A new draft bill aimed at screening foreign direct investment (FDI) in Cyprus risks creating significant uncertainty and delays in the property market, potentially deterring foreign capital. This warning comes from the Association of Credit Acquisition Companies and Credit Facility Management Companies (ACACS) in a letter to the Parliamentary Committee on Finance.
Vague Definitions and Bureaucratic Hurdles
The association’s primary concern is the bill’s lack of clear definitions for what constitutes a “property of strategic importance.” According to ACACS Director Lisa Solonos, this ambiguity could lead to bureaucratic logjams and investor frustration, as it’s unclear which property transactions would be subject to review.
In the letter, she warned that this could result in an excessive number of applications being filed, creating delays that push investors towards competing destinations. “For legal certainty and practical reasons, it is vital to clearly define which properties fall under the law,” Solonos stressed.
Protracted Timelines and Retroactive Cancellations
The proposed timelines for the approval process are also a major point of contention. The various deadlines could extend the review and approval process to more than four months, a timeframe seen as a major obstacle for property transactions that often require speed, particularly when bank financing is involved.
An even greater concern is a provision granting the Ministry of Finance the power to retroactively cancel transactions up to 14 months after they have been completed. Solonos warned that “this provision creates severe uncertainty and discourages investment,” and questioned who would be liable for damages if a developer has already started construction.
Proposed Amendments and the Bill’s Purpose
To mitigate these risks, ACACS has called for clearer definitions, shorter approval deadlines, and a compensation mechanism for investors affected by any retroactive cancellations. The association also proposes reducing the 14-month review period to a maximum of three months.
The bill is intended to establish an FDI Screening Mechanism in line with EU regulations, aiming to protect national security and public order. However, industry stakeholders are urging for amendments to prevent unintended negative consequences for the real estate sector.
Source: Cyprus Property News