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Construction sector continues to deteriorate

The island’s construction industry is suffering from the impact of the economic crisis and lack of liquidity as the number of building permits continue to fall with no signs of a recovery on the horizon.

THE CYPRUS construction sector continued to decline in June with the number building permits issued during the month standing at 557 compared with the 696 issued in June last year; a decrease of 20%, according to the latest figures released by the Cyprus Statistical Service.

Compared with June 2011 the total area of these building permits fell from 173,957 square metres to 124,830 square metres (-28%) and their value fell from €163 million to €136 million (-17%).

During May, building permits were issued for:

  • Residential buildings – 352 permits
  • Non-residential buildings – 100 permits
  • Civil engineering projects – 74 permits
  • Division of plots of land – 26 permits
  • Road construction – 5 permit

During the first half of 2012, 3,671 building permits were issued; a decrease of 21% compared to the 4,619 permits issued during the same period last year. Their total value fell from €1.082 million to €777,712 (-28%) and their total area fell from 1,168,184 square metres to 782,418 square metres (-33%).

New home construction

The 352 residential building permits that were approved in May provided for the construction of 523 new homes comprising 227 single houses and 296 multiple housing units (such as apartments and other residential complexes).

This is a fall of 21% compared with June 2011 when building permits were issued for the construction of 662 new homes.

New home contruction in Cyprus - June 2012

Source: Cyprus Statistical Service

During the first half of 2012, the number of new homes for which permits have been issued has dropped 39.4% compared with the first half of last year. Their total value fell from €797.7 million to €552.6 million (-31%) and their total area fell from 900,227 square metres to 595,354 square metres (-34%).

According to the Cyprus Statistical Service, building permits constitute a leading indicator of future activity in the construction sector.

Meanwhile, Eurostat figures released last Friday show that the construction sector’s contribution to the island’s GDP  shrank by €54 million (-19.7%) on an annual basis in the second quarter of 2012.

Readers' comments

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  • Maria says:

    I don’t know why anybody believes in Cyprus figures Nigel, when I go in the Land Registry it is Empty compared to 5 years ago, Cyprus needs to concentrate on what matters to bring tourist back, and build better homes, decent mortgages and not make their own laws up as they go along.

  • Denton Mackrell says:

    I heard a rumour from a reliable source that a developer consortium is trying to get a new project off the ground to build a new town in Cyprus!

    Does their model depend on buyers, if/when their confidence returns, NOT buying any of the current new stock that has been sitting dead for a few years, and instead rushing to buy in the new town? Er….. why would they do that?

    Any suggestions on where this new town could be sited? Is there any demand for one?

    Looks like another fantasy project to join the ranks of the Pyla Disneyworld, the Oroklini Golf Resort, the Oroklini Hotel & Leisure Complex, the Qatari 5 Star Hotel etc etc.

  • Costas Apacket says:

    Nigel, thanks for the feedback and transactional figures.

    Assuming, as Mike says, that all of these 7,282 transfer were nothing to do with the 4,709 new sales contracts lodged, and that the rate of transfer remains at the same levels, then it will only take until 2022 to clear the current backlog.

    Siga Siga!

  • Adrian says:

    The construction industry is collapsing around their ears and every body knows where the trouble is,and it all comes back to the Title deeds but the government will not take action. The construction industry will collapse faster than their sub-standard concrete can crumble.

  • Mike says:

    As Nigel has noted the backlog does seem to be being attended to however one must assume that none of the 4,709 contracts deposited for the first 7 months of this year are amongst the 7,282 that have been transferred.

    Liken this to England and Wales where in 2010 655,360 transfers were undertaken. (2011 figures are only available to October). 67,497 of those were in July alone. I appreciate it is comparing chalk with cheese but the overall productivity level and service offered is far greater. In saying that however I must add that I was impressed with some of the new staff promoted at Limassol land registry (surveying side). I got the impression of an injection of dynamism as compared to the old lethargic and apathetic administration. Time will tell however, the proof of the pudding will be in the eating, but I am the eternal optimist.

  • John Swift says:

    The chickens really are coming home to roost with worse to come because if these developers go under through lack of sales there’ll be an awful lot of people finding their homes are in danger unless the EU cracks the whip hard enough on the Cyprus government, the banks, developers and solicitors must be held to account for the mess, the banks and solicitors are just as guilty as the rogue builders.

  • @Costas Apacket – During the first seven months of this year a total of 7,282 properties have been transferred compared to the 4,709 contracts of sale that have been deposited at the Land Registry offices over the same period.

  • Costas Apacket says:

    There’s little work going into the District Lands and Planning Offices and even less Title Deed Transfers coming out.

    Just what are they up to in there?

  • Pete says:

    I keep saying it; self inflicted, every time. And if the title deeds, developer mortgages, dubious bank loans, no building regs inspections etc etc etc aren’t enough, we’re now finding out about substandard concrete. It doesn’t matter where you go on this island, they manage to shoot themselves in the foot every time so it’s little wonder the construction industry in Cyprus is on the deck.

  • cojack says:

    I hope nobody spends any money on looking for the reason for the decline.

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.


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