Despite slowing inflation, there is little reason to expect construction costs in Cyprus to fall anytime soon. Representatives of the construction industry warn that the prices of key building materials remain 30–40% higher than pre-pandemic levels, while another increase in concrete prices is expected in the coming months. At the same time, the market continues to face a shortage of skilled workers, causing delays to many construction projects.
Construction costs in Cyprus remain high
According to representatives of the Cyprus Federation of Building Contractors Associations, the surge in prices began during the COVID-19 pandemic, when global supply chains were severely disrupted. The situation was later exacerbated by instability in the Middle East and rising transportation costs.
Cyprus relies almost entirely on imported construction materials, meaning that fluctuations in global markets are quickly reflected in the cost of local projects. Over the past five years, prices have stabilised at levels that are, on average, 30–40% higher than they were before 2020. Industry participants do not expect any significant decline in the foreseeable future.
Strong demand for real estate is placing additional pressure on prices. Residential developments, tourism infrastructure, and commercial projects continue to be built across the island, supported by sustained interest from foreign investors and ongoing population growth.
One of the next drivers of higher construction costs will be an increase in concrete prices. Cement producers are facing additional expenses due to the purchase of carbon emission allowances under the European Union's climate policy. Experts believe these costs will gradually be passed on through the price of construction materials. As a result, both developers and private individuals planning to build homes or commercial properties will face higher expenses. More expensive concrete is also expected to push up the price of new apartments, as it remains one of the essential components of virtually every construction project.
Labour shortages are slowing construction
Another major challenge remains the shortage of skilled workers. Due to the high volume of construction activity, companies are struggling to recruit professionals across nearly every construction trade. In recent years, many workers have moved into other industries, while the training of new specialists has not kept pace with demand. As a result, contractors are increasingly forced to delay project completion despite strong buyer demand. According to industry experts, today's delays are more often caused by labour shortages than by a lack of financing or building materials.
To address the workforce shortage, Cyprus continues to recruit workers from third countries. In particular, an agreement with Egypt has simplified the employment of foreign construction workers. Over the past two years, the number of foreign workers on construction sites has increased by approximately 2,000, while some approved applications are still being processed. However, construction companies point out that hiring overseas workers does not reduce their overall costs. Employers must cover accommodation, transportation, meals, and workforce management, leaving little or no financial benefit.
What this means for property buyers
Property market experts believe that buyers should not expect a significant drop in the price of newly built homes. High material costs, labour shortages, increasing expenses related to environmental compliance, and continued strong demand are all supporting property prices. For buyers, this means that new developments are likely to enter the market at even higher prices. As a result, developers are increasingly encouraging purchasers to buy at the early stages of construction, when prices are traditionally lower than after a project has been completed.