Building permits surge but labour and red tape threaten growth

A sharp rise in building permits points to a stronger construction sector and a positive outlook for the wider Cypriot economy, according to the Cyprus employers and industrialists federation (Oev) and the Cyprus chamber of commerce and industry (Keve). Speaking to the Cyprus News Agency (CNA), Oev director general Michalis Antoniou emphasised strong housing demand but warned that labour shortages were limiting the sector’s ability to respond. Keve secretary general Philokypros Rousounides, meanwhile, called for less bureaucracy and faster licensing procedures. According to the latest figures from the statistical service (Cystat), 2,915 building permits were issued between January and April 2026, up from 2,157 during the corresponding period of 2025. This represented an increase of 35.1 per cent. At the same time, the total value of permits rose by 46.1 per cent, their total floor area increased by 45.5 per cent and the number of planned residential units jumped by 65 per cent. “The construction sector has always been one of the engines of the economy,” Antoniou said, describing it as one of the pillars supporting Cyprus’ return to growth following periods of crisis or recession. In his assessment, the increase in permits showed that the property sector remained attractive to both Cypriot and foreign investors. Moreover, higher levels of construction were helping to expand the supply of homes, offering “at least a partial easing of the housing problem”. However, Antoniou identified the availability of workers as one of the most pressing challenges facing the industry, arguing that the existing workforce was insufficient to meet demand for new homes and other property developments. Without enough workers, he explained, the sector could neither accelerate construction nor respond adequately to current demand. Although the government had taken steps to address the problem, he said labour needs remained greater than the available supply, while procedures for securing workers should be simplified and automated further. “If we satisfy this demand, we will also contribute to alleviating the country’s housing issue,” Antoniou noted. Alongside labour shortages, the sector continued to face pressure from raw material, transport and energy costs, most of which could not be controlled through domestic decisions, he added. Property and construction prices also varied considerably between districts, depending on land costs and the specifications of each development. Antoniou said building costs had risen particularly sharply following the Covid-19 pandemic, before coming under further pressure from Russia’s invasion of Ukraine and developments in the Middle East. Despite those pressures, “demand remains high”, he said, linking the strength of the market to Cyprus’ growing population and its success in attracting investments involving a physical presence in the country. The arrival of company executives and their families was creating demand not only for additional housing but also for wider infrastructure, Antoniou added, including more primary and secondary schools. Nevertheless, he played down the possibility of the property market developing into a bubble. Antoniou described lending by financial institutions as prudent and cautious, assessing the risk of such conditions emerging as minimal to non-existent. Rousounides similarly viewed the increase in building permits as a positive sign, saying the Cypriot economy had “demonstrated once again its resilience” despite successive crises and geopolitical tensions. According to the Keve secretary general, the figures showed that the construction industry continued to operate effectively and remained on a path of recovery and growth. They also pointed to broader development opportunities and a more encouraging outlook for the economy. Rousounides estimated that the permits reflected “to a large extent” a genuine strengthening of economic activity. However, he cautioned that the figures should be examined in greater detail to establish whether movements during particular periods had been influenced by individual large investments. “What remains and what we hold is the positive sign regarding the development perspective of our country,” Rousounides said. Still, he identified bureaucracy and the pace of the digital transition as important obstacles, not only for construction but across the wider economy. Rousounides placed particular emphasis on building permits, arguing that a system that was “more flexible, faster and more attractive” would improve conditions for companies and individuals seeking to invest in Cyprus. He also referred to efforts to make the Cypriot economy more outward-looking and attract additional foreign investment, noting that initiatives undertaken over the past six months to a year were gradually beginning to produce results. Turning to housing affordability, Rousounides acknowledged that buying a home was “certainly not as easy as it was in previous decades”. Like Antoniou, he pointed to the effect of external factors, including energy prices, geopolitical developments and the cost of raw and construction materials. Those higher expenses were ultimately reflected in the final prices paid by buyers, he explained. Meanwhile, construction companies had to price their projects in a way that allowed them to remain viable, retain their employees and maintain the capacity required to take on major developments and investments. Rousounides concluded that, because of its small size, the Cypriot economy remained particularly exposed to external pressures, pointing to inflation as a clear example of a largely imported problem.