Tell us about the work going at REMU. What are its objectives for the near future?

Since REMU's establishment in 2017, I'd dare say that it has come to be regarded as a trailblazer in the field - the numbers speak for themselves.

Swapping debt for real estate has been an important tool in reducing NPLs on banks' balance sheets, giving lenders a real solution. This particular solution has paid off, as more and more borrowers seek this mode of debt restructuring.

As part of the debt-for-asset swap, since 2016 Bank of Cyprus has acquired real estate worth over €2.5 billion. However the Bank does not intend to become a landowner or an investor in real estate -so early on, and as far back as 2017, our efforts have concentrated on real estate sales as a means of divesting of the property portfolio.

Published results show that, to date since REMU's establishment in 2016, properties worth billions have been put on the market, achieving sales over and above the book value of the real estate in question. Indicatively, sales since the start of 2016 are in excess of €1.7 billion, far above the value of the real estate currently on the Bank's balance sheet and worth €1.15 billion.

Are you satisfied with the sales of real estate by REMU? What were some of the largest sales in 2022?

Over the past few years REMU has earned the trust of buyers and investors, and in doing so it has stood out from among the competition from other banks or companies specialising in putting properties on the market. We are satisfied, because we see a great deal of interest since REMU began operations. The interest relates not just to prime real estate, but also properties of smaller value purchased by individuals as an alternative form of investment. There has also been a great deal of interest from foreign buyers, from countries in our region, like Israel and Lebanon, as well as from faraway places like China.

Overall, more than 3,500 distinct properties were put on the market, with these sales relating to organic sales, but also some structured sales, for example the sale of a number of commercial properties through the AIF/ CYREIT and the subsequent sale of the shares.

These properties have been sold to Cypriots and foreigners alike, and many (which were in an abandoned state) have been developed or renovated into state-of-the-art spaces with new uses - as offices, hotels, supermarkets and malls.

Even during 2021, when the pandemic weighed down on the real estate market, REMU completed property sales worth €149 million. In fact, the number of properties sold last year set a record for management.

Coming to 2022, and despite the geopolitical state of play, we are satisfied with the pace of sales, which appears to be returning to pre-pandemic levels. Based on the results announced for the first half of the year, sales came to approximately €100 million, relating to 375 properties. Certainly from June onward we have carried out additional sales, some of which were of particular interest.

Although every sale counts- which by the way is our internal motto - the larger sales in 2022 include: the Yiorkio building; high-value land parcels in Nicosia, located next to the Mall of Cyprus; land plots in Limassol; commercial space in Nicosia; and a host of other properties.

How much profit has the bank made from property sales?

Profits from property sales are not an end unto itself, as initially our strategic priority was to reduce the stock of non-performing loans, while currently we aim to decrease our portfolio of real estate.

REMU manages and monetizes properties in an optimal way, and later puts them on the market and at prices which - as the data show - generate some profit. The Bank is seen as a reliable partner by investors wanting to invest in real estate in Cyprus, and this is borne out in practice. We are making available some of the best properties on the market, and we're prepared to sell at reasonable prices.

The real gain from these sales lies in making best use of a number of properties that were sold and were in an abandoned or half-finished state, transforming them into useful buildings and developments in Cyprus, yielding value/shelter/professional premises for their new owners, not to mention generating jobs for a large number of people working in renovation/restoration.

What type of property draws the most interest?

I'd say that every type of property has its own type of buyer. We see interest across all types of properties, either due to their location and/or price.

Certainly residential properties, specifically apartments and homes in all districts, garner the most interest - from Cypriot as well as foreign investors.

The same goes for seaside properties, while hotels - despite being few in number - are snapped up quickly.

As I mentioned, although these are the types of properties getting the most attention, our sales numbers over the last few years yield some interesting conclusions - sales of land account for almost 40% of total sales, both in terms of value and in terms of units. By mathematically adjusting the sales, so that the numbers pertain to purely organic sales (excluding structured sales) that number goes up to nearly 50%, again both in terms of value and in terms of units. That is to say, about one in two properties relate to a land parcel, be it a plot of land in Nicosia, a field in the mountains, or a large seaside plot.

How does the rise in real estate prices affect REMU's operations and sales performance?

No doubt the spike in construction costs to a large extent does support sales, as the built-up properties held by REMU are unaffected by rising building costs, so their market price becomes even more attractive - and in line with the latest trends overseas for renovating and repurposing existing properties located in city centres.

Regarding the prices and, because a lot is being said about this, I'd like to clarify that REMU does not compete with developers, vendors or real estate agents. Nor is it true that REMU sells at low prices - and we have the data for that. We don't engage in mass selling, at any price level. At the same time, everyone should understand that unless real transactions take place, the value of the real estate cannot rise in theory. If the argument about major price increases is to hold, then the respective transactions must also be taking place.

As I already mentioned, since 2016 we have put on the market properties worth a total of more than €1.7 billion, and relating to over 3,500 transactions. For Bank of Cyprus, a key priority remains the rational management of the properties in its possession, and in a way that does not impact trends in the real estate market.

Has the pace of real estate recoveries dropped or does it remain high?

Certainly the pace of real estate recoveries, at least in terms of value, has slowed down significantly. This is reflected in the index for non-performing loans which has dropped to single-digits, as per the Group's strategic priorities. A portfolio of problematic loans still exists, which is what the debt recovery unit is working on in partnership with the REMU team - but any additional new influx of property is far more limited compared to the €1.1 billion recorded in 2016, or the almost €0.5 billion in 2017.

Our top strategic objective remains to reduce the portfolio of properties, be it through organic sales or other targeted initiatives (structured sales or partnerships in developing/selling high-value property). The limited number and value of new recoveries (DFAS) plays a key role, supporting the strategic objective of reducing the value of real estate on the balance sheet.