While war is raging in Ukraine, with all the ensuing consequences for the people and the country itself, Europe is seeing economic consequences in various sectors of the economy, as prices are already rallying. Real estate could not be an exception. It is indicative that in many European countries real estate prices began to rise due to inflationary pressure and, mainly, rising prices for building materials at the international level.
The image of the property sector in Cyprus is no different from the rest of Europe. Of course, it must be emphasized that Cyprus real estate has managed to reduce its dependence on the Russian market over the past two years due to the pandemic. This removes the fears of developers about the influence of Ukraine on the search for foreign buyers. At the same time, however, industry cannot help but worry about the impact of the war on the global economy. The rise in prices for oil and construction materials such as iron and wood recorded during this period, as well as the rising trend in interest rates, are currently the biggest problem facing the Cyprus property market.
Rise in rental prices
The war in Ukraine also affected rental prices. The influx of Ukrainians forced to leave their country, as well as Russians fleeing economic instability in Russia due to sanctions, have increased the demand for rentals in Cyprus, and in particular in Limassol. In recent weeks, there has been a sharp rise in rental prices, worsening an already price-heavy rental market, especially for apartments. Rents in Cyprus have been high anyway due to the reduced supply of suitable properties. For many years, the supply of apartments has been below demand, and the situation will not improve in the near future, given the current market conditions. On the contrary, in today’s conditions, the supply will decrease even more, since the implementation of many new projects has been postponed until later.
In these circumstances, limited government intervention is deemed necessary to correct any misstatement as soon as possible. Such incentives should be provided by the government to encourage and enable the private sector to produce more property for which there is a strong demand, such as apartments. With an increase in supply, the problem of high rents will also be solved.
* Director of Imperio, Deputy President of the Pancyprian Association of Land Surveyors, Member of the Board of KEBE and Chairman of the Real Estate Committee