By Yannis Misirlis

• President of the Real Estate Development Association

We often hear that delays in obtaining permits create additional costs for real estate projects. Usually, however, the discussion remains at the level of general references to “bureaucracy,” without looking at actual figures.

Let’s look at a simple, hypothetical but entirely realistic example, based on reasonable assumptions widely used in the evaluation of land development investments. The figures are illustrative, but they accurately reflect the relationship between delays and costs.

Consider a medium- to large-scale residential project consisting of 125 apartments in Cyprus:

• Land cost: €7 million
• Development and construction cost: €25 million
• Total project cost: €32 million

Let’s now compare two different scenarios.

In the first scenario, the investor purchases the land and, within 6 months, obtains the necessary permits and begins development. Construction is completed in 2 years.

In the second scenario, the same investor buys the land but has to wait four years before development can begin due to delays in the permitting process. Construction again takes two years.

At first glance, many would say that the only difference is time. In reality, however, the entire financial structure of the project changes.

First of all, there is the cost of holding the land. An investor who has tied up €7 million for four years without being able to start the project incurs a real financial cost. Even with a relatively conservative cost of capital of around 6%, the additional burden from the delay amounts to approximately €1.7 million.

Then there are the increased operating costs. A project that remains on hold for four years does not merely “freeze” capital. The investor continues to maintain a team of engineers, architects, urban planners, legal advisors, and administrative staff who monitor, review, and advance the permitting processes. Even with a very conservative estimate of €200,000 per year, the additional administrative costs over these four years amount to approximately €800,000.

With an average annual inflation rate of 4% for construction costs—excluding increases due to factors such as wars—the development cost of €25 million increases by approximately €3.5–4 million.

Therefore, even before calculating any return on investment, the exact same project has now incurred approximately €6.3 million in additional costs, solely due to the delay in obtaining permits (€1.7m land + €3.8m inflation + €0.8m administrative costs = approximately €6.3m.)

It should be noted that this example does not account for any interest rate increases, changes in energy prices, delays due to appeals or legal proceedings, additional bank fees, or changes in building codes. Therefore, this is a rather conservative estimate.

And this is where the real financial impact lies.

In the first scenario, the €32 million project requires final sales of approximately €38.4 million to be considered viable. For the 125 apartments, the average price comes to approximately €307,000 per apartment.

In the second scenario, the same project now costs approximately €38.3 million, solely due to the four-year delay in obtaining permits. Maintaining exactly the same 20% profit margin, the required total sales increase to approximately €46 million. This translates to an average price of approximately €368,000 per apartment.

In other words, without the investor’s return increasing by even a single euro, the average price of each apartment increases by approximately €60,000 (about 20%), solely due to the delay in obtaining permits.

Most importantly, however, the delay does not affect only this specific project. The more time an investor needs to complete a project, the fewer projects that same investor can carry out within the same decade. In other words, it is not just the cost of each home that increases. The number of new homes that can be built also decreases. This further restricts supply and puts even more pressure on prices.

In other words, the delay does not merely create a real economic cost for the investor. It ultimately translates into higher sales prices for the end buyer. And this is perhaps the most important point that is often overlooked in the public debate on housing policy.

Moreover, the discussion about affordable housing cannot be meaningful as long as the permitting system continues to act as a source of delays, uncertainty, and rising costs. When these procedures tie up capital for years, they drive up investment costs, limit the supply of new housing, and put upward pressure on prices; and the final cost is passed on to citizens trying to find a place to live.

Long delays make the housing supply particularly inelastic. When the market cannot quickly increase the production of new housing, even small increases in demand lead to a disproportionate rise in prices.

The speed of the permitting process is not a technical detail. It is a key factor in determining housing prices. And this does not concern only investors or real estate developers. It affects the entire economy. Because, inevitably, uncertainty about when a development will be completed leads to less investment, a smaller housing supply, and higher housing costs.

Speeding up the permitting process does not in any way mean compromising on the quality of oversight or environmental protection. It means faster, more predictable, and more efficient procedures. No serious businessperson is asking for fewer inspections. They are asking for those same inspections to be completed within a reasonable and predictable timeframe.

The discussion must therefore finally shift from “whether there are delays” to what the actual economic cost of these delays is.

At the end of the day, the discussion isn’t about real estate developers. It’s about whether a young person will be able to buy their first home, whether a young family will find affordable housing, and whether the Cypriot economy will continue to attract quality investments that support social cohesion. Speeding up the permitting process is not merely a reform in favor of growth. It is a reform in favor of society.