16.04.2022
It turns out that someone else’s poverty from time to time helps the real estate of Cyprus.
Those of a more “mature” age will remember the Lebanese interest (as a result of the civil war) when property prices and rents skyrocketed, followed by the breakup of Yugoslavia, the first wave of instability in Russia, when many became rich in one the night the USSR collapsed, and the invasion of Ukraine. This foreign interest has been directed towards Limassol and Larnaca, which has boosted demand and kept property values high.
We now see the outcome of the situation in Ukraine with a sharp increase in demand for rentals (primarily in Limassol and Larnaca), mainly for apartments and, to a lesser extent, for office space.
It is noteworthy that the requests are for high budgets, such as one-bedroom apartments for rent at a price of 1000 euros per day, offices for rent at a price of 20 euros per sq.m. etc., while for more prestigious apartments rental requests are around 2000-3000 euros per hour.
I do not know if this demand will be maintained and for how long, as it depends on the brutality and duration of this highly unfortunate conflict. At the same time, there is interest in apartment buildings (perhaps family houses), while hotels require rental through agents without explicit intentions.
Whatever the level of demand, it is not aimed at more expensive skyscrapers. But still, this is an indicator of demand from Ukraine (individuals and companies).
Although the Cypriot government offers some financial assistance to Ukrainian refugees, this is not enough for long-term stable living.Therefore, this interest should be treated with caution. In addition, apartment rent growth will not decrease (due to higher construction costs, higher interest rates and inflation).
This demand will hurt local residents who are already struggling to pay their current rent based on median income.
In addition, these Ukrainian refugees, most of whom are well educated and have innovative ideas, cannot fill the gap in the hospitality industry, as they are mostly women and children with limited English proficiency, rather than a labor force focused on this sector.
A report on Alpha TV mentions a Congolese girl (now 14 years old) who came to Cyprus about five years ago, told her heartbreaking story and was top of her class at a local school.
Now she is under threat of deportation with her family, no handouts from the government, her father works at a gas station, her mother a cleaner, and after five years of hard work, they managed to buy a used car.
So, of the approximately 10,000 Ukrainian refugees we have accepted so far, if we add many other economic or other migrants to another 20,000, we will strengthen the workforce (and social security system). By contrast, Italy needs 500,000 foreign residents a year to contribute to the labor industry, while Greece needs 100,000.Cyprus also has one of the lowest birth rates in Europe, which at current levels means that the social security fund will soon become unsustainable unless it is replenished with new workers and social security payers.
It is difficult to predict the outcome of the refugee situation in Cyprus and it is correct to say that the poverty of other countries has helped the Cypriot real estate market, especially for some landlords.
Antonis Luazou – real estate appraiser, project consultants and real estate agents
