Huge repricing means huge Opportunities for the Real Estate Industry in Cyprus!
There are many social and economic factors that have affected the property pricing some of which are not easy to analyze due to little to no research.
Globalization has created a dynamic in foreign investments especially in the real estate industry but it has also created market instability due to socioeconomic and political factors that can easily and instantly affect the world property prices.
The research conducted into the impact of war on both commercial and residential real estate is inadequate but that alone does not mean that there is no correlation. There are some very evident impacts of war on commercial real estate.
It will take us ages to analyze effectively and sufficiently what the real impact of a war is on the world economy therefore we will only discuss the immediate impact on the increase for prices of raw materials which have shifted significantly the demand and supply curves. To put this into an economic perspective, when prices rise, demand falls creating a downward sloping curve. When prices fall, demand is expected to increase creating an upward sloping curve.
The war has brought geopolitical changes within the EU with Cyprus following the rest of the European Union countries to cease all political and economic relations with Russia. The whole situation has created uncertainty for future investments, economic and political instability and also a rise in the costs of raw materials which in effect has brought housing costs to rise significantly to new high levels.
To be fair, the Ukraine war is not the only one to blame for this chaos. The ongoing pandemic along with the many sanctions imposed on Russia and the political decisions of the EU have created high inflation rates and as a consequence a lower purchasing power for potential buyers.
On top of that, the ECB (European Central Bank) has directed Cypriot banks to raise the interest rates of loans to be aligned with a common EU financial policy since the interest rates offered by banks in other EU countries were significantly higher than they were in Cyprus.
Considering all these risks and uncertainty, why the present is the best time to invest in the Cyprus real estate industry?
Given these facts the rational would be to postpone buying, correct? Well, that should not be the case if you understand how the property market works and even more so in the case that you are an investor looking out for opportunities. We elaborate below.
The rise of interest rates along with the rise in the construction materials have made it very hard for people to own their own house and even more so, if you add to the equation the unexplainable reluctancy of Cypriot banks to loan out their funds even though the banks more than meet the capital ratio requirements. It is extremely difficult for people to buy a house and many young couples are discouraged from buying and prefer to rent.
It seems that in the case of Cyprus banks giving out loans the saying “The sins of the fathers are visited upon the children” is really on point.
How does making it difficult for people to get a loan affect the real estate prices?
This basically translates to a shortage of supply in new houses, an increase in the demand for the already built houses and a tremendous increase in the demand for rent.
These changes have caused a boom in the real estate industry creating big opportunities to all those who are fortunate enough and have the financial strength to buy or invest.
International investors have already identified the dynamic of the Cyprus real estate industry and have been active already in the Cypriot market taking also into consideration other appealing factors such as the trend of high-tech companies to relocate their businesses to Cyprus.
The prices in the real estate industry in the next couple of years are expected to be similar to a rollercoaster fluctuating constantly but this turbulent environment has created a once in a lifetime opportunity for investors that are able and willing to take risks now!
We strongly believe that NOW is the best time to invest for the long term. By investing in a diversified portfolio, investors can both mitigate short-term risks and position for long-term performance. This way you also avoid the risk of being left, potentially indefinitely, on the sidelines.
Invest now and thank us later!