Introduction

In a joint meeting in March 2026, the Ministry of Transport, ETEK (the Cyprus Scientific and Technical Chamber) and other stakeholders reported that construction and real estate contribute over 15% of GDP in Cyprus. The sector is a major employer, with 47,000 employees. ETEK, responsible for the registration and supervision of civil engineers, architects, surveyors and other construction and real estate professionals, has 14,200 members. Meanwhile, Cyprus remains one of the most accessible property markets in Europe and is experiencing steady momentum. At the same time, there is a widening gap between income growth and property costs.

This year’s chapter outlines the state of the Cyprus economy before turning to real estate. It explains trends, developments and challenges, while also highlighting the Cyprus presidency of the Council of the European Union and what this means for real estate. New legislation is outlined, with special reference to this year’s pivotal amendments to tax law. Additionally, the report explains the major government policies and plans, presents stakeholder views and concludes with a brief outlook.

The Cyprus Economy in 2026

The Cyprus economy exhibited resilience and growth in 2026. Its entire trajectory is an interplay between productivity and engagement with the broader geopolitical context.

According to data released from CyStat on 2 June 2026, Cyprus experienced GDP growth of 3% in the first trimester of 2026 compared with the last trimester of 2025. In terms of production, construction is the second-best sector, with a 4.9% growth rate (the best sector is technology, information and communications, with a 5.4% growth rate). In this context, CyStat refers to “resilient growth”.

In the same month, the Central Bank (CB) released a pivotal report, in which the CB governor spoke of resilience and a diversified productive base. The six takeaways of the report were:

• a good forecast for GDP growth;
• nearing full-employment status;
• downward inflation;
• a public finance surplus;
• a profitable banking sector; and
• regulatory upgrades with improved compliance.

Additionally, foreign investment is experiencing what the media calls a “boom”, and ship registration and construction have gained momentum.

Although Cyprus does not rank high for innovation among the EU countries, it outperforms in other areas, ranking first in trade mark applications and education (source: the EU 2025 Innovation Rankings).

In May 2026, the European Commission’s economic forecast for Cyprus projected a decrease in GDP from 3.8% in 2025 to 2.3% in 2026, with growth predicted to increase in 2027 (2.7%). The projections can be understood in the context of the conflict in the Middle East.

The University of Cyprus Economics Research Centre (CypERC), on the other hand, offers a more optimistic forecast in its Economic Outlook for April 2026, with growth of 2.9–3.8% in 2026 and 3.1% in 2027. It does, nevertheless, recognise the “economic headwinds” arising out of the Middle East conflict and “the plight of the Cyprus dairy and meat farms”. CypERC notes consumer uncertainty due to rising price pressures and “upside risks to inflation”. The tone of the report is, however, positive, mentioning strong growth, low unemployment and robust public finances.

Cyprus Presidency of the Council of the European Union

On 1 January 2026, Cyprus assumed the presidency of the Council of the European Union. This led to summits and meetings taking place on the island, including the Informal Ministerial Meeting for Housing, hosted in Nicosia between 11 and 12 May 2026. The meeting discussed current challenges, such as rising prices and construction costs, and emphasised the need to produce more housing units and to facilitate co-operation between the private and public sectors. Sustainability and new construction methods were also discussed.

The Informal Meeting looked forward to the 2026 Pan-European Investment Platform for Affordable and Sustainable Housing. This platform, according to the European Commission website, will:

• support collaboration between public authorities and private investors to pool resources and scale up investment in housing supply across the EU; and
• provide direct access to information about financing opportunities, best practices, case studies and innovative approaches across member states.

Recent Trends and Developments

The year 2026 is seeing a number of trends and developments, ranging from the cost of borrowing to sales statistics, luxury living, media reports, young people and home ownership, the cost of rent and foreign buyers.

Housing loans

Housing loans are cheaper in Cyprus than in most Eurozone countries, as reported by the European Central Bank in January 2026. Interest rates in the Eurozone range from 3.30% to 3.40%. In Cyprus, they are at 3%. This is a welcome development following a period in the second half of 2025 when mortgage interest rates were high, averaging 3.74%.

Real estate sales

The real estate market closed 2025 with rising sales across all districts of Cyprus, with Limassol leading. In general, reports for 2025 were satisfactory; for example, the first half of the year showed a 0.5% increase over the first half of 2024. In January, the government laid the foundation for the first affordable housing complex in Limassol and announced plans for a further 1,000 affordable housing units.

Cyprus as an attractive destination: luxurious new developments

Cyprus is attractive to foreign residents. It is no longer merely a favourite holiday destination but rather a lifestyle choice. Areas experiencing demand include the luxury-brand residence (residence as a “trophy asset”) and second-residence categories. Interestingly, Roberto Cavalli, in partnership with local developers, is building the first Roberto Cavalli Housing Tower in Limassol, at an estimated cost of EUR200 million. This is the first Cavalli property development in Europe. Unique penthouses in luxury residential towers further enhance Cyprus’s reputation as an exclusive destination for wealthy individuals.

What the media says

Media reports sometimes focus on young buyers. For young people, buying property in Cyprus could, for years, be described as “save, borrow, buy”. Things are now changing. Young buyers are a demographic that now faces challenges such as rising demand, persistent price increases, intensifying competition from international investors, structural pressures and rising living costs. All these need to be balanced with factors like affordability and timing. There is also a view that young people prefer renting because it offers flexibility and does not require a long-term commitment.

Challenges

Challenges facing real estate include, among others, high prices and rents, and sales to third-party nationals. Admittedly, the rising cost of renting has reached a level causing social concern. Though people always worry about rental prices, what is currently alarming is that there seems to be no end to the upward trend. Rent is unaffordable for many young couples, and young adults are unable to leave their parents’ house until their 40s. Other identified challenges include:

• the limited housing supply;
• complex or outdated procedures that undermine efficiency and legal certainty; and
• meeting sustainability requirements and implementing the green transition.

Sales to third-country nationals

Finally, an ongoing issue is the large amount of sales to third country nationals; individuals or legal entities that are from outside Cyprus or the EU. This issue is perceived as exacerbating problems such as rising land prices and limited supply. Consequently, the government is drafting legislation to enhance the requirements and make them more rigorous.

As things stand, a third-country national may acquire property in Cyprus by simply completing the relevant application form, which will then be examined by the Council of Ministers.

Under the proposed rules, there will be limits to what third-country nationals can buy. An applicant may purchase only two units from the list below:

• an apartment or house;
• a villa on a plot of land up to 4,014 m2;
• a plot of land up to 4,014 m2, provided that a residence will be constructed soon; and
• one office (maximum 250 m2) or shop (maximum 100 m2), plus a house or apartment.

Permission might be granted under certain conditions to acquire larger plots of land or other property types (offices, commercial, industrial, etc).

The application will still be handled by the Council of Ministers, but will be filed electronically in a special record. Documentation will be detailed and include anti-money-laundering due diligence and tax information. The aim of the proposed new rules is to maintain Cyprus as a welcoming destination for living or headquartering, while ensuring that it attracts physical and legal persons who can contribute, in good faith, to the economy and culture of Cyprus.

Developments in Legislation

Legislative developments focus on housing and the process of acquiring a home through a mortgage provider.

A perennial problem in Cyprus real estate is the situation with the so-called “trapped” or “enclaved” buyers. The situation covers instances where the buyer has paid the sale price or is paying the mortgage, but the seller does not transfer the title deeds, usually because the seller has already mortgaged the property elsewhere. A solution was found in a series of statutory rules, whereby the Director of the DLS could transfer the property to the buyer if the buyer repaid the mortgage. This was held unconstitutional for violating the first mortgage owner’s property rights and freedom of contract. The government tried to resolve the matter anew this time in consultation with banks and other stakeholders.

The result was Law 110 (I)/ 2025, which came into force on 4 July 2025. This legislation was incorporated as an amendment to the Immovable Property (Transfer and Mortgage) Law 9/ 65. Law 110(I)/ 2025 provides that if the buyer repays the mortgage but the bank abusively and without justification refuses to transfer the property to the buyer, the Director of the DLS may do so upon the buyer’s application. The buyer must apply within 45 days of the bank’s unreasonable refusal to co-operate, and a court order will, under normal circumstances, be issued to the effect that the property is transferred to the buyer.

Importantly, the Credit Agreements for Consumers Relating to Residential Immovable Property Law, N 41(I)/ 2017, was amended in May 2026 with regard to loan security rules. The new rules are set out in Law 117(I)/2026, which will be incorporated into the main law. They specify that there is no need for guarantors to stand as security when the value of the real estate involved covers the loan, and the debtor’s ability to pay is judged satisfactory. The new rules do not make the use of guarantors optional: they prohibit it altogether.

In fact, a package of new legislation went through the House of Representatives before its self-dissolution (elections took place on 24 May 2026). The package aimed to protect the public from foreclosures and increase the arbitration options. However, only some of these measures were signed into law, while others are before the Supreme Court awaiting a ruling on their constitutionality. Also, the European Central Bank has expressed its disapproval and, at the time of writing (19 June 2026), issued a written warning on the matter.

Tax Amendments and How They Impact Real Estate

In 2026, Cyprus passed the long-awaited reforms to tax legislation. The reforms, which were met with mixed reviews, aim to relieve tax burdens, boost the economy, and support low-income and single-parent families, as well as single individuals.

Regarding real estate, there are two important amendments. The first concerns the Capital Gains Tax Law 52/ 1980. Under the amended rules, when a person sells their primary residence, the tax exemption is EUR150,000, provided they have resided in the property for five years and the property does not exceed one and a half hectares in size. The general lifetime exemption is raised to EUR30,000, and the exemption for agricultural land to EUR|50,000.

The second important amendment concerns stamp duty. The Stamp Duty Law, including stamp duty on real estate transactions, was abolished as of 1 January 2026.

Government Policies and Plans

In December 2025, the President of the Republic attended the Annual General Meeting of the Cyprus Property Developers Association, where he outlined his administration’s current real estate and property policies. His main points/goals were as follows:

developers are committing to building affordable housing units in exchange for building density bonuses – this scheme is expected to create over 1,500 housing units, of which 250 will be sold or let at affordable prices;

• building 500 affordable housing units for families or single individuals; and
• building collective housing units – these units will target employees in the industrial, commercial and tourism sectors.

During the 16th Nicosia Economic Congress (April 2026), the Minister of the Interior gave further guidance on government policies and plans affecting real estate. These include:

• affordable housing as a central priority;
• modernisation and digitalisation of the Department of Lands and Surveys;
• legislative reforms concerning issues like the allocation of government land and the calculation of transfer fees;
• the creation of specialised branches to examine applications for rights of way in order to speed up the processing time; and
• establishing new procedures for the management and protection of conserved buildings.

The Minister of the Interior often addresses the public on current policies and plans through the Ministry webpage, and in articles and speeches. Thus, the Minister mentioned the successful build-to-rent scheme, which is expected to produce 2,000 housing units within the next two years. He also explained how several plans are creating affordable housing in Nicosia and Limassol, while government support for young families or single individuals has, since 2019, helped 1,957 applicants acquire residence. Government funding of EUR82.5 million goes to 1,974 refugee housing policies, with raised income criteria and broadened categories of eligible applicants.

Other currently running plans include the following.

• Renovate-rent: a housing scheme in which owners of vacant or disused properties receive a grant to renovate them and then rent them out at affordable prices. The grants range from EUR15,000 to EUR30,000.
• Housing scheme for the revitalisation of mountainous areas, buffer zone areas and disadvantaged areas.
• Support for young families and young people under 41 years of age.
• A plan to build student accommodation units.
• Fast-track building permissions: applications for up to two residences are processed within 40 days, while those for blocks of flats are processed in 80 days.

A move that is expected to help alleviate housing concerns is the enhanced role given to the KOAG, the Cyprus Land Development Organisation. KOAG is now responsible for executing the government’s affordable housing plans. It receives funding partly from the government and partly from its own activities and schemes.

Sadly, this year has seen tragic deaths due to people living in dangerous accommodation. This has put pressure on the government to act. Dangerous buildings are the responsibility of the District Local Government Organisations (EOAs). These have begun working closely with ETEK to address and ultimately eliminate the problem, with a series of meetings taking place in all the island’s districts this summer.

Stakeholder Involvement

Developers and property group CEOs often speak to the media, helping to create a comprehensive, grass-roots picture of the Cyprus real estate sector. The real estate sector is described as resilient but vulnerable to geopolitical trends.

The Association of Large Investment Projects presented the government with several proposals to attract foreign corporations to headquarter in Cyprus (“headquartering”), including tax allowances. It also urges the private sector to invest in the development of supporting infrastructure, including housing, international schools and universities. The Association points out that Cyprus is increasingly emerging as a key destination for corporate headquartering.

The government policies and plans are seen by some as positive efforts that are still at the initial stage. Their long-term impact remains to be seen. Foreign buyers are regarded as a positive force in the economy.

Problems identified include the need to simplify the processes for obtaining building permits and issuing title deeds.

Outlook

On 2 June 2026, the IMD World Competitiveness Centre upgraded Cyprus from 44th to 42nd place in the World Competitiveness Index. Cyprus is praised for its advancing economy, surplus public finances and business environment. Moreover, unemployment is low, with the population nearing full employment. The outlook for the Cyprus economy is positive, and the same holds true for real estate. Demand is rising, the construction industry is active and the real estate, development and construction fields attract highly motivated professionals. New areas of focus include the green transition and sustainability, digitalisation and the use of AI in real estate. Large public works projects complement the activity of the private sector.

Conclusion

This has been a year of growth, both for the economy in general and real estate in particular. As is often the case, trends and developments are affected by international geopolitics and the individual characteristics of the domestic economy. Resilience and expansion are accompanied by challenges and critical concerns. These are increasingly becoming the responsibility of not only the government but also the private sector. The two sectors are willing to remain in dialogue and co-operate to resolve problems. Thus, real estate is looking ahead to a year of continued activity, new legislative measures, and interaction between government and stakeholders to respond to challenges and needs.