Cyprus - Country Commercial Guide
Distressed Assets

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-09-30

Overview

At the end of March 2021, Cypriot banks still had NPLs amounting to 17.7 percent of their total loans, compared with 27.6 percent a year earlier, meaning the ROC continues to have the second-highest level of non-performing loans (NPLs) in the EU, after Greece.  Since 2013, the two main banks on the island, Bank of Cyprus and Hellenic Bank, have made significant progress towards reducing their exposure to NPLs through loan restructuring and securitization, but they have more work to do.  Two U.S. funds (PIMCO and Apollo) have bought large bundles of distressed loans in Cyprus at a discount, but there is more potential for such deals given the aim of Cypriot banks to reduce their NPLs to less than 10 percent in the near future. 

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, possibly through an e-auction (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

Gordian Holdings

Altamira Asset Management (Cyprus)

Central Bank’s Property Index

Royal Institution of Charter Surveyors (RICS) Cyprus Property Index