Town planning and tax incentives provided to developers along with the purchase of luxury residences and tower apartments by foreigners so as to get the Cypriot passport seem to help out the island’s business world.
Central Bank data shows that the granting of citizenship to investors – mainly Russians and Chinese – for the purchase of luxury properties mainly in high-rises has led to the reduction of non-performing loans. However, part of the reduction of NPLs is also due to the transfer of red loans from the collapsed Cyprus Co-op Bank to KEDIPES.
By the end of 2018, NPLs in the construction sector stood at €1.30 billion from €5.12 billion in 2014, marking a decline of €3.82 billion within four years. However, many of the sector’s red loans have been written off against property exchanged between banks and debtors. In 2015, red loans in the construction sector stood at €4.93 billion, €3.81 billion in 2016 and €3.15 billion in 2017.
A remarkable improvement is recorded in the hotel and restaurant industry. The positive path of tourism has contributed to a drastic reduction of debts by hoteliers, especially of non-performing loans. Because of the positive forecast that tourism will continue to rise in coming years, hoteliers have taken the investment risk of expansion or of construction of new units. In the sector of hotels and restaurants, NPLs dropped to €274.55 million by end of 2018 from €1.33 billion in 2014, €1.30 billion in 2015, €1 billion in 2016 and €337 million in 2017.
In the wholesale and retail trade sector which marks big ups and downs with constant restructuring and sale of assets by companies, NPLs loans stood at €1.42 billion by end of 2018. In 2017, NPLs stood at €1.88 billion, in 2016 at €2.13, in 2015 at €2.27 and €2.34 billion in 2014.