Cyprus recorded around 18,114 property sales in 2025 — up approximately 15% on the previous year — but Pavlos Loizou, CEO of real estate analytics firm Ask Wire, says the market has entered a new phase: one where quality, sustainability and resilience count for more than transaction volume.
Residential property remains the primary driver, with apartments now accounting for 81.6% of new home sales, concentrated in Limassol, Larnaca and Paphos. Their relative affordability compared with other property types is drawing both owner-occupiers and investors. In the commercial sector, demand has polarised sharply: Grade A office space commands yields of around 6-7% with vacancy rates running at just 5-8% in Limassol and Nicosia, while older buildings are haemorrhaging tenants and standing empty.
Foreign buyer interest remains strong, underpinned by GDP growth of approximately 3.2% in 2025 — above the eurozone average — and a record tourism year that brought 4.5 million visitors and around €3.6 billion in revenue. Short-term rental activity is expanding at one of the highest rates in the EU, Loizou says, pushing demand for investment properties in coastal and tourist areas.
The office market is being reshaped by a separate trend. Cyprus has moved beyond its reputation as a tax destination and is establishing itself as a headquartering hub for technology and fintech companies. These businesses are not looking for an address, Loizou says — they want Grade A buildings with high-speed digital infrastructure, flexible co-working spaces and easy access to housing for their staff. With vacancy rates in quality stock running at 5-8%, supply is struggling to keep pace.
The Middle East conflict is creating opposing pressures. Cyprus is drawing investors and families seeking stability — a trend that accelerated after the escalation in Israel and Lebanon from 2023. At the same time, some booking cancellations have already been reported for the coming season, and the trajectory of summer advance bookings will be a critical test for the market. If the conflict with Iran proves prolonged, Loizou warns, Cyprus may face a softer tourist year.
The sector faces structural headwinds on multiple fronts. A construction labour shortage is pushing up costs and delaying projects. Permitting remains complex and slow. Construction materials prices are still around 18-19% above their 2021 levels despite a modest 1.3% annual increase in 2025, suggesting gradual stabilisation rather than relief. Mortgage rates, though easing, averaged approximately 3.37% in December 2025 — above pre-2022 levels — according to Central Bank data.
Green certification is opening a new fault line in the market. The Neocleous Tower in Limassol — Cyprus’s first LEED Gold certified building — cuts greenhouse gas emissions by 50% against conventional buildings through smart HVAC, water-saving systems and low-toxicity materials. Nicosia’s Landmark Office Tower is pursuing the same standard, targeting 40% water savings and 25% lower energy use. Rents in certified buildings run 15-20% above older stock, reflecting demand from ESG-committed tenants — and the gap with ageing buildings will only widen as upgrade pressure mounts.
Loizou expects growth to continue but at a more measured pace than the previous decade, shaped by how geopolitical pressures play out. The central risk is over-dependence on foreign demand alongside mounting pressure to deliver affordable housing for local buyers. The opportunities lie in retrofitting older buildings, developing energy-efficient projects and improving property management. The question for 2026 and beyond, he argues, is not how many square metres get built — but whether Cyprus can create sustainable ecosystems that hold their value over time.
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