This is the result of continued financial and real estate difficulties in the country and will demand that the banking system obtains €10.1 billion (£8.7 billion approximately) to raise its basic capital to the level required by the European Banking Authority. However, this will take Cyprus’ total sovereign debt to unmanageable levels and make the European bailout much more difficult.
According to the newspaper, the Cyprus Central Bank met with PIMCO officials last week but the body does not believe that its baseline recapitalisation amount of €6.9 billion (£5.9 billion approximately) would be accepted by investors. The Global Property Guide believes this puts the country in a difficult position. “This worsens Cyprus’s tarnished reputation in its issuance of title deeds along with its structural weaknesses in its mortgage lending that started to erode the banking system in 2008,” they wrote.
Unfortunately, this is just the latest blow for Cyprus and at the beginning of February, figures from the Land Registry showed that transaction volumes are falling in the property sector. While low real estate prices in the country are enabling a greater number of foreign investors to buy a home in Cyprus, sales are actually decreasing. 2013 is expected to be an all-time low for property sales, which were down 53 per cent in January from the same time in 2012, Cyprus Property News reported.
While these figures were arguably slightly screwed, due to a rush to deposit contract sales in 2012 to benefit from a reduction in Property Transfer Fees, the Cypriot property market can be forgiven for being wary. Although January was predicted to bring lower transaction volumes than previous years, it was not expected that they would be the lowest monthly level on record and occur across all areas.