Overview
Despite considerable progress in recent years, banks in the ROC still had the EU’s highest percentage of non-Performing Loans (NPLs) at 9.0 percent of all loans as of April 2023. Cypriot banks are striving to reduce NPLs further, either by selling their portfolios of NPLs or using recently amended insolvency and foreclosure frameworks. Since 2013, the two largest banks on the island by market share, Bank of Cyprus and Hellenic Bank, have reduced their exposure to NPLs through loan restructuring and securitization.
Leading Sub-Sectors and Opportunities
Long-Term Investments
Long-term investors may find opportunities to acquire distressed assets at discount prices either from the two main local banks or from debt-servicing companies (several relevant websites are listed below). Notably, property prices in the ROC bottomed out in 2014 and have been rising slowly since, making the acquisition of NPLs tied to property an attractive prospect. At present levels, domestic property prices are competitive with other southern European countries, including Portugal, Spain, and Greece, as well as neighboring Israel and Lebanon. Prospective investors must have a legal presence in Cyprus and be vetted by the Central Bank of Cyprus. Non-EU investors interested in acquiring large development projects in the ROC may be able to overcome restrictions concerning property size by establishing a company in the ROC.
Resources
Bank of Cyprus Real Estate Management Unit
Altamira Asset Management (Cyprus)
Royal Institution of Chartered Surveyors (RICS) Cyprus Property Index