Board member of the Royal Institution for Chartered Surveyors (Rics) Cyprus Pavlos Loizou has said the economic situation in the country is impacting the real estate sector.

Speaking to the Cyprus Mail, he stated: "Property and rental prices continue to drop, mainly due to the unfavourable economic climate, the negative forecasts for the broader economy, the lack of sponsorship and the low performances [of real estate assets]."

Mr Loizou explained Cypriot commercial property yields need to improve and rents have to stabilise if investors are to be encouraged back to the country and he stressed until this happens, the market will remain in a "slump". 

Meanwhile, Cyprus Property News revealed the rate of construction in the nation slowed in February, with 9.4 per cent fewer building permits issued this year than in the same month in 2011.

The figures from the Cyprus Statistical Service also showed the total value of construction projects in January and February fell to €261.2 million (£212.2 million), down from the €351.7 million recorded in the same period a year earlier.