22.03.2022
Regarding the effects of the war, as well as the related sanctions, Pavlos Loizou, CEO of fintech company WiRE FS, said that the Cyprus property market is likely to be affected both positively and negatively.
In recent weeks, there has been an influx of foreign nationals from affected countries, including Ukraine, Russia and Belarus, with more than 6,000 Ukrainians arriving on the island by March 18.
In addition, until February 24, there were about 2,300 Ukrainian tourists in Cyprus, and there is no exact data on people from Russia and Belarus who visited Cyprus in recent weeks. The majority of people who have moved to Cyprus are employees who work for companies that are either based or operating in the aforementioned countries. These displaced persons are now temporarily relocated to hotel rooms in Cyprus, mainly in Limassol, as their companies seek to protect both their employees and their own business opportunities.
This development can have a beneficial effect on the local economy, as there are young people with a high level of education and professional experience among the resettlers, who can eventually be integrated into the Cypriot labor market.
“If these people end up staying in Cyprus, then they will definitely be looking for personal accommodation, so we will see an increase in demand for residential properties for rent,” Loizou said.“If the companies that these people work for also decide that they will continue to operate through Cyprus, then at a later stage there will be increased demand for office space rental, again focusing on the city of Limassol, where most foreign companies are based,” he added.
As for any negative consequences of the conflict, they primarily concern Russian investors and business people.
Loizou estimates that since about 10% of large projects in Cyprus are financed by Russian capital, there is a possibility that some of these projects may be frozen, at least for the moment.
“Given that Russians make up a significant percentage of luxury property buyers, mainly in Limassol and Paphos, this sub-sector of the real estate market will certainly experience some decline,” he said, explaining this as a general uncertainty permeating the global economy, as well as the difficulty of translation funds from one country to another, especially at an exchange rate that is not favorable for the conversion of rubles into euros.
As for the Cypriot buyers, they are very concerned about the rising cost of building materials, which leads to an increase in property prices.
“This development has the potential to attract even more people to an already sizable secondary market that has a significant supply for all types of properties, especially with the continued increase in the availability of property from asset management companies,” concluded Luazou.
