Financial Mirror (Cyprus)
Developers crushed under soaring costs
The construction industry is suffering as the price hike of raw materials continues, with developers crushed under higher costs as they are deprived of Russian money.
Developers say some private projects in the pipeline have been put on ice; projects underway have been slowed down, while those backed by Russian investors are put on hold due to sanctions on Moscow.
In comments to news site Stockwatch, Stelios Gavriel, Chair of the Federation of Cyprus Building Contractors Associations (OSEOK), said: “Developers’ lives have been made difficult as they are no longer able to meet the demands of the market”.
“Thankfully, the last two to three years have been kind to us, and we have enough liquidity to keep our projects alive until September. After that, we will no longer be able to buy raw materials for a certain period, as prices are going up daily”.
Gavriel said the cost of iron was at EUR 450 per tonne last year, while currently, prices are between EUR 1,150 to EUR 2,000 per tonne.
As he argued, contractors have agreements to honour, which means they cannot transfer the cost to buyers, while on the other hand, importers are rolling increases down to developers.
The president of the association of large investment projects, Andreas Demetriades, in statements to Stockwatch, said the majority of big private projects had been frozen due to lack of funding, as Russian investors no longer have access to Cyprus ventures.
“Large investment projects are on hold until funding is found from sources other than Russian funds.
“We must turn to the European market, the British market, and the Middle East market to reduce the gap left by the Russian and Ukrainian markets,” said Demetriades.
The chair of the Technical Chamber (ETEK) - an advisory body to the government - Constantinos Constanti, said uncertainty in the industry is an obstacle for new projects for investment purposes, but this may be a good opportunity to review the development model of Cyprus.
“If there are investors, we should encourage them to invest in green growth, agriculture, energy upgrades, photovoltaic parks, technological projects, moving away from the easy profit that the high risers brought,” said Constanti.