21.11.2022
The situation with the constant increase in the cost of housing units has been a concern for some time in the extent to which it affects the local market, especially the middle and low income group.
Significant increases in construction costs, expected increases in interest rates, changing attitudes towards rent, and an influx of foreign demand have pushed city rents to levels that are unattainable for locals as foreign demand has skyrocketed to the point where high demand from one city is being channeled to other cities.
On the one hand, we expected the departure of many Russian citizens to ease the situation, but on the other hand, we have an influx of Ukrainian companies to fill the void; although the latter are not as financially prosperous as the Russians.
It seems that Cyprus has some kind of “trick” that someone else’s misfortune to some extent helps our small island.
Since 1974 (Turkish invasion) we have had: the unfavorable situation in Lebanon, which sent demand from wealthy Lebanese to Cyprus, then we had the civil war in Yugoslavia, the destruction of the USSR, and now the war in Ukraine. And the endless interest in Cyprus on the part of Israeli investors.
So we have a new casino in Limassol that needs 5000 employees (mostly foreign staff as the locals are not particularly interested in hard work or after hours) and just recently 9000 new applications from foreign companies added to the local ones. An increase in the number of student residences is also needed, as students are expected to increase by 50 percent over the next two to three years.
Shipping, which is one of the main earning centers in Cyprus, does not seem to have been affected by the Ukrainian war, but then we have an equal number of new shipping registrations without causing much loss.
The refugees we accept (6 percent of the total population) are part of the “local” demand with a subsidy of 300 euros per person per day, albeit at a low price, but they are there, while hotels now accept about 30,000 Ukrainians and, in our own experience, they are highly educated and well-behaved, which could be the backbone of future business. At the moment we have at least 14,000 newcomers who are mostly in the higher income group looking for the same accommodation as the locals. If we take this number to 14,000, this could increase the demand for apartments by at least 3,000 units, which we cannot supply.
Nicosia is the latest city to benefit from this increase in demand. In a recent let out in Nicosia for a couple of 2 bedroom apartments and after posting the ad, we had 8 inquiries, mostly from foreigners, and the apartment was properly handed over four hours after the ad was posted. This affects primarily the demand of students, as well as local residents with an average / low income. So, yes, demand is pushing prices up, but at the same time it’s creating hardship for locals. This housing shortage was foreseen by Israeli investors who have purchased large plots of land in the Fasouri/Casino area with major projects under development, but it is still not enough.
So, if we talk about more popular 2-room apartments, then the average rent for apartments in the city is as follows:
| City | Rent |
| Limassol | 850 euro |
| Larnaca | 700 euro |
| Pathos | 650 euro |
| Nicosia | 750 euro |
Antonis Loizou & Associates EPE – real estate appraisers and development project managers
