THE CYPRUS REAL ESTATE MARKET IN 2026

THE CYPRUS REAL ESTATE MARKET IN 2026:

Current Conditions and Near-Term Outlook

August 2026

Introduction

The real estate sector remains one of the principal pillars of the Cypriot economy and a central area of our firm’s transactional practice. Over the past two years, the market has entered a phase of sustained expansion, characterised by record transaction volumes, accelerating price growth in specific segments, and an increasingly international purchaser base. This publication summarises the current state of the market by reference to official statistical sources, principally the Central Bank of Cyprus (CBC), the Statistical Service of Cyprus (CYSTAT) and the Department of Lands and Surveys (DLS), and offers our assessment of the direction the market is likely to take in the near term.

The Market at a Glance

Price Dynamics: A Market Led by Apartments

According to the Residential Property Price Index compiled by the Central Bank of Cyprus, residential values rose by 7.1% year-on-year in the fourth quarter of 2025 and by 7.5% in the first quarter of 2026, marking a clear acceleration from the 4.8% annual growth recorded at the beginning of 2025. The headline figure, however, conceals a pronounced divergence between segments: apartment prices increased by 10.8% year-on-year in Q1 2026, whereas house prices rose by a comparatively modest 3.0%. Measured against the index’s 2010 base year, apartment prices nationally now stand approximately 27% higher, with Limassol apartments having appreciated by roughly 53% over the same period.

Regional performance also remains uneven. In the first quarter of 2026, annual price growth accelerated in Nicosia (2.8%) and Larnaca (8.9%), while moderating, albeit from elevated levels, in Limassol (9.1%) and Paphos (6.4%). Larnaca’s emergence as one of the fastest-growing districts reflects significant infrastructure investment and its comparatively lower entry prices, which have attracted both domestic purchasers and overseas investors priced out of Limassol.

It is worth noting that the harmonised House Price Index published by CYSTAT and Eurostat recorded a somewhat more moderate national increase of 6.0% year-on-year in Q4 2025. The difference is methodological rather than substantive: the CBC index is constructed from bank valuation data, whereas the harmonised index tracks actual residential purchases. Both series, however, point in the same direction – continued, demand-led appreciation.

Transaction Activity and the Role of Foreign Purchasers

2025 was the strongest year for property sales in Cyprus since 2007 and the third-best year since records began in 2000. A total of 18,114 contracts of sale were deposited with the Land Registry, of which domestic purchasers accounted for 10,859 (59.9%), EU nationals for 2,446 (13.5%) and non-EU nationals for 4,809 (26.5%). Foreign purchasers thus represented 40.1% of all transactions – well above the post-2008 average of approximately 36%. Total transaction values for 2025 have been estimated at approximately €6.5 billion, an increase of around 8% on 2024.

The momentum has carried into 2026. Between January and July 2026, 12,047 contracts of sale were deposited, a 14% increase over the corresponding period of 2025, with foreign purchasers maintaining a share of roughly 41%. April 2026 set a new monthly record for transaction volume, surpassing the previous high recorded in April 2007. Paphos and Larnaca are currently exhibiting the strongest growth in activity, while Limassol retains its position as the island’s principal business and investment hub. Purchaser nationality data indicate that British, Israeli, Russian, Greek and Lebanese nationals remain the most active foreign buyer groups, with marked district-level concentrations, Israeli purchasers in Larnaca, Russian purchasers in Limassol, and British purchasers in Paphos and Famagusta.

Supply Response and Financing Conditions

On the supply side, the picture is improving, though gradually. CYSTAT data show that 6,089 residential building permits were issued in 2025, an increase of 29.4% year-on-year, authorising 16,171 dwelling units, a rise of 42.7%. The largest shares of authorised units were concentrated in Nicosia (approximately 33%), Limassol (29%) and Larnaca (23%). Permit issuance accelerated further in early 2026, with residential permits up 79.2% in the first two months of the year. Nevertheless, the conversion of permits into completed housing remains constrained by licensing delays, persistent labour shortages in the construction sector and construction costs that, while now stabilising (the Construction Materials Price Index rose by only 0.9% year-on-year in Q1 2026), remain at historically elevated levels.

Financing conditions have eased materially. Following the European Central Bank’s gradual loosening of monetary policy since mid-2024, the weighted average mortgage interest rate in Cyprus declined to 3.15% in March 2026, compared with 3.53% a year earlier. Cheaper credit has supported domestic demand, although the market remains predominantly equity- and foreign-capital-driven. Gross rental yields average approximately 4.9% across the main urban submarkets, with apartments (circa 5.4% per RICS/KPMG data) significantly outperforming houses (circa 3.0%).

Near-Term Outlook: Our Assessment

On the basis of the data summarised above, and with the customary caveat that projections are inherently uncertain, we consider the following developments the most probable over the next twelve to twenty-four months:

• Continued but moderating price growth. The consensus of published forecasts, which we share, points to headline residential price growth in the region of 3–5% for 2026 as a whole, decelerating from the current pace as new supply progressively reaches the market. Apartments are expected to continue outperforming houses, particularly in Limassol and Larnaca.
• A gradual rebalancing of supply and demand. The sharp rise in permits issued in 2025 and early 2026 should translate into increased completions from 2027 onwards. However, given construction-sector capacity constraints, we do not anticipate an oversupply scenario; the effect is more likely to be a normalisation of price growth than a correction.
• Sustained international demand. The structural drivers of foreign purchases, the relocation of international businesses and professionals, the permanent residence by investment framework under Regulation 6(2), the favourable tax environment and the reduced VAT rate available for a primary residence, remain intact. Absent a material geopolitical or regulatory shock, we expect foreign purchasers to continue accounting for approximately 40% of transactions.
• Larnaca as the district to watch. The combination of infrastructure development, lower entry prices and rapidly growing international interest suggests that Larnaca will continue to record above-average growth in both transaction volumes and values.
• Key risks. The principal downside risks are regional geopolitical instability, a slower-than-expected pass-through of ECB rate cuts, affordability pressures on domestic purchasers, and construction-sector bottlenecks delaying the supply response. Prospective purchasers should also monitor the evolving regulatory landscape, including planning reform and any adjustments to residence-by-investment criteria.

Legal Considerations for Prospective Purchasers

Heightened market activity makes rigorous legal due diligence more important, not less. Purchasers – particularly overseas purchasers acquiring off-plan units – should ensure, at a minimum: verification of title and of any encumbrances (mortgages, memos, prohibitions) at the Land Registry; confirmation of planning and building permits; appropriate contractual protections regarding delivery, defects and the issue of separate title deeds; the timely deposit of the contract of sale with the Land Registry for specific performance protection under the Sale of Property (Specific Performance) Law of 2011 (Law 81(I)/2011); and, where applicable, the district court or Council of Ministers approvals required for acquisitions by non-EU nationals. Our firm advises purchasers, vendors and developers at every stage of this process.

Sources

• Central Bank of Cyprus, Residential Property Price Index, Q4 2025 and Q1 2026 reports.
• Statistical Service of Cyprus (CYSTAT), Building Permits series 2025–2026; Construction Materials Price Index, Q1 2026; harmonised House Price Index (with Eurostat), Q4 2025.
• Department of Lands and Surveys, contracts of sale statistics, 2025 and January–July 2026.
• Bank for International Settlements, Residential Property Price database (Cyprus series, 2010=100).
• RICS / KPMG Cyprus Property Price Index, Q4 2025 (rental yields).
• PwC Cyprus, Cyprus Real Estate Market report, 2025 (transaction values).

Disclaimer: This publication is provided for general information purposes only and does not constitute legal, financial or investment advice. Market projections are based on publicly available data as at August 2026 and are subject to change. Readers should seek specific professional advice before entering into any transaction. For further information, please contact Anastasios Mylonas & Co LLC.