit crunch and ensuing recession. With overall foreign tourist arrivals down by just under 17% for the year to date. A figure much in keeping with the rest of Spain. However Lanzarote´s economy is much more vulnerable – as the island relies almost totally on this sector. And is especially dependent on tourism from the UK – which accounts for around 55% of all visitor numbers annually.
As a result the island has been profoundly affected by this years economic events. As the British market has been affected to a much larger degree thanks to the added impact of the weakness of the pound. Which has resulted in visitor numbers from the UK dropping by close to 20% – some way ahead of the average for other nationalities.
The latest figures just released by AENA suggest that there may now be some light at the end of the tunnel for Lanzarote´s tourist dependent economy though. As whilst the total number of foreign arrivals fell by 8.17% this rate of decline is much lower than in previous months. When the number of foreign arrivals had previously been falling by a cumulative rate of over 16%. Providing some encouragement for the many overseas owners of apartments and villas in Lanzarote.
According to the latest AENA figures total arrivals for October numbered 124,673 foreign tourists. Down from 135,762 in the same month last year. With the German market – Lanzarote´s second largest – actually registering a small increase in visitor numbers. Up from 19,912 in October 2008 to 20,418 last month.
British arrivals fell for the same period fell to 69,224 from 76,051 visitors. Whilst the number of tourists visiting the island from Eire – Lanzarote´s third largest market – declined from 17,078 passengers in October 2008 to 15,411 last month.
These more positive figures are also reflected in a decreasing rate of decline in occupancy levels in Lanzarote hotels and apartment complexes. With the number of beds filled dropping by less than 9% last month. A massive improvement on earlier in the year when the island’s hoteliers were struggling to cope with the lowest occupany rates ever seen on the island in over forty years of tourism.
On an annual basis every Australian property investor should sit down and review their property portfolio. Many people will do this around the end of the tax year – but I prefer to do it over the Christmas / New Year holiday’s when I have more time and also time to make any property investment changes and have them reflect in the current year’s tax return.
Property Investment is not a “hand’s off” form of investment. Even if you employ a property manager for the day-to-day tenant management – you still need to manage your investment in a more intensive manner than say you would with a superannuation scheme.
Renovations can add value to a property
So on an annual basis what should a property investor be considering? The biggest item I think is maintenance and property upgrades. Particularly if your property investment is a stand-alone house you need to be proactive in budgeting to maintain and improve the property and grounds. I normally have a list of “like to do’s” so that if the tenant vacates during the year I might take the opportunity to upgrade the bathroom or re-paint the lounge while the property is empty – and also probably see a rental increase in return for my efforts. Ask outgoing tenants why they are leaving – often it will be for reasons outside of your control – but if the noisy neighbours or the constant traffic noise drove them out then those are things worth trying to mitigate with improved sound-proofing – even if you can’t fix the problem entirely.
Another area always worth reviewing on an annual basis is your property’s mortgage. Especially with the recent shake out in the banking industry its quite likely that mortgage has been sold to a different institution in the last 18 months or so. You should look at current offers and decide whether you like the loan structure you currently have. All the signs are that Australian home loan rates are on the way up, with another rate rise tipped before Christmas. If you don’t intend to sell or pay down all of the mortgage in the next couple of years locking in historically low fixed-rates for at least part of your mortgage would make a lot of sense.
If your property investments aren’t in your own suburb I like to keep an eye on the local property market. Are there plans for local facilities such as freeways and shopping centres which may impact your property. How are the demographics changing and how will that impact the rentability of your property.
Managing a property investment portfolio is not do it once and forget it exercise. You need to keep an interest in your investment and make proactive decisions – if you don’t its highly unlikely that anyone else is going to do so.
Hopefully, the new government in Greece may just provide the impetus that Cyprus needs to finally sort out the political morass that has soured relations in this corner of the Mediterranean. For too long, any social and economic progress on the island has been hampered by the division of Cyprus and by the dogged refusal of the two sides to shift position. The opening up of the dividing wall across Ledra Street, in 2008, was a start, but there has been no clear progress in deciding upon a long-term future. For those thinking of investing in property Northern Cyprus, finding an answer to the issue of property claims is essential before risking large sums of money.
Certainly, Greece and the Greek Cypriots are pushing for unification with checks and safeguards ensuring that both the Greek and the Turkish Communities receive full recognition and political representation. Turkey and the Turkish Cypriots, on the other hand, are wary of becoming marginalised and losing their rights within a unified Cyprus.
Importantly, Greek Prime Minister Papandreou and Cyprus President Demetris Christofias stipulated that the full recognition of property rights, the major stumbling block in negotiations, must be upheld. For those of you thinking of investing in property in Northern Cyprus, this is certainly an interesting development. Due to the danger of ownership claims from Greek Cypriots, and the fact that deeds there may not be worth the paper that they are written on, this is a warning to hold fire for a while. As yet, there has been no clear indication of what form this would take, whether Cypriots will exchange properties or whether some form of compensation package will be agreed.
Ledra Street - Could the Opening of this Border Point Make or Break Investment in Property Northern Cyprus
Property Northern Cyprus – Stick or Twist
What is certain is that property in Northern Cyprus could well become the subject of intense debate over the next few years and buying a property there could be an expensive mistake. If compensation is agreed, then there should be no problem as the ‘rightful’ owner of the property will be given money to drop their claim. However, if property rights are upheld and a Cypriot from the south decides that they want their property back, then you risk losing everything.
Obviously, this is a far from ideal situation, so try not to be sucked in by the many Cypriot Real Estate Agents reassuring you that there is no problem with the deeds or that ‘their’ properties are clean and uncontested. As we said in a previous post, Property for sale in Cyprus, unless it is with money that you can afford to lose, you are best to delay any decision until further negotiations give a clearer indication of any potential outcome.
Certainly, this particular situation has been allowed to continue for far too long, and we can only hope that this rhetoric is converted into solid action. Until then, for those thinking of investing in property Northern Cyprus patience is certainly a virtue.
Yet another law suit in the offing as yet another UAE developer decides the small print means “no deal” on a “guaranteed” offer. It appears that the larger developers really do think small investors are good for one thing only. I have long been of the opinion that the shoddy treatment of smaller investors will backfire on the UAE as and when there is a turn around in the market.An investor in Ajman-based BSEL Infrastructure Realty’s Pearl Tower is seeking 12 per cent interest on his principal amount as assured by the developer under his buyback offer.
However, the developer, who has returned the principal amount to him, through a post-dated cheque, said the offer was valid only for investors who had paid “up front” in full for the units.
Anis Alaeddin, who invested in a unit in Peal Tower, Emirates City, said the developer in a letter (published below) guaranteed a buyback at a premium of 12 per cent per annum and was to return the money within 15 days from the date the buyback option was exercised. BSEL’s Executive Director Manish Kanakiya contested the claim, saying the contract clause clearly mentioned that cancellation or termination of the agreement would lead to forfeiture of a maximum of 15 per cent of the total value of the unit.
Kanakiya said: “The buyback offer was valid only if the investor had paid 100 per cent at the time of booking. But if the purchase was made on a payment plan, then clauses will come into force, and clause number 8.10 will be enforced.”
Clause 8.10 reads: “In the event of cancellation/termination of this agreement by request of the buyer, or by default by the buyer of any clause in this agreement, all payments previously made by the buyer, subject to a maximum 15 per cent of the total price [hereinafter referred as 'agreed amount'] will be absolutely forfeited by the seller and the refundable amount, if any, will only be paid to the buyer after rebooking of the unit.”
In October 2007, BSEL Infrastructure Realty, a fully owned subsidiary of India’s BSEL Infrastructure Realty Limited, said in a press statement that it will develop seven towers in Ajman with first being the Pearl Tower.
The statement further said: “The launch of the project, with each tower rising up to 50 floors, also comes with a ‘one-of-its-kind’ offer of buy back with assured 12 per cent returns after one year.”
Alaeddin said he had bought a unit in Pearl Tower for Dh590,000 in November 2007, only after reading about the developer’s buyback offer. The offer, according to him, could be exercised 12 months after making the first payment. In October, the developer finally gave him a cheque, post-dated January 31, 2010, for the principal amount.
He said: “In April 2009, I visited BSEL’s office and asked to exercise my buyback guarantee right. As per the agreement, the developer has to pay back my total investment along with 12 per cent interest within 15 days of the request date. But they have refused to abide by the documents they have signed. The developer initially told me they would refund the money if I forfeited 15 per cent of the total price.”
He visited BSEL’s office again on May 14 after being told a cheque, post-dated to July 31, 2009, would be ready for collection. “However, the company’s accounts department refused to give me a post-dated cheque and did not show any flexibility over my request even though I have every right to ask for my money within 15 days of exercising my right.”
Alaeddin said he again visited BSEL’s office in June and asked for his cheque but the company still refused to give it to him. “I then approached the Ajman Real Estate Regulatory Agency (Arra) to ask for my money and there followed a series of e-mails between the authority and BSEL.”
In July BSEL said a 15 per cent penalty on the total value of the unit had to be levied before the principal plus interest could be paid. In early September the developer offered to pay the investor Dh33,000 lesser than the principal amount – 30 per cent less than the promised amount.
According to Kanakiya, the developer had issued buyback letters to not more than 12 to 13 investors, and only five or six people had paid 100 per cent on booking.
“It was a scheme that we were running for one or two months but stopped it after the Ajman authority said developers can’t offer buybacks. However, they told us, ‘You cannot cancel whatever we had assured in the past’.
“We will not deduct any money if an investor is staying until the project completion and we will pay him 12 per cent on a pro-rata basis on his investment, including guaranteeing a buyback,” he added.
In late September, the company told Alaeddin it would return his principal payment by the year end and had sent a letter to Arra requesting the money be transferred from their escrow account to his bank account
When contacted, an Arra representative told Alaeddin that the company had sent a letter but the authority had rejected it because it was against its policy to return money out of an escrow account to a “canceled” buyer.
“The agency has requested that the developer pay me from the company’s funds and not the escrow account,” the investor added.
We shall see, but the various lawsuits in Dubai have invariably ended with a ruling in favor of the developers.
What makes Australian property investors different from property investors in other parts of the world? Well a complete answer would take a lot more electrons than I have here but to me there are several characteristics that those down-under have which are distinct from property investors in other countries.
Australians don’t have the same entrepreneurial drive as some nationalities – say many Asian countries or Americans. Yet Australians have long invested in property with an ethusasim which is not seem in countries such as Europe or America. In fact arguably the only country more obsessed with property investment is New Zealand. Why is that? Well most of it comes down to tax and general laws, rather than national identity!
Melbourne - a robust property market
In comparison to America, Australia doesn’t make it easy for entrepreneurs – being declared bankrupt is the end of your career as a business owner or even company director in Australia. In America some of the biggest names have been through several unsuccessful companies and bankruptcies before success. They would never have been allowed to continue to raise money if they had lived in Australia. Perhaps those who in America have the will and personality to start a company channel the drive into property investment in Australia?
In tax terms Australian regulations encourage to a reasonable extent the Australian fascination with property. Although Australia does have both sales tax on purchase and capital gains tax it is possible to claim property depreciation in some circumstances and mortgage interest almost always. In contrast New Zealand offers a regime with no capital gains or sales tax on property – which is why it is home to some of the world’s most ethusasitic property investors.
Australians who have sufficient assets can also include investment property within their self-managed superannuation – providing some significant tax advantages for those past 40 or so.
Australian property, in general, is one of the strongest markets in the world. That is not to say that Australian property never goes down – it can certainly be a wild-ride for those who fall for over-priced apartments or invest in small towns where the single employer just left. In general though Australian property prices are a great deal higher than those in America. The reason is somewhat surprising – supply! Yes, in general, there is a shortage of property in Australia. How can that be in a country with one of the world’s lowest population densities? Quite simply, complex and mulit-layer bureaucracy involved in the planning regime for new developments. It can take years and years for developers to get permission for new land releases.
So property investment will continue to be popular with Australians. With the difficulties of business start-ups combined to the robustness of property prices there is certainly money to be made – but caveat emptor is the order of the day in the current market!
For Northern Europeans seeking a holiday home in the sun, Greece has long been a favoured destination, offering the chance to mix beauty and solitude with a pulsating nightlife. Despite this attraction, the country has remained relatively untapped as far as Greek holiday homes are concerned, especially when compared to the traditional hotspots in Spain, Portugal and France.
Part of the reason for this is the tendency of the Greek government to deter international investors flipping homes, in an attempt to preserve pristine areas and prevent property booms and bubbles from arising. However, this policy has kept prices low and affordable, and so it is a slight mystery why Greek holiday homes number in the tens of thousands rather than the millions in the Iberian Peninsula.
The Untapped Greek Holiday Home Market
Looking deeper, one of the main factors deterring Northern Europeans from buying holiday homes is the lack of cheap flights to Greece. Many holiday home owners buy property near to airports serviced by such companies as Easyjet and Ryanair. This allows them to visit frequently, at much less than the cost of a train ticket from London to the Scottish Islands, or from the Midlands to Cornwall.
Greek airports, on the other hand, have often adopted protectionist policies, resisting the march of the budget carriers. Whilst people fully expect a little extra time and expense for flights to Greece, paying at least £150 from London to Athens is too much. In addition, the lack of regular services to regional airports, other than summer charters, adds extra expense and time onto the trip, making it unviable to enjoy a short break in the country.
Aegean Airlines - Opening the Market for Greek Holiday Homes
The Rise of the Budget Airlines
This trend is changing, especially after the financial troubles of the national carrier, Olympic Airlines, and an increasing number of flights are opening up the country. Easyjet already offers services to many Greek airports, including Corfu and Santorini, and other operators, such as Jet2, are keen to muscle in on the market and tap into the huge holiday market.
Aegean Airlines has announced an alliance with BMI, opening up the number of British provincial airports offering flights to Athens, and connection flights from Athens to the rest of Greece will increase the options. The net outcome of this is that prices should tumble and Aegean has already begun an aggressive campaign, announcing a wealth of special offers for international and domestic flights.
For those seeking to buy a Greek holiday home, this is certainly great news, unlocking the potential for short breaks. The major hotspots have steep property values, but there are many untapped regions where genuine bargains can be found. Opening up the regional airports and offering cheap flights could be the catalyst for the revival of the Greek property market, currently suffering from a period of stagnation.
Other Greek Property News
As we pointed out a couple of weeks ago, in Government, Taxes and Illegal Homes – Concerns for Greek Luxury Property Investors, the Greek government plans to readjust the tax burden concerning property taxes, moving many low and middle-income earners out of the bracket but increasing the rate for large property owners.
It is predicted that the new limit will be 600 000 Euros, lifting a large proportion of the beleaguered middle classes out of the bracket. This is also of benefit to those seeking Greek holiday homes, ensuring that they do not have to pay annual taxes for a property that remains dormant for much of the year.
Or 9% !!!!!!!!!!!!!! or 30%!!!!!!!!!!
More bad news from Dubai. According the the Financial Times, Property prices in Dubai only jumped 7 percent in one quarter as “demand revived” and “lending conditions eased.” Quite who is expected to believe this sort of nonsense is beyond me.
Especially as just last month Dubai property prices rose 30 percent!!!
Dubai Property Prices Show Signs of Revival:
Dubai property prices have risen for the first time since the market crashed last year , up 7 per cent in the second quarter as demand revived and lending conditions eased, consultancy Colliers International said.
The volume of transactions in the third quarter also jumped 64 per cent compared with the previous quarter but residential prices were still 47 per cent lower than in the same period a year ago and are equivalent to prices in the second quarter of 2007, according to the consultancy’s Dubai House Price Index.
“The Q3 results indicate a ‘bounce’ in the market but we will have to wait for the Q4 results before we can say whether an underlying growth profile exists, indicating a potential recovery,” said Ian Albert, regional director.
The rise in the index, based on mortgage transactions, came as demand increased with better expatriate job security prospects – outside the troubled real estate sector – and easing bank lending requirements and loan to value ratios eased up lending to potential buyers.
It reflects a growing sense of optimism in Dubai, which was badly hit by the credit crunch as its vast debts combined with the puncturing of the real estate bubble a year ago.
A large-scale expatriate exodus failed to materialise, while financial support from the Abu Dhabi-backed UAE central government and healthier credit markets have helped the government start paying off upcoming maturities on its $80bn debt pile, restoring confidence in the city’s solvency.
Real estate agents say the market, which dropped up to 50 per cent from its peak last year, has moved on from a speculative bubble to a more user-oriented market.
But Colliers warned that an upcoming surge in completed properties will drag down average prices next year – though not across the board.
“Well planned mature developments in good locations, supported by facilities and community infrastructure will receive relatively higher demand,” said Mr Albert.
“The dynamic between consumer demand and the banks’ risk profile for lending will be fundamental to driving the price direction of each development in the coming months.”
Apartment prices rose 6 per cent, villas were up 9 per cent and townhouses rose 7 per cent between the second and third quarters, according to the index, which was launched in January 2008.
Earlier on in the day,
Dubai property prices rebound by 9% after bottoming out !
Said Business 24/7:
Property market in Dubai is showing initial signs of a turnaround with prices rebounding by nine per cent after bottoming out in April, according to a new report.
HC Securities & Investment in its monthly report on the Mena property market said the recovery follows a 30 per cent peak to trough drop in agreed prices and a 65 per cent fall when compared to peak advertised prices.
According to the report, improving sentiment and risk appetite, a negative real interest environment and attractive rental yields are some of the indicators for recovery. 24/7
So – we now have a disappointing 7 or 9% rise after last month’s 30% rise. But with the quadruple whammy of “demand revived,” “lending conditions eased,” along with “improving sentiment and risk appetite,” this sounds like the perfect line of bullshit to me.
Ignoring the “slight” over supply problem, and rents continuing to fall through the floor, Dubai sounds like a great place to invest your life savings about now. Sarcasm in case you were wondering. the day Dubai’s property prices jump 7% in one quarter is the quarter after I get offered a 140% no money down mortgage with a free Bentley. Whatever happened to those free Bentleys and BMWs ? Last I heard – none of them materialized. Still – at least they didn’t get dumped at the airport.
It appears official – Australia’s government wants Australia to grow to a total population of around 35 million by 2049. Not exactly huge, compared to many other countries – but a little scary for some Australian’s who will tell you straight faced the country is running out of resources to support the 20 odd million people it has now. I say they need to get out more. And Australian property investors should take note.
The reality is that Australia really does need to populate or perish. Most of its population lives on the eastern sea board. Most of the north is empty – just north of which, in fact a leaky boat ride away, is Indonesia. Indonesia hasa population of 230 million spread over 1.9 million square kilometres that’s a population density of nearly 120 people/square kilometer. Australia’s average population density is 2.8 people/square kilometer – in fact in most of the north its a lot less than 1 person per a square kilometer. But there is a lack of water you say – well actually there isn’t – not in the North the tropical client is the same one which supports all those millions in Indonesia. The South East of Australia is in drought – not the north.
During the early days of World War 2, Australian military planners famously drew a line on the map roughly from Brisbane to Adelaide and declared everything to the north of it indefensible. Nothing much has changed in the following 60 years.
The Undeveloped Kimberly, Northern Australia
So what will the future of Australia look like and what will it mean to Australian property investors? Well this is where it gets harder to predict. The conventional wisdom is that most growth will occur in the big four cities: Perth, Melbourne, Sydney, Brisbane and that we need to live in higher density housing to make it practical. But Australians don’t like living in small flats – they keep on buying 4×2 “starter” homes which could house an entire tribe of Indonesians – for a couple. Australians like space, outdoor living, and sporting facilities. I don’t think the spread of suburbs is going to stop anytime soon. In addition concentrating even more people primarily in the South East will do nothing much for the defence – or even sensible use of – the majority of the country.
I’d like to see some serious development occur in the North West and North. Workers from the Argyle mine are flown from Perth – a flight so long it requires a jet – yet the local town should be a paradise featuring a year round summer, abundant natural fruit and vegetables and unlimited supplies of water. Of course there is a slight crime problem – maybe the local government would actually have to do something for the seriously disenfranchised local population? The local dysfunctional governments, including the Northern Territory’s one would have to be revamped, or replaced. It would all be quite difficult to do – but it would be a sustainable solution.
If you are an idealist invest in northern Australia property – if you are a pragmatist – then overpriced, over-large, MacMansions 30km from the CBD aren’t going out of fashion anytime soon – regardless of what the urban planners would like you to believe!
There have always been cowboy estate agents in Cyprus, parasites who will constantly lie and cheat in a attempt to deprive you of your hard-earned money. At best, some of them are simply underqualified, out of their depth and almost completely inept. At the other end of the scale are the professional sharks, who often work with lawyers and officials to make sure that you are doubly shafted.
Before blaming the Cypriots, many of these shady characters are expatriates, often from Britain. These rely upon befriending you and use the old trick of ‘helping’ you navigate through the bureaucracy. According to Nigel Howarth, of the respected Cyprus Property Magazine:
“We have warned you previously about retired Britons living in Cyprus who prey on the fears and wallets of their fellow countrymen; people like Andrew Nolan former manager at estate agents Peter Stephenson Properties and Ian Beaumont, his ‘partner in crime’”.
Needless to say, if you find yourself dealing with anybody even remotely connected to these predatory pieces of scum, go elsewhere.
The Estate Agents Registration Council and Useless European Union Bureaucrats
The Cypriot government, in 2004, enacted legislation to curb the worst excesses and strengthened the laws, in 2007. Any estate agent operating in Cyprus has to be registered with the official body, the Estate Agents Registration Council. To qualify, an estate agent must possess a university degree in estate agency or property valuation, and at least one year of experience. Alternatively, an applicant must have eight years of experience with an approved estate agent and must sit an exam about Cypriot property laws. They must also be fluent in Greek or Turkish.
Only Registered Estate Agents are Permitted to Charge Commission. There are No Exceptions
So far, so good, but you will still see many unlicensed estate agents advertising their services. Despite closing the loophole, preventing anybody from using terms such as ‘property consultant,’ ‘property advisor,’ or property investment manager, these businesses thrive. For once, the authorities are not entirely to blame and have genuinely tried their best to uphold the legislation. The problem is that the EU, unable to resist meddling, has decided that these laws discriminate against non-Cypriots. Quite reasonably, the Cypriots point out that they cannot win – people complained when foreign investors were ripped off; when the Cypriots did something about it, people still complained.
Cowboy Estate Agents in Cyprus
Finding a Reputable Estate Agent in Cyprus
Despite this setback, there is still a way that you can protect yourself from the cowboy estate agents in Cyprus. The EU cannot legislate against private organizations, and Cyprus has two bodies that will offer you a good degree of protection. The first, the Cyprus Real Estate Agents Association (CREAA), is an organization that only accepts bona-fide estate agents. To be a member, an estate agent has to meet extremely strict requirements, and have no criminal record or previous bankruptcy. They also appoint a lawyer if you have problems with one of their members, for a very small fee. The organisation is there – use them.
For added protection, find an estate agent who is also a member of the Real Estate Agent Federation (FIABCI). This body is an international organization covering all aspects of the process, including surveyors, constructors, lawyers and architects, amongst others.
If your estate agent is a member of both of these, and you have a good independent lawyer, you have minimised the chances of falling prey to one of the cowboy estate agents in Cyprus. The Cyprus property boom is over, but preventing fraud is a big step towards persuading the investors to return.
