Rents for office spaces in Cyprus, particularly in the coastal town of Limassol, sometimes exceed those in cities like London or Amsterdam, according to major tech companies operating in Cyprus. On Friday, these companies highlighted the issue of office space as one of the key obstacles to the expansion of the rapidly growing ICT sector.

The challenges faced by this vibrant sector were discussed during a session titled “Solidifying the Tech Island: Developing a Competitive Digital Economy for Cyprus” at the Cyprus Forum.

Speaking at the discussion, Nicodemos Damianou, Deputy Minister of Research, Innovation, and Digital Policy, emphasized that the goal of transforming Cyprus into a tech hub is becoming a reality. “This is not a distant or unreachable goal. It is happening,” he stated.

He added that the ICT sector has been the fastest-growing sector in Cyprus over the past decade, with an average growth rate of around 10%, contributing significantly to the diversification of the country’s economic model. “Now, we should focus on how to leverage this growth to maintain momentum,” Damianou said.

According to the Deputy Minister, the key elements needed to further boost the sector include robust digital infrastructure, high-speed connectivity, data centers, a digitally skilled workforce, a supportive business environment, and a legal and regulatory framework that promotes growth. “All these factors together can create an environment where businesses can thrive and innovate, both nationally and globally,” Damianou added.

Christoforos Anayiotos, head of DEAL, an advisory firm under KPMG, revealed that the firm has conducted a study on the sector’s economic impact. He noted that, in terms of gross value-added (GVA), the ICT sector’s contribution amounted to €3.3 billion, or 12% of the total GVA.

When including indirect spillovers, the sector's contribution rises to €5.6 billion. Anayiotos stressed that these figures were calculated cautiously, excluding fintech companies, which are classified under financial services. Anayiotos also pointed out that, contrary to popular belief, 60% of the sector’s employees are Cypriots, according to official statistics.

Aristos Damianou, an MP from the left-wing party AKEL, acknowledged the sector's progress but questioned whether enough is being done to support its growth. In this context, he emphasized the need for the government to monitor the implementation of laws passed by the legislature and reduce bureaucratic obstacles.

He criticized the high rent prices for both office and residential spaces, calling them "outrageous." He expressed shock that professionals and entrepreneurs are forced to arrange schools for their children on their own, especially in Limassol, because the state or the economy fails to create the necessary infrastructure. He also stressed the need to address educational infrastructure for families relocating to Cyprus.

Elena Prochaskova, Director of JetBrains, highlighted the importance of connecting tech companies with universities. “The demand for innovation continues to rise, requiring new and evolving skills. Collaboration with universities serves as a bridge to the industry,” she said.

Elena Grigorian, CEO of My Games, which has a hub in Cyprus, praised the sector's progress and the country’s competitive advantages. However, she also emphasized that updating the Intellectual Property (IP) framework, known as the IP box, could attract a new wave of IT giants to the island.

Grigorian also pointed out the challenge of finding suitable schools for children who relocate to Cyprus with their families. Despite living in Cyprus, she mentioned that her 10-year-old daughter still has no local educational options. Additionally, she raised the issue of office space scarcity, which is hindering her company's expansion efforts. “We try to expand every year, but it’s not easy to find new office spaces,” she said.

Ugne Buraciene, CEO of Payabl and the moderator of the discussion, echoed these concerns, stating that her company struggles to expand because office costs in Cyprus are, in some cases, higher than those in London and the Netherlands.

Anayiotos also pointed out that the issue of schools frequently arises in discussions with clients. He further noted challenges related to public transport, flight connectivity, and affordable workspaces.