Despite the recorded decline in demand for real estate from Russian clients, there is no significant decline from the domestic or the rest of the foreign market, says Cyfield director George Chrisochos.
Mr. Chrysochos emphasizes that Cyprus is a haven for investors, businesses and families, given that the long-term effects of the war will benefit our country. In this context, he notes that “we will expect an increase in demand, both in residential buildings and in apartments, as well as in offices.”
Referring to rising production costs, Director Cyfield notes that we have reached a point where there is no commercial or economic logic in the value of raw materials. However, according to him, if there is no further escalation of the crisis, no further growth of materials is expected.
How does the Russian invasion of Ukraine, as well as the sanctions imposed against Moscow, affect the construction and real estate sector in Cyprus?
Like all industries, the war will directly affect real estate. Many pending sales with clients in Russia and Ukraine cannot be completed due to the imposition of capital controls and the ban on Russian banks from transferring funds to Europe.
In the near future, due to the ban on Russian airlines, the traffic of Russian potential clients to Cyprus will decrease, which means that there will be a decrease in demand for real estate from Russian clients, who have always constituted a significant market share for Cyprus. However, the long-term consequences of the war will benefit Cyprus. As we have seen in the past, Cyprus is a safe haven for investors, businesses and families who want to escape the crisis in their home countries and live and work in Cyprus, enjoying the benefits of a high standard of living, low taxation, stability and business. perspectives offered by the European Union.
So we will expect an increase in demand, both in houses and apartments, and in offices.
Do you think we will see a further increase in construction costs?
We have reached the point where there is no commercial or economic logic in the values of raw materials. The prices that we are seeing today are the result of war and sanctions.
Global trade today has adjusted to the data we mentioned above. While there is huge uncertainty, as we have recently seen from many unforeseen events, unless the crisis further escalates, we do not expect a further increase in the number of submissions.
This does not mean that existing prices no longer create huge problems for manufacturers who signed contracts before the war.
In addition to the increase, have you noticed delays or shortages of materials?
All orders for equipment and parts that we have placed in the last few months have a delivery time of up to four times longer than usual.
Because of this, we are seeing a phenomenon where used cars or parts on the market today are more expensive than new ones.
We have not noticed a shortage in our own needs, because the market has found alternative solutions for the supply of materials, which, unfortunately, are much more expensive and have a longer delivery time.
Did the increase in costs contribute to the decrease in demand? Or is demand staying the same?
Demand comes from the real needs of the market, for example: people continue to marry and create families and generally need housing.
Banks continue to grant mortgages with relative ease, and foreigners continue to be attracted by the high standard of living in Cyprus.
Apart from an immediate decrease in demand in the Russian-Ukrainian market, we do not see a significant decrease in demand in the domestic or other external markets. Potential clients agreed that buying a home requires adjusting their budget.
Many potential buyers who have decided to put off purchasing a property due to rising material prices are returning to searching because they see that potential cost reductions will come slowly. All this leads to a steady demand.