Landbank Real Estate Analytics CEO Andreas F. Christophoridis predicts the impact of the Russian-Ukrainian crisis on construction costs and the real estate market.
Mr. Christophoridis noted that both the direct effects of the war and the introduction by the EU, the UK and the US of restrictive measures against the Russian elite and the economy have caused significant disruptions in supply chains. reactions in the construction sector and the economy as a whole.
Sudden increase in construction costs
Asked the next day to comment on the real estate situation following the start of the Russian invasion of Ukraine in February of this year, Mr. Christophoridis said the two countries are major suppliers of metals (mainly copper, titanium, uranium and iron), raw materials, chemicals and equipment in the European market and the UK market, while Russia supplies the EU with more than 35% in oil and gas.
“As can be seen from macroeconomic indicators, this severe disruption in the global economy is causing inflationary trends with a sharp rise in construction costs,” he said.
Impact on supply and demand
Presenting his own assessment of the Cyprus property market, the CEO of Landbank Real Estate Analytics stressed that the property sector as a whole will be affected in terms of both demand and supply, however specifying that it is still unknown to what extent this will be affected.
Inflation with low growth
At the same time, the risk of inflation stagnation seems to be visible;a combination of inflation and low growth rates, which usually has a negative impact on both unemployment and the cost of living.
“In order to cope with inflationary trends, it seems that central bank interest rates will increase, however, this is expected to cause an additional problem in the already received economic growth, as lending will become more expensive,” Mr. Christophoridis. noted, emphasizing that since economic conditions involve significant risks and costs, investment in the construction sector is expected to be further affected.