Cyprus’ commercial property market remained on a positive track in the first half of 2026, with offices and warehouses recording notable gains in both values and rents. Retail property, however, continued to show the weakest growth despite a strong rise in consumer spending.
According to Danos’ Cyprus Market Insight Report S1 2026, economic growth, the expansion of the services sector and business relocations are supporting demand. Limited supply of new, high-quality commercial space is also helping to underpin the market.
At the same time, inflation returned to 4% in June, reducing the scope for further interest rate cuts. However, this did not weaken demand for high-quality commercial property.
Office market continues to grow
The office market recorded another period of steady growth, without showing signs of overheating.
Capital values for offices rose by 2.91% year on year in the first quarter of 2026. Rents increased by 3.03%, the second-highest rise among all property types after apartments.
Office yields remained broadly unchanged at 5.60%. Danos said this points to a stable market, with growth driven by occupier demand rather than speculative investment.
Demand continues to come mainly from technology, professional services, financial services and shipping. These sectors are also among the key drivers of Cyprus’ wider economy.
Danos also highlighted a growing ‘flight to quality’ among occupiers. Businesses are increasingly seeking modern, energy-efficient Grade A buildings, leaving older offices facing longer vacancy periods.
Limassol remains the most expensive office market
Limassol continues to be Cyprus’ most expensive office market.
Prime office rents stand at about €29 per sq m per month, the highest level in the country. Demand is supported by the city’s concentration of international companies, shipping businesses and technology firms.
Nicosia remains the largest market by transaction volume and available stock. It offers a wider choice of properties and lower average rents, while Paphos and Larnaca remain smaller but stable markets.
The limited supply of new Grade A offices, particularly in Limassol, remains a key factor supporting both rents and capital values.
Retail property remains the market’s weak spot
Retail property is showing a different trend from the rest of the commercial market.
Danos describes this as the ‘retail paradox’. Retail sales are rising strongly, but the property market is failing to match that growth.
In May 2026, retail turnover increased by 9.8% in value and 7.5% in volume. Yet shop capital values rose by only 0.72%, while rents increased by just 0.66%.
That was the weakest performance among all property categories. Retail property yields remained stable at 5.77%.
Danos said the gap reflects the impact of e-commerce, a more cautious approach among investors and limited scope for further rental growth, despite stronger consumer activity.
Wide differences between retail locations
Location remains a major factor in Cyprus’ retail property market.
On Limassol’s prime high-street locations, rents average about €39 per sq m. For the best-performing shops, rents can reach as much as €94 per sq m.
By contrast, most rents in Nicosia and Larnaca range from €12 to €18 per sq m. Secondary locations are seeing little or no growth in capital values.
According to the report, the strongest retail performance continues to be concentrated on Limassol’s main shopping streets and in major organised shopping centres.
Warehouses lead commercial property growth
The warehouse and logistics sector continues to show the strongest momentum among Cyprus’ commercial property markets.
Capital values increased by 3.48% year on year, while rents rose by 2.58%. Warehouse yields edged down to 4.20%, the lowest level among all commercial property types.
Danos said the lower yield reflects strong investor interest in the sector.
Supply remains limited. Limassol accounts for about 47% of available warehouse stock, followed by Nicosia with around 33% and Larnaca with 20%.
Limassol also remains the most expensive market for warehouse space, with rents of about €7 per sq m. The national average is around €5 per sq m, while Larnaca remains the cheapest option at about €3 per sq m.
Danos expects demand to remain strong, supported by the growth of e-commerce, rising supply chain requirements and the strategic role of the Port of Limassol.
Modern warehouses are therefore expected to remain one of the most attractive parts of Cyprus’ property market during the second half of 2026.
