Tech firms complain about high Limassol rents

Tech firms have warned that soaring rents for offices – higher in some cases than in London and Amsterdam – were threatening Cyprus’ ambition to become a tech hub.

The rising cost of office space, particularly in Limassol, had become a major obstacle to the continued growth of the country’s Information and Communications Technology (ICT) sector, members of tech companies warned at last weekend’s Cyprus Forum.

This concern was raised during a discussion titled, “Solidifying the Tech Island: Developing a Competitive Digital Economy for Cyprus.”

Deputy Minister of Research, Innovation and Digital Policy Nicodemos Damianou, insisted however, that Cyprus’ ambition to become a technology hub was achievable.

“The goal of Cyprus becoming a technology centre is not a distant and unattainable goal,” he said, pointing to the sector’s remarkable growth over the last decade, with an average annual increase of 10 per cent. This progress had significantly contributed to diversifying the island’s economy, he said.

He went on to say that maintaining this momentum will depended on focusing on key elements such as digital infrastructure, high-speed connectivity, data centres, a digitally literate workforce, and a supportive environment for start-ups.

“All of these ingredients,” he added, “can collectively create an environment where businesses can grow and innovate not only nationally but also globally.”

Christophoros Anayiotos, board member and head of Deal Advisory at KPMG in Cyprus, referred to a study estimating the sector’s direct contribution to the economy at €3.3bn. The study includes not only ICT companies but also parts of the professional and scientific services sectors. 

“By this measure, the sector makes a direct contribution to the economy of €3.3 billion, or about 12 per cent of the country’s gross value added,” he explained. When indirect effects were included, the contribution could be as high as €5.6 billion. 

Anayiotos also challenged a common misconception, saying, “Based on official statistics, 60 per cent of employees in the sector are Cypriots, which counters the perception that jobs in the sector are only for foreigners.“

He admitted that affordable workspaces was one of the challenges facing the sector as well as the poor public transport. There was also a need for stronger ties between higher education and the job market, he said.

AKEL deputy Aristos Damianou doubted whether there was the political will to fully support the sector’s ongoing growth. Acknowledging the sector’s achievements, he felt there was a need for less bureaucracy and better enforcement of existing laws.

His concerns were also linked to the rising costs in Limassol. The high prices for office space and housing, were ‘outrageous’, he said.

He also pointed to the challenges of securing adequate educational infrastructure for expatriates, adding that “It is shocking to ask businesspeople to create schools because the economy itself cannot create the infrastructure.”

Elena Prochaskova, Director of JetBrains, echoed concerns about education and skills, focusing on the growing demand for innovation and how it impacts the labour market.

She emphasised the importance of building closer ties between universities and industry to address the skills gap.

“The demand for innovation continues to escalate and requires more and more skills,” Prochaskova commented, suggesting that collaboration between universities and tech firms would better prepare future workers.

On Cyprus’ appeal to tech firms, Elena Grigorian, CEO of MY.GAMES, highlighted various factors that have made the island an attractive destination, including tax incentives and double tax treaties.

However, she noted that updating the intellectual property framework was essential for attracting global tech giants. She also pointed out the shortage of office space to accommodate expanding companies.

Ugne Buraciene, Group Chief Executive Officer of payabl, shared similar concerns about office space costs, stating, “The cost of offices is actually higher than what we pay in London and the Netherlands in some cases.“