7 January, 2020

Cyprus construction industry working full steam

When the Statistical Service of Cyprus published the latest data on the number of building permits issued in Cyprus for January-September 2019, the figures were more than positive and encouraging: 5201 permits this year, compared to 4702 for the same period last year. But after the first impression, analysts are always keen to know more, to fully interpret these statistics. Why?

Because building permits are recognized as the barometer of consumer confidence and, in the case of Cyprus, investors’ interest. In fact, the construction industry, and the housing market overall, are largely in step with the wider economy. Not only does construction create jobs, but it also spills over into other sectors and benefits a host of suppliers that provide everything from fixtures, furniture and household appliances, to gardens and pools, as well as telecom installations and even security systems.

Growing number of permits, area, and value

For a more accurate assessment of the impact of this increase, let’s break down those initial numbers. The 5201 permits issued in 2019 were linked to 6867 residential units, compared with the 4702 permits for 4500 units last year. So, the first conclusion is that the trend and demand was for residential development rather than commercial premises.

When comparing the numbers and year-on-year increase, it is equally important to determine the trend in terms of area, but also in terms of value. According to the Statistical Service, the increase in the number of permits this year was accompanied by an increase of 48,5% in terms of area, compared to last year, reaching a total of 1,9 million sqm compared with 1,3 million for the same period in 2018. In terms of value, this year’s building permits amounted to €2.749 million, which is a 77,1% increase on the value of last year’s permits which was calculated at 1.552 million.

Breakdown by district

As the town of Limassol seems to be expanding both vertically and horizontally, it is not surprising that this district recorded the greatest increase in every respect, miles ahead of Larnaca and Paphos. Nicosia – always subject to other factors due to its inland location – lags far behind, while the Ayia Napa / Protaras area actually witnessed a drop, having led the way in previous years, with construction currently under way.

The following table provides an overview at a glance:

Area for which building permits were issued in Jan-Sept in ’000 sqm
  2019 2018 % ’19 / ’18
Nicosia 467,7 432,5 8,1
Ayia Napa / Protaras 105,5 142,3 -25,8
Larnaca 251,7 167,1 50,6
Limassol 876,5 392,0 123,6
Paphos 189,7 140,0 35,5
TOTAL 1891,1 1273,8 48,5
Source: Statistical Services of the Republic of Cyprus

The above figures are all the more encouraging, as they constitute a return to pre-crises levels, not seen since 2011. With a reasonable, sensible and forward-thinking approach, the government and all players in the real estate sector can and should take action and measures to secure sustainable growth on solid ground.

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Yiannos Trisokkas

Yiannos Trisokkas

Yiannos Trisokkas is the Director of Casamont Cyprus Ltd overseeing operations in Cyprus and Greece. He has also been the Managing Partner of Henley & Partners Cyprus Ltd since 2013, with Greece’s Golden Visa Program within his ambit. He serves as the Chairman of the Real Estate Committee and Member of the Management Board of Henley & Partners.