Filenews 24 March 2022
Many businesses based in Ukraine and Russia are transferring their staff to Cyprus, resulting in an increase in demand for residential units, especially in Limassol, a phenomenon that is expected to continue in the coming months, said the President of the Real Estate Agents Registration Council, Marinos Kynaigirou, speaking about the consequences of the crisis in the real estate sector.
He noted, however, that "the sanctions accepted by Russia, a market important for the sector in Cyprus, leave no one unaffected. Even if the war is to stop, it will take a long time for the situation to get smooth again, since the exchange rate on the rouble, inflation and sanctions will have significant long-term effects."
He also added that "the most is expected to affect the luxury real estate market, but also the cases under development of projects, which are financed by Russian funds."
It is too early to say with certainty to what extent the Cypriot real estate market will be affected by the war in Ukraine, real estate appraiser Antonis Loizou told CNA.
Because of the EU sanctions on Russia, which Cyprus adopts, the Russian market, he said, may not risk coming to Cyprus, and prefer Turkey.
He also added that Ukrainian buyers were the most up-and-coming real estate market in Cyprus, while it is known, he said, that Russians hold a large share of the market. From this, Cyprus is expected to be greatly affected, he noted, especially in the sector of tourist properties located near the sea, where prices are expected to fall or many properties to remain unsold.
The Government and the land development companies should also be oriented towards new markets, noted Mr. Loizou, such as Germany. He mentioned that Crete has 2 million German tourists, while Cyprus receives only 200,000 tourists from Germany. "Tourism is the forerunner for the property market," he said.
In addition, another parameter affecting the Cypriot real estate market, according to Mr. Loizou, is the limitation of the activities of Russian companies in Cyprus, which is expected to affect a number of professionals, such as lawyers, accounting offices, etc., amounting to about 5,000 highly paid people, he said. The drop in their incomes is expected to have an impact on the local real estate market as well, he noted.
Increases in property prices
"The rally of increases in building materials, as it seems, will continue for the next period and there is expected to be an impact on the final price of disposal of new properties, but also complications in relation to buildings that were sold 'on paper' under other market conditions and their construction will now begin," Mr. Kynaigirou told CNA.
"Due to the energy crisis and the price increases at an international level, a huge appreciation is emerging throughout the construction and construction industry," he said, while noting that the length of the uncertainty caused by the war in Ukraine will be a determining factor.
He added that if the increased prices last long, this will lead to an increase even in prices from second-hand properties, which today are affected only if they need renovation.
Mr. Loizou added that other factors that affect the real estate market are increases in material prices, which also carry part of the increase in the price of oil. In addition, he said the market is expected to be further affected by the expected increase in lending rates, as evidenced by announcements by the European Central Bank, as well as by inflation, which affects the purchasing power of residents, while the under discussion increase of VAT to 19% on housing is expected to harm the local real estate market, he said.
In addition, he noted that prices are expected to rise in second-hand residential units, which are expected to be in more demand, as they are cheaper than new ones, while they are not burdened with VAT.
Moreover, the President of the Real Estate Agents Registration Council told CNA that in the first two months of 2022 there was a 65% increase in sales documents on a nationwide basis, in a market that had already improved since 2021.
He added that there is a significant demand for apartments in city centres, while there is a gradual lack of large, quality offices. There has been no significant change in rental prices in recent months, he said.
