Rents for offices spaces in Cyprus and especially in coastal town of Limassol in some cases exceed those in London or Amsterdam, big tech companies operating in Cyprus said on Friday, as the issue of office spaces seems to be one of the obstacles in the expansion of the ICT sector, which has posted rapid growth in the last years.

The challenges which the vibrant sector faces were discussed on Friday at the Cyprus Forum, during a session titled “Solidifying the tech island: Developing a competitive digital economy for Cyprus.”

Speaking during the discussion, Nicodemos Damianou, Deputy Minister of Research, Innovation and Digital Policy, said the goal of converting Cyprus into a tech hub “is becoming a reality.”

“This is not a distant unapproachable goal. It is becoming a reality,” he noted.

He added that the ICT “has been the sector with the highest growth over the past decade in Cyprus with an average growth of around 10%,” contributing to the diversification of Cyprus’ economic model.

“Now we should focus on how to leverage with a view to ensure that we maintain the momentum,” Damianou added.

According to Damianou, the key-elements to further boost the sector are the digital infrastructure, a fast robust high-speed connectivity, data centres, a digitally enabled skilled workforce, a digitally enabled business environment, and an environment that is conducive to the start-up ecosystem, as well as a legal and regulatory network that would support and safeguard this growth.

“All these elements can collectively create an environment in which businesses can thrive, can innovate not only nationally but globally,” the Deputy Minister went on to say.

ICT contribution at €5.6 billion

On his part, Christoforos Anayiotos, head of DEAL, an advisory firm of KPMG, said the firm has carried out a study over the sector’s impact on the economy, stating that on gross value-added (GVA) basis, the ICT sector’s contribution amounted to €3.3 billion, or 12% of the GVA output.

Taking into account the indirect spillovers, the sector’s contribution rises to €5.6 billion, Anayiotos added, pointing out that this measure was prudent as it excluded fintech companies which are included in the financial services sector.

Anayiotos pointed out that according to official statistics, 60% of the sector employees are Cypriots, contrary to the belief that the sector’s employees are mostly foreigners.

Aristos Damianou, an MP of left-wing party AKEL acknowledged the sector’s progress, but said the “question remains whether we do enough to facilitate the growth of the industry.”

In this context he highlighted the need for the state to monitor the implementation of laws enacted by the legislature and the need to cut red tape.

He called the rent prices both for housing spaces and accommodation as “outrageous,” adding that it is shocking “to put professionals, entrepreneurs in a position of having to run around to create schools for their own children, for example in Limassol because the state or the economy itself does not create the infrastructure for such opportunities.” He also pointed the need to address the needs with regard to schools of persons which relocate in Cyprus.

Elena Prochaskova, Director of Jetbrains, highlighted the need to connect tech companies with the Universities.

“The demand for innovation continues to escalate requiring more and more new skills and evolving skills, collaboration with universities is a bridge with the industry,” she said.

On her part, Elena Grigorian, CEO of My Games, a company that maintains one of its hubs in Cyprus, referred to the progress of the sector, as well as Cyprus’ comparative advantages.

She also noted that the updating of the Intellectual Property framework, (IP box) “could evolve the second wave of IT giants moving here.”

Grigorian at the same time highlighted the problem of having schools for children who come to live on the island, noting that although she is located in Cyprus her ten-year daughter has no option for being educated in Cyprus.

She also raised the issue of office space scarcity which inhibits the expansion of her company. “We are trying to increase it every year and it is not so easy to find new spaces,” she added.

Ugne Buraciene, CEO of Payabl and discussion moderator, said that “we are struggling to expand because the cost of the offices is actually higher than what I pay in London and in the Netherlands in some cases.”

On his part, Anayiotos, also said that in their discussion with clients “the issue of schools always comes up.” He also highlighted issues of public transport, flight connectivity and affordable work spaces.