Cypriot developers have backed the initiative approved in December 2023 by the Cabinet of Ministers, which provides a number of incentives for the construction of affordable housing on the island.
In particular, the secretary of the Federation of Building Contractors Associations of Cyprus (OCEOC) Stelios Gavriel said that many developers have already started to develop strategies for the implementation of innovations in their work and seeking funding for future projects.
Recall that the main goal of the innovations is to bring to the real estate market in Cyprus in the next three years about 800 residential units at affordable prices for ordinary people (both for purchase and for rent).
As part of a strategic initiative to stimulate the development of affordable housing, the Government of Cyprus has developed an innovative housing policy.
In particular, the approved incentive concerns the introduction of two new alternatives for the use of an additional building ratio, depending on the needs and planning of each interested developer.
By the way, the housing incentive for the maximum allowable build-out ratio will be increased:
- Up to 45% for residential zones with a build-out ratio greater than 1:1;
- up to 25% for residential zones with a building ratio equal to or less than 1:1.
However, these incentives will be applied as follows:
- For properties with a minimum net floor area of 1 thousand m2, a maximum allowable build-out ratio of 45%;
- for properties with a minimum net floor area of 4 thousand m2 - a maximum allowable building coefficient of 25%.
It should be noted that the use of an increased build-out ratio in a property under construction in accordance with the above conditions also obliges developers to provide housing:
- in an amount equal to 25% of the floor area resulting from the increased build-out ratio to beneficiaries of the affordable housing program, with the remainder to be used at the owner's discretion (for residential zones with a build-out ratio greater than 1:1).
- 15% of the square footage resulting from the increase in the build-out ratio to affordable housing program beneficiaries, with the remainder to be used at the discretion of the owner (for residential zones with a build-out ratio equal to or less than 1:1).
Notably, those properties that, under the new strategy, remain unsold for two years after the commissioning of residential complexes, will be eligible for purchase by the State Land Development Organization (SLDO).
In turn, the KOAG will have the right to include these properties in the program of preferential rentals at affordable prices for the poor.
Gabriel noted that developers will need to find investors who have the cash and are willing to wait before they get any return on their investment under the new program.
While demand for housing is strong, rents and prices are rising, banks are tightly restricting loans to developers. Most projects are self-financing. We share the government's plans to increase the number of housing units on the market while reducing the purchase price and rents for fellow citizens in need," Gavriel commented.
He also applauded the government's plans to increase the housing stock in order to reduce the cost of purchase and rent for needy citizens.
Finally, Gabriel mentioned that he expects demand for such properties to increase in the coming years, especially as Cyprus is becoming a popular destination for fintech and high-tech companies to relocate due to government incentive schemes.