08.04.2022
Real estate stakeholders are wary of the construction sector’s near-term prospects and are cautioning not to be deceived by the rosy picture painted by the rising building permit trend.
According to statistics (Cystat), building permits issued by local authorities in January 2022 recorded an increase in area (10.1%) and cost (3.4%) compared to last year.
This follows an encouraging trend in 2021, which saw a 16.2% increase in building permits to 8,164 compared to 7,023 in 2020.
However, this trend will end in the coming months and be reversed as the industry faces a bumpy road due to the war in Ukraine.
Panos Danos, CEO of Danos/BNPRE Group, said the increase in building permits reflects the recovery euphoria prevailing in 2021 following the lifting of COVID restrictions.
“Permits issued in recent months were filed in 2021, when things started to improve. However, a lot has changed since then: in mid-2021, the cost of building materials skyrocketed, and the war in Ukraine and sanctions against Russia increased it even more,” Danos said.
He added that many developers are hesitant to continue with licensed projects, as high energy and raw material costs have significantly reduced their profits.“I expect the impact of high spending to be reflected in building permit reports in the second half of 2022 and the first half of 2023,” Danos said, noting that investors would be more cautious. On the other hand, the lack of investment alternatives on the island could result in cash-strapped investors investing in real estate rather than keeping their money in banks with negative interest rates. The coming months will be challenging as uncertainty prevails.”
The number of building permits issued by the authorities in January rose to 535, according to Cystat.
The total value of these permits reached 165.5 million euros on a total area of 158,000 square meters.
With these permits, it is planned to build 640 housing units, an annual decline of 8.8%.
Compared to January 2021, the number of building permits issued increased by 8.3%.
The total cost of these permits increased by 3.4% and the total area by 10.1%.
In January, the number of permits for the construction of residential buildings decreased by 3.5% compared to 2021, the number of non-residential buildings increased by 27.7%, civil engineering projects increased by 52.2%, road construction increased by 233.3%.
