07.09.2022
Despite falling building material prices, due to the ongoing energy crisis, Cyprus developers are reluctant to give the green light to new construction projects until they have a clearer idea of where construction costs are going.
Stakeholders in the Cypriot construction sector fear the price cuts, which they see as temporary, as large building materials companies have threatened to cease operations due to rising energy prices.
Stelios Gavriel, chairman of the Federation of Construction Contractors Associations of Cyprus (OSEOK), said the price cuts could be temporary as developers limited their purchases.
“Also, construction activity always drops in August due to the holiday season. Therefore, the true extent of the problem will begin to emerge from this month,” Gavriel said. He said that uncertainty is affecting large private projects, new homes and villas due to the required composite materials, which is drastically increasing construction costs.
“On the other hand, the construction of apartments has not suffered to such an extent, since the building materials used are not so diverse. Unless the prices of building materials are corrected, which, despite the recent decline, are very high compared to 2019, those who want to build a house will have to reconsider their plans, reducing the building area and any additional buildings.
Konstantinos Constanti, Chairman of the Cyprus Technical Chamber (ETEK), which advises the government, commented that worldwide prices for basic materials, after rising above 70%, seem to be stabilizing.
The prices of some materials, such as iron and steel, fell by 5-10%. However, as he noted, the recent decline does not compensate for the growth recorded over the past two years.
Shipping costs are down from their 2021 peak, but “they remain at a much higher level than in 2019, averaging between 25% and 30%.”
If prices remain at this level, young couples will not be able to buy a house or apartment, Constanti said, leading to a vicious cycle as developers will not have buyers to sell their projects to.
