CYPRUS: New index shows serious decline in construction sector

An average of seven months of work is left in the local construction industry with the current contracts, according to figures gathered so far with an aim to create an index on the course of the construction industry in Cyprus.

The survey for the index, which is being formed by the Federation of Associations of Building Contractors Cyprus (OSEOK) in cooperation with research company RAI Consultants, so far shows that indices concerning the activity of the construction industry remain close to their lowest levels during the period April-August 2012, with no trace of recovery trends but indications that the sector will continue to decline.

The main reasons behind the contractors` problems are inadequate demand, low cash flow and borrowing restrictions, the financial crisis and competition with other Cypriot contracting companies.

Furthermore, it appears that unemployment in the sector continued to rise in April-August 2012, with a significant deterioration of the situation during the last four months in all districts.

The survey notes that one of the indices confirming the deep crisis of the construction industry is that of months until the completion of current works, which has been gradually but steadily dropping over the past two years, to approach the lowest point to date, with contracts expiring in seven months.

Demand for purchasing or building homes within 12 months is at 2% and renovations at 4%, while many contractors have been recorded to have already left the sector.

The survey covered contractors across the island and figures were gathered through questionnaires.

According to OSEOK, the Index will prove to be an important and pioneering instrument on a national and European level, providing data and trends in the construction industry, and the degree to which it is affected by exogenous factors, such as the financial crisis.