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Cyprus stimulates buyers. demand for real estate is now likely to grow

The threshold for real estate investment in Cyprus with rights to obtain the county’s citizenship was recently reduced to EUR 2 million. This might significantly increase the demand for properties on the island.

Sector consultants estimate the number of sales to Russian citizens to increase by 20% for the year to come. The demand for housing in Cyprus might grow significantly with a drop of the threshold of investment in exchange for citizenship from EUR 2.5 mln to EUR 2 mln. Hence, according to experts, the number of deals might grow by 20-25% in 2017. Other estimates suggest that by the end of last year the number of requests for the selection of real estate in Cyprus increased by 15-20% compared to the same period last year. Concurrently, given this tendency, the house prices have already grown by about 2%.

The investment threshold in exchange for citizenship was brought down officially in Cyprus in November 2016, but it only starts having a significant impact on the market now. In the course of the two years prior to that, with the threshold fixed at EUR 2.5 mln, demand for the local properties remained undemonstrative. Compared to 2015, the number of requests increased by 11% in 2016, however only 6% of cases reflect a sale purchase in excess of EUR 2 million.

Given all the necessary formalities, the period for obtaining a Cypriot passport is three months. This is the fastest and cheapest way to get an EU document: all other member-states offer citizenship only after a period of five to ten years spent in the country with a temporary residence permit. The only alternative is Malta. «The local ’passport for investment’ programme supposes a EUR 500 thousand direct investment in the development of the country. This, in fact, means that a potential applicant should donate some EUR 700,000 to the local authorities (considering all the legal costs).

A new owner of the Cyprus passport must hold a residential property worth EUR 500,000 (under an indefinite period of ownership). Any other assets may be sold after three years. Throughout this period, apartments and villas may be leased: our estimates show that an annual return on a residential property in this case would be on average between 4% and 5%.

In case of a subsequent resale of assets the owners do not run into any risks. «There is a steady demand for housing In Cyprus, in the price segment up to USD 1 million. This is given that the house is purchased for personal needs. In cases of more expensive properties, one can never be too careful,» the real estate consultants believe.

Panama’s Mossack Fonseca sacks 40% of its employees

Panama’s Mossack Fonseca, a provider of legal support in the registration of the offshore companies, announced a dismissal of more than 75 employees, or about 40% of the company’s workforce. The firm announced that, despite the numerous calls for justice and communication with the mass media channels, the political, economic and media situation around the company forced its management to part with more than 75 of its employees who, in the course of the last 40 years, invested a significant share of their time and skill in the company«, wrote the local media quoting the company statement. Since April 2016 «some 250 employees» have stopped working for Mossack Fonseca.

In February this year, the firm founders, Jurgen Mossak and Ramon Fonseca, were taken into custody. The Panamanian prosecutor’s office suspects them of laundering money, concealing assets and funds of «dubious origin.»

A large-scale investigation based on Mossack Fonseca papers was made public in April 2016. The total revealed data was 11.5 million documents collected from 1977 to 2015. The papers contain information on the offshore financial schemes, which might involve 12 former and acting heads of state and some 100 politicians and celebrities from over 50 countries around the globe.

According to the WikiLeaks, the publication of the Panama papers was endorsed by the US Agency for International Development and the Soros Foundation.

Russians loose interest to properties abroad

By the end of 2016 it was clear that Russians set a new anti-record by only investing USD 800 mln in the foreign real estate. This is the smallest amount for the past eight years, and the volume of this type of investment is set to decline in 2017, primarily due to the reduction in the number of sales of holiday properties abroad.

Russian business does not like freelancers

According to a report by Accenture, freelancers are replacing the permanent staff members all over the world. In Russia, however, employers still prefer the latter. What keeps the Russian businesses from joining the global trend?

The world is rapidly shifting towards the Workforce Marketplace model, with freelancers directly selling their services online are gradually replacing the full-time employees. This is a conclusion that follows from Accenture consulting last annual report, ’Accenture Technology Vision 2017′, following a survey among companies from 45 countries and 16 different sectors.

For the first time, Russia was included in this report. Given the results, the Russian businesses are not aligned with the global trend. Only 12.4% of the specialists working for the surveyed companies are freelancers. This is the lowest rate among the 45 participating countries. For comparison, the leader, Saudi Arabia, has 29.5% of freelancers in the workforce.

Some 28.3% of the polled Russian companies completely reject the idea of employing freelancers, while the average rate across all represented countries is at 13.8%. Moreover, businesses in Russia are not striving for a change: in the next three years only 42.5% of respondents said they would be prepared to hire freelancers. This percentage in Norway, for example, is 64.6%.

So why do the Russian employers hold no trust in freelancers and online skill exchanges?

Freelancers are there, with no effect

The first experience that the founder and owner of the intelligent Zorgtech street-booths manufacturer Maxim Pulov had with the freelancers was an extremely unfortunate one. A few years back he was working on a major IT contract for the Russian Ministry of Culture. At one point, he needed help of a software developer, so Pulov decided to employ a freelancer.

He picked someone he thought to be a worthy specialist, an ex-employee of Microsoft with good references. Things were going fine until one day, only 3 days before the delivery of the project, the freelancer suddenly cut all contacts. «He had all the source codes, we were not able to hand over the finished project,» Pulov recalls today his sour experience. He found the address of the unfortunate freelancer and went personally to see him in the middle of the night.

On the spot, it turned out that after leaving Microsoft, the software developer took on several projects at once, but failed to deliver: he worked with no sleep through a whole week bringing himself to a nervous breakdown. Somehow, the project was then brought to a completion. Since then however Pulov no longer entrusts serious work to freelancers.

The unreliability of freelancers is a typical issue in Russia. In 2016, the IT operator Inoventika was forced to suspend the production of TV commercials about the company’s products. The reason is once again a failure of a freelancer, whose tasks included creating a story, preparing a script and shooting a video. «As a result, no deadlines were observed, and we wrote the story board ourselves,» says the IT firm’s spokeswoman Ekaterina Khrobostova. «This is why we no longer subcontract strategically critical projects to freelancers».

Broken deadlines, disappearance and straightforward hackwork are the typical complaints from the businessmen to the outside employees. No matter how strong are the CVs, or the recommendations of the previous customers, or a constant control, the freelance employees keep underperforming or simply disappear. What can one do about it?

When do freelancers become useful?

According to the survey by Accenture, 26.4% of the Russian companies see freelancers only as a temporary resource that allows them to meet short-term needs.

According to some experts, a freelancer can be only entrusted with the implementation of standard, and preferably not the most urgent, tasks: a website design with simple architecture, shooting a video or a technical installation. These conclusions are drawn following their experience of foiled cooperation with freelancers.

The main reason for using freelancers is the economic one, or so claim, according to the Accenture survey, 35.8% of representatives of the Russian companies. «This model functions in cases when it is too expensive to hire specialists with a narrow set of skills. Whereas attracting freelancers, we save some 50% to 70%,» claim the entrepreneurs.

Smart freelancer banks

Smart online freelancer banks will soon help increase the effectiveness of the independent labour, analysts predict.

At the moment, sophisticated mathematical algorithms are developed for such online banks. Their role would be to select freelancers for certain projects against a highest set of parameters vital for the potential employer. «In the nearest future the online banks and exchanges will become fully automated using artificial intelligence,» affirm the IT experts. «The more regular use by an employer would ensure a faster and better selection process of the candidates, by offering the very employee necessary for a project, providing a great amount of confirmed data related to the subject. This will happen in an automatic mode, the only task would be to form a request.»

The most popular online workforce bank today is Upwork, with hundreds of thousands of registered specialists of all profiles and qualification levels. There are others: Freelancer, Gigster, Zhubajie. Unlike the similar Russian projects (such as online employers Workle, YouDo, Freelance. ru), they are quite heavily automated. According to the feedback by some customers, it is the low-skilled specialists who mostly seek work as sub-contractors through the domestic online resources, while the star employees prefer word of mouth.

This, perhaps, is the reason why the Russian businesses show little willingness to use the online job banks to attract independent employees: 28.3% of Russian companies, according to Accenture, do not use online resources (while the average in other countries is 13%). This is the highest level of ’denial’ among the surveyed countries. The use of the online workforce banks for large projects is considered by 17.9% of the Russian companies. In this respect, Russia is far behind the leaders: Austria (38.8%), Switzerland (30.5%) and Great Britain (22.5%). As the online banks increase automation for searching and hiring of freelancers, the demand will inevitably grow, experts affirm.

According to the Accenture’s estimates, an evident transition to the Workforce Marketplace model by businesses worldwide should occur in the next few years. Today, only 15.5% of the total workforce in the US are freelancers; by 2020 this rate may exceed 40%. Consultants make no forecasts for Russia yet.

Bahrain: new regulation to attract investment

New rules providing 100% foreign ownership will boost investment in Bahrain.

The Kingdom of Bahrain is implementing comprehensive changes to its corporate laws and procedures, making it easier to set up and conduct business in Bahrain. These changes will provide for a simplified incorporation of businesses, streamline the company administration processes and ease the restrictions on full foreign ownership.

A series of new laws and amendments have been introduced over the last 24 months to modernise and streamline the regulatory regime, enhance corporate governance and increase accountability, empower shareholders and facilitate foreign participation in Bahrain companies. They are designed to promote entrepreneurship in this Gulf country, and encourage foreign investors to choose Bahrain as a destination of choice for doing business in the region.

Cyprus: tourism brings 3,5 BLN euro in the state budget

The growth in tourist traffic in Cyprus led in 2016 to an increase by 4.4% of the budget revenues, a total of 3.5 billion euros or 19.9% of the country’s GDP. This is the result of some 3.2 million of tourists who visited the country last year. This follows from the report of a leading audit company.

Experts also make positive forecasts for the future of tourism in Cyprus: annual revenue is expected to grow by 3.6% all the way up to 2026. By then, the revenue from tourism sector of the economy will represent 22.9% of Cyprus’s GDP, or some 5 billion euros.

According to the reports, the tourist offer in Cyprus is more expensive than on the other Mediterranean markets. Nonetheless, Cyprus is one of the few states that learn fast to work with seasonality. Thus, last year the authorities managed to extend the tourist season in Cyprus by 2 months.

Cyprus: second in Europe on the number of poor

According to a research carried out by the Economic Research Institute of Cologne, the number of poor in Cyprus grew by 28.2% since 2008. In the European Union, the country ranked second after Greece on this indicator.

The calculations reveal that the Mediterranean countries suffered most from the global economic crisis. Thus, in Spain, for instance, the poverty level increased by 18%, in Italy by 11%. In the period from 2008 to 2015, the number of poor in Greece increased by 40%. Then comes Cyprus with 28.2% growth. The situation in Ireland is slightly better, where the number of poor rose by 28%.

The research not only took into account the low level of income of the population, but also the purchasing incapacity, as well as the reduction in educational opportunities, underemployment and deterioration of the public health system.

The poverty rate in Cyprus is attributed to the prolonged recession, high level of unemployment, along with the severe austerity measures and other terms imposed on Cyprus and Greece by the international lenders.

Russia—China trade turnover up by 28.8%

The trade turnover between Russia and China grew by 28.8% in February 2017, compared to the same period last year. According to the data of the main Chinese Customs administration it amounted to 5.034 billion dollars. By February 2017, Chinese exports to Russia grew by 14.9% up to USD 2.02 bln, while import to China from Russia increased by 44.3% up to USD 3.014 bln.

As a result of 2016, the trade turnover between Russia and China grew by 2.2% up to USD 69.525 billion: Chinese exports to Russia grew by 7.3% to USD 37.297 billion, while imports from Russia fell by 3.1% to USD 32,228 billion.

The Russia—China trade turnover decreased in 2015 by 28.6% and amounted to 68.06 billion dollars.

Cyprus and France lead in combating financial crimes

Transparency International analytics division recently published a report under a title «Top Secret: countries keep financial crimes fighting data to themselves». The document mentions Cyprus, among others. TI studied 12 countries including Cyprus and some major financial centres such as Germany, Luxembourg, the Netherlands, United Kingdom and the USA. The report is based on information available up to January 2017.

The report underlines that «Cyprus has provided the most comprehensive set of data on combating money-laundering among the 12 analysed countries. The information allowed to assess the state by 14 out of 20 indicators», which came under the expert scrutiny. The number of inspections and criminal investigations into money-laundering activities were very high in 2014, with one in every five criminal investigations leading to prosecution. The only critique is a low number of applications for mutual legal assistance in cases of international financial crimes.

The TI experts concluded the following on combating money laundering: «Cyprus and France provided the most comprehensive data sets covering all aspects of monitoring, violations and sanctions.»