Construction industry enjoying a revival
An increase in housing projects and renovations help diversify the sector
Cyprus’ construction industry seems to be regaining confidence over the past year, as developers encouraged by an increase of activity, feel that the barren years of the real estate crisis are behind them.
The Federation of the Building Constructors Association of Cyprus (OSEOK) said things are looking up as developers see a bright future with big projects in the pipeline, while others are expected to be announced.
The manager of OSEOK, Frangos Prokopas, said that the sector has seen an upward swing that began in 2017 and has continued into 2018.
He said the federation’s Activity Index has recorded a positive trend for the first time since 2010, standing at +12%. The Activity Index measures the percentage of developers who stated that they saw their business grow in 2017.
Meanwhile, the Work Cycle Index of the Federation measuring the percentage of contractors who have declared that their work load for 2017 was above normal or expected, minus the percentage of those who declare it to be below the norm, recorded a significant improvement too, standing at - 37%. The index improved from -92% at the end of 2013, with the base year being 2007.
“However, these indices should not be taken literally, but should be used as indicators rather than measurements of how many developers actually saw their business grow,” Prokopas said.
He explained that one should look index.
“For example, the Activity index in December 2013 stood at -74%. It was a time were a lot of smaller developers closed shop. Now we see these smaller developers reopening their
at the trend of the businesses and taking on contractors,” said Prokopas.
He said smaller developers are being sub-contracted by bigger firms who, due to layoffs and other cuts made during the 2013 crisis, do not have the necessary staff or infrastructure to cope with big projects.
But now developers are rather optimistic regarding the future as major projects are in the pipeline or expected to be announced.
“Public works had been put on ice during the previous years and the sector is now anticipating the declaration of big public projects by the government,” added Prokopas.
Between 2013 and 2018, apart from road works, no big construction projects were put forward by the state. Prokopas said that public works to be announced coupled with the construction of a number of high-rises on the Limassol and Paphos coast - which are to take off in the next few years - will give a serious boost to the sector.
Prokopas is encouraged that the sector has started to disengage itself from its dependence on projects connected with the investment for citizenship scheme. He said that the focus of the construction sector is currently concentrated in two main activities, apart from luxury projects on the southwestern coast of Cyprus. He said that there is a significant number of houses being built in the capital.
“In Nicosia we see houses of all sizes being built, with a large number of luxury houses also being raised,” said Prokopas. He added that in Limassol there is a rise in demand for apartments as offshore companies, involved in the natural gas exploration, are bringing more employees to the town.
Prokopas’ insistence that a significant part of the industry’s activity is concentrated on housing are backed by Cystat figures showing that 70.4% of the 1,984 building permits issued in the first four months of 2018 were for residencies.
Furthermore, fortifying the argument that the industry is
projects
along with
bigger turning to the local market, 744 of building permits were issued for projects in Nicosia, a market dominated by Cypriot buyers.
A real estate analyst told the paper that is comes as no surprise that a significant chunk of activity regards the construction of houses. “It’s only natural that the key finding of all reports surrounding the sector is that a significant chunk of the industry’s activity concerns housing.”
“Neither should it come as a surprise that Nicosia is leading the statistics regarding building permits,” the analyst added.
Similar surveys found that Nicosia has seen property sales go from 1,200 in 2016 to 1,485 in 2017.
The analyst explained that the housing needs of locals were put on ice during the years of the crisis as people were living with uncertainty of the times.
“Now as the economy is stabilising, people feel more confident to take out a mortgage, as the banks have started to give out loans, or to invest cash they have been saving up over the past five years.”