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Are We Living Beyond Our Means?

The state of the economy affects the state of the property market, both directly (sales prices) and indirectly (difficult loans). Without being necessarily experts on the economy, we understand that the way out of the prevailing situation is to encourage development and business expansion, to add confidence to those daring investors, especially those involved in large projects and reduce bureaucracy. We will also add that we need some sort of “economy patriotism” by all of us, so the individual “sacrifice” large or small can benefit the whole country.

As we have noted extreme measures do not rally the patriotic feeling that we need (see Greece with the bombing reactions etc and more recently in France with the pension proposals).

Our Government, we cannot say, it gets top marks in its economy administration. This Government has inherited from the previous Government €½ bil. excess and over the 2 years of its governance, it has managed to spend it all and borrow another €1½ bil. Economic reports including that of the E.U. and the Governor of the Central Bank encourages this Government to cut down spending with the primary consideration the wage bill of the civil service. Yet, whereas the civil service accepts a reduction of salaries for all incoming wages for new incoming staff, this Government does not agree with (civil servants get approximately 1.75 time more than equivalent jobs in the private practice) and all this, notwithstanding the fact that the opposing parties agree with the reduction!! Governmental spending includes also projects that are not necessary those which will help the Cyprus economy over the immediate future. The Culture Center (which will cost around €100 mil.) is an example, as is the new Pafos-Polis road (notwithstanding the fact that we are all for it, it could be postponed by 1-1½ years), the Akamas national park (estimated cost over €250 mil.) and various smaller but numerous “voting chasers projects” which amount to €15-€20 mil.

As if all these were not enough, we have a situation with the Qatar investment, which could amount to over €150 mil. upfront cash, plus the remaining fringe benefits from this 55.000 sq.mts. development (including the establishment of a business hub for the gulf states and emirates). Our experience so far is that opposing politicians will do just about everything to cancel the project regardless, various professionals emanating purely from own promotion/jealousy etc have adopted a small-mindness approach and no one is considering what the affects will be if the Qatar fund pulls out and the “message” that this will be passed on to international investors (we have invited as Government the Qatar fund to invest and then we said no!!).

The very bad handling of Eurocypria airline, which is shutting down at a cost of €50 mil. (the damage to Cyprus tourism apart), is an addition of the whole very bad situation.

Another aspect, not directly related to the economy, but related to real estate sales abroad, is the level of security. The level of individual security’s feeling is falling, but still it has retained its European 3rd best secured position, because the other countries are also having a deteriorating situation. Handbag thefts are increasing, organized crime (relating to prostitution and gambling) is increasing and problematic/violent behavior (see football matches) is the ordinary situation. Yet the Chief of Police complain that 25% of the newcomers police officers are women and that % is increasing fast and his suggestion to have a women’s quota has been rejected (a huge mistake), so in a few years who is going to handle the night policing, the drags raids and football hooligans?

These are some of the points that trouble us and we wanted to share our thoughts with you. The economy and its prospects depend on many factors, local and international, but may be at the end of the day, we, as Cypriots, sit back and relax like nothing is happening, driving a car down hill with increasing speed? Should the economy not be above political ambitions and should we not ask politicians to project themselves for the benefit of the economy of the country?

Mr Antonis Loizou FRICS, the Managing Partner of Antonis Loizou & Associates – Chartered Surveyors, a Cyprus Real Estate service provider based in Cyprus with offices in Romania and Russia. The company website offers more than 3000 Cyprus properties for sale online.

Mr Loizou has practiced in the UK and Cyprus for over 30 years, has a long track record of providing advice on complex real estate projects, writes regularly in the financial press, and is involved in the highest levels of the Cyprus government influencing policy.

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