Nicosia, Cyprus. Planning and permitting delays can add around €60,000 to the average price of a new apartment in Cyprus without increasing a developer’s profit, according to Yiannis Misirlis, chairman of the Cyprus Property Developers Association.
He said housing affordability debates often focus on property prices, construction costs and interest rates, while overlooking the financial impact of delays in planning and permitting processes.
Financial impact of delays
Misirlis said the issue is often dismissed as bureaucracy, despite what he described as substantial and measurable financial consequences ultimately borne by homebuyers.
He presented an example based on assumptions commonly used in real estate investment analysis involving a medium-to-large residential development of 125 apartments in Cyprus.
Project scenarios
The example assumes land acquisition costs of €7 million and construction and development costs of €25 million, bringing the initial project cost to €32 million.
Under the first scenario, the developer acquires the land, secures all required permits within six months and begins construction immediately. The project is completed two years later.
Under the second scenario, the developer buys the same site but waits four years before construction can begin because of planning and permitting delays. The construction period remains two years.
Cost of holding land
“At first glance, the only difference appears to be time,” Misirlis said. In reality, he said, the project’s financial structure changes entirely.
He said the most immediate impact is the cost of holding land. With €7 million tied up for four years without generating a return, the developer incurs a financial cost.
Using a cost of capital of 6 per cent, which Misirlis described as relatively conservative, the additional burden would amount to approximately €1.7 million.