Planning and permitting delays are quietly becoming one of the biggest cost drivers in Cyprus’s housing market, adding an estimated €60,000 to the price of the average new apartment without increasing developers’ profits.
That is the warning from Yiannis Misirlis, chairman of the Cyprus Property Developers Association (CPDA), who argues that delays, rather than construction costs alone, are becoming one of the biggest drivers of housing affordability.
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A Realistic Project, A Very Different Outcome
To illustrate the impact, Misirlis pointed to a residential development of 125 apartments with a €7 million land cost and €25 million in construction and development expenses, bringing the initial investment to €32 million.
He compared two scenarios. In the first, permits are secured within six months, and construction begins immediately, allowing the project to be completed two years later. In the second, planning approvals delay construction by four years, while the build itself still takes two years.
“At first glance, the only difference appears to be time. In reality, the entire financial structure of the project changes,”
Misirlis said.
Where The Costs Accumulate
Keeping €7 million tied up for four years creates significant financing costs. Using a 6% cost of capital, Misirlis estimates that land holding alone adds about €1.7 million.
Professional and administrative costs also continue to accumulate while the project awaits approval, adding an estimated €800,000 over four years.
Construction inflation further increases the bill. Assuming costs rise by 4% annually, the original €25 million construction budget grows by roughly €3.8 million.
Together, those factors add about €6.3 million to the project before any profit is taken into account. Misirlis noted that the estimate excludes higher financing costs, interest rate movements, energy price increases, legal disputes, additional banking charges and regulatory changes.
How Delays Affect Apartment Prices
In the first scenario, a €32 million project would require total sales of around €38.4 million to achieve a commercially sustainable 20% profit margin, translating into an average selling price of roughly €307,000 per apartment.
After four years of permitting delays, development costs rise to about €38.3 million. Maintaining the same profit margin pushes total sales to approximately €46 million, increasing the average apartment price to around €368,000.
“The developer’s profitability has not increased by a single euro. Yet the average selling price rises by about €60,000 per apartment solely because of delays in the permitting process,”
Misirlis said.
A Supply Problem, Not Just A Cost Problem
Misirlis argues that the impact extends well beyond a single development. Lengthy approval processes reduce the number of projects that can be completed over time, limiting housing supply while placing further upward pressure on prices.
For that reason, he believes planning efficiency should be central to any discussion about housing affordability.
“Any meaningful conversation about affordable housing must address the efficiency of the planning and permitting system. When approvals immobilise capital for years, increase development costs, constrain housing supply and create uncertainty, the resulting costs are ultimately transferred to households,”
he said.
He stressed that faster permitting should not come at the expense of planning standards or environmental safeguards.
“No responsible developer is asking for fewer checks. We are asking for the same checks to be completed within reasonable and predictable timeframes,”
Misirlis said.
