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Cyprus Renovate – Rent scheme struggles to gain momentum

Nigel Howarth
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Cyprus Renovate – Rent scheme struggles to gain momentum

The Cyprus Renovate – Rent scheme is struggling to gain traction, despite offering property owners incentives that are generally seen as attractive enough to encourage them to refurbish and rent out homes and apartments.

The scheme was announced in November 2024 and can also cover renovation work carried out up to one year before an application. Yet, as of yesterday, just 86 applications had been submitted through the Cyprus Land Development Corporation. Of these, 54 had been approved, while a further seven were still awaiting examination.

The figures suggest the scheme has yet to develop any real momentum. Its original target was to bring 1,000 residential units back into the rental market. Based on the current take-up, however, that target appears increasingly difficult to achieve.

The scheme was initially backed by a €25 million budget. Its first period of operation has now ended, but it has been renewed and will remain in force until 2027.

Why are property owners staying away?

The key question for those involved in the housing market is why so few owners are taking part. There is no single answer, but market conditions appear to be playing an important role.

According to industry estimates, owners of older residential properties can earn more by renting them to groups of foreign workers on a per-person basis. This can involve letting a property to five, 10 or more occupants at an agreed rate.

For some owners, the choice is therefore straightforward. Joining the government scheme means making an application, leaving a property vacant while renovation work is carried out and initially paying for the work themselves. The property must then be rented for four years at 70% of the market rent.

This may be particularly difficult for owners with just one residential unit. They face a lengthy process and a period without rental income, followed by a four-year commitment at a reduced rent.

Developers may have other priorities

Another question is why professional housing operators and property owners with greater financial resources are not making greater use of the scheme.

One view among market participants is that financially stronger owners are responding to high housing demand in a different way. They may prefer to build new homes and apartments, renovate existing buildings for sale, or refurbish properties and sell them at a profit.

The proceeds can then be reinvested in another project. This may be more attractive than entering a government scheme that involves an application process, a four-year rental commitment and rents below the market rate.

Is the scheme too complicated?

Some property professionals also believe that the scheme has been held back by its complexity.

The original call for applications and implementation guide ran to 34 pages and contained provisions that could be difficult for the average homeowner to understand. Several of the requirements were later simplified.

Many of the conditions were introduced for a clear reason. They were designed to prevent abuse and ensure that public funds were used for their intended purpose.

However, the safeguards may also have made the scheme harder for individual property owners to access. For a homeowner unfamiliar with housing regulations, funding rules and renovation requirements, the application process can appear daunting.

Renovate – Rent: maximum financial support

The maximum level of financial support available under the scheme is:

  • One-bedroom home: up to €20,000
  • Two-bedroom home: up to €30,000
  • Three-bedroom home: up to €40,000

On paper, these incentives can make a significant contribution towards renovation costs. The low number of applications suggests, however, that the financial support alone has not been enough to persuade large numbers of owners to participate.

Cyprus renovate-rent scheme launched to unlock empty homes

The scheme was introduced following estimates that around 30,000 residential units across Cyprus were effectively out of the market. Many were considered unsuitable for occupation because of their physical condition, appearance or other problems.

The idea was simple: bring these homes back into use through renovation, increase the supply of rental properties and, ultimately, ease pressure on rents.

The challenge is that the wider housing market has changed rapidly. According to the 2021 population and housing census, Cyprus had 492,931 residential properties. Of these, 354,818 were homes of usual residence, while 138,113 were vacant or used for temporary residence.

Some of the vacant properties are likely to be holiday homes, so the figures do not mean that all 138,113 units could readily become long-term rental properties.

Most homes in urban areas

The geographical distribution of housing also helps explain where the pressure is greatest.

Some 298,020 homes, or 60.5% of the total, were recorded in urban areas. These are also the areas where housing demand is generally strongest.

A further 194,911 homes, or 39.5%, were located in rural areas.

Nicosia district accounted for 163,350 homes, or 33.1% of the total. Limassol followed with 132,574 homes (26.9%), while Larnaca had 82,274 (16.7%), Paphos 74,473 (15.1%) and Famagusta 40,260 (8.2%).

Population growth adds to housing pressure

Cyprus had a population of 923,381 in 2021, up 9.9% from 840,407 recorded in the 2011 census. That represents an increase of 82,974 people who needed somewhere to live.

Over the same period, the number of homes increased by 59,719, or 13.8%.

Since 2021, legislation has also made it easier for companies and third-country nationals to come to Cyprus for specialised employment. This is widely seen as another factor behind rising demand for residential property.

There have also been reports of pressure on Cypriot families and students to leave rented homes and apartments so that landlords can re-let them to foreign tenants at higher rents.

The bigger housing policy question

The weak take-up of the Cyprus Renovate – Rent scheme raises questions about how government housing incentives should be designed.

The scheme offers meaningful financial support, but owners are weighing that support against renovation costs, lost rental income, administrative requirements and a four-year commitment at a below-market rent.

At the same time, strong housing demand creates other opportunities for property owners, including new development, renovation for resale and higher-yield private rentals.

For the government, the challenge is now to determine why a scheme designed to unlock thousands of unused homes has attracted so few applicants.

Unless the economics and application process become more attractive, the target of returning 1,000 homes to the rental market by 2027 could remain well out of reach.

(Translated from an article in Philenews)

Cyprus rents: housing supply must be the priority

Nigel Howarth
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Cyprus rents: housing supply must be the priority

Cyprus needs rental policies that do more than limit rent increases. The priority should be to increase the supply of homes available to rent, according to Yiannis Misirlis, President of the Real Estate Development Association.

He said a debate about limiting rent rises is entirely justified, particularly when a sudden increase can place significant pressure on a household budget. However, the key question is how such rules would affect the wider property market.

According to Mr Misirlis, international experience shows that limits on rent increases can provide security for existing tenants. But if such measures are too strict or remain in place for the long term, they could reduce investment in new rental housing.

There is also a risk that market activity could fall, creating two distinct groups. One would include people who have already secured a home, while the other would be made up of households looking for a new property at higher market rents.

Demand is outpacing supply

In Cyprus, the main issue is not simply rising rents. Mr Misirlis said demand has grown faster than supply in some cities and housing categories.

When many households compete for a limited number of available homes, controlling prices alone cannot create the missing housing stock.

“The best protection for a tenant is to give them more choice.”

Mr Misirlis said genuine bargaining power exists when people can choose between a larger number of suitable homes.

He stressed that this does not mean allowing a rental market without rules. The state can still provide protection against extreme or abusive practices, but such measures should be targeted and objective.

The aim, he said, should be to protect tenants without discouraging the development of new homes.

Build-to-Rent could increase supply

Mr Misirlis also called for targeted financial support for households that are genuinely struggling with housing costs. He argued that this would be preferable to broad measures covering the entire rental market.

He placed particular emphasis on creating an effective Build-to-Rent framework. This would give institutional and private investors a stronger incentive to develop homes specifically for long-term rental.

New investment that increases the available housing stock should not, he argued, be undermined by rules that weaken the investment case from the outset.

Another option is to bring empty or underused homes back into the market. Incentives for renovation and long-term letting could help unlock additional rental properties.

At the same time, planning and licensing procedures for new residential developments need to be significantly faster.

Mr Misirlis said it made little sense to express concern about a shortage of affordable homes while new developments remain tied up in the approval process for years.

Landlords also need certainty

Increasing the supply of rental homes will also require long-term renting to remain predictable and financially viable for landlords, he said.

That means effective dispute resolution, greater certainty around tenancy agreements and guarantee schemes for vulnerable tenants. Such measures could reduce risk and encourage more owners to place properties on the rental market.

The housing problem has no single cause, Mr Misirlis concluded, and cannot be solved with one measure.

A successful policy should therefore provide protection for tenants, security for landlords and, above all, more housing supply.

Its success should not be judged only by whether a rent increase was held back in the short term. The real test will be whether, five years from now, a new family has more homes to choose from at prices it can genuinely afford.

(Translated from an article by Yiannis Misirlis)

Cyprus building activity rises 45.5% in early 2026

Nigel Howarth
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Cyprus building activity rises 45.5% in early 2026

Cyprus building activity rose 45.5% in the first four months of 2026, with approved projects covering 1.35 million square metres. The increase was driven mainly by residential construction, while non-residential development declined.

Residential building floor area rose 66.9% to 1.23 million sqm, from 738,562 sqm a year earlier. Civil engineering projects also recorded strong growth, with approved floor area jumping 844.7% to 17,231 sqm.

By contrast, non-residential building area fell 46.4% to 100,562 sqm.

Cyprus residential construction and new housing developments in 2026
Cyprus building activity surged in early 2026, led by residential construction.

Larnaca leads growth

Larnaca district recorded the strongest increase. Approved project floor area reached 290,400 sqm, up 168.3% from 108,200 sqm in the first four months of 2025. It was also 223.8% above the 2019 level.

Paphos followed, with approved floor area rising 99.0% to 141,200 sqm. Nicosia recorded the largest total area at 489,400 sqm, up 63.8% year on year.

Limassol saw more modest growth of 2.6%, reaching 401,000 sqm. Famagusta was the only district to record a decline, with approved floor area falling 51.7% to 28,600 sqm.

Across Cyprus, approved project floor area was 93.3% higher than in the first four months of 2019.

Building permit value up 46.1%

The total value of building permits reached €1.671 billion, up 46.1% from €1.144 billion in the same period of 2025.

Residential permits accounted for much of the increase. Their value rose 66.6% to €1.429 billion.

The number of building permits also increased. Authorities issued 2,915 permits, up 35.1% year on year. Residential permits rose 33.6%, while land subdivision permits increased 72.0%.

In April alone, 639 permits were issued, covering 335,300 sqm and providing for 1,728 residential units.

New housing supply jumps 65%

The number of residential units covered by permits rose 65.0% to 7,131 in the first four months of 2026, from 4,321 a year earlier.

Apartment buildings recorded the strongest growth. The number of units rose 85.9% to 5,184, compared with 2,789 in 2025. Detached houses increased 23.3%, while semi-detached homes rose 14.2%.

Cyprus commercial property market in 2026

Nigel Howarth
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Cyprus commercial property market in 2026

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.

Cyprus plans major overhaul of forced property sales

Nigel Howarth
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Cyprus plans major overhaul of forced property sales

Cyprus is set to overhaul the rules governing forced property sales, with new measures aimed at speeding up auctions and bringing greater certainty to the process.

A government proposal prepared by the Department of Lands and Surveys would introduce private property valuers, automatic reductions in reserve prices and a limit on the number of auctions for certain undivided properties.

The draft legislation is currently out for public consultation until 8 September. If approved, it would bring significant changes to how the reserve price of a property is set and how unsuccessful auctions are handled.

What is a forced property sale?

A forced property sale can take place when a property owner has an outstanding court judgment and a warrant for the sale has been issued. It can also arise when a property is mortgaged and the lender exercises its rights under Cyprus mortgage and foreclosure legislation.

Other legislation or a court decision can also require a property to be sold.

The rules are designed to balance the rights of creditors with protection for property owners. In particular, the reserve price is intended to prevent a property being sold at an exceptionally low price.

Private valuers brought into the process

One of the biggest changes would be the introduction of private property valuers.

Under the proposed system, the applicant would appoint a private valuer after receiving notification from the relevant District Land Office. The valuer would determine the property’s market value and recommend the reserve sale price in a formal valuation report.

The move is intended to take some of the pressure off the Department of Lands and Surveys and speed up the process.

A fee schedule for private valuers would be established and approved by the Director and the Cyprus Scientific and Technical Chamber’s Association of Valuers, ETEK. Fees would normally be reviewed every five years, unless there are grounds for an earlier change.

Reserve price would fall by 15%

The proposals would also introduce a clear financial penalty for failed auctions.

If a property fails to sell, the reserve price for subsequent sales held within five years of the first unsuccessful auction would be reduced by 15%.

The change would replace a less predictable approach with a fixed reduction. It could make properties more attractive to potential buyers after an unsuccessful auction.

The reserve price remains the minimum amount at which the property can be sold.

Fresh valuation after five years

Property values can change significantly over time. The proposed legislation recognises this by introducing a five-year period for valuations.

After five years have passed from the date of the original valuation, the District Land Office official could require the applicant to submit a new valuation and a new reserve price.

There would, however, be an exception where the property’s value has already been materially affected by a significant change in its physical or legal status, or by another factor.

Two-auction limit for undivided properties

The government also wants to tackle lengthy cases involving undivided properties.

Under the proposed changes, certain applications under Article 28 would be limited to two unsuccessful auctions.

If the property has failed to sell twice and five years have passed since its valuation, the application would be set aside. The applicant would then be asked whether they want to start the process again.

The aim is to prevent cases from remaining open indefinitely.

New application could be made

An applicant who still wants to sell the property could submit a new application. It would then be considered under Article 27 of Chapter 224.

The application could only proceed if the property still cannot be divided under the relevant legal provisions.

This is particularly important for undivided properties, where the sale process can become complicated and prolonged.

Existing cases could also be affected

The draft legislation contains transitional provisions that could bring some existing cases under the new rules.

Where a reserve price has already been set under the current law but the forced sale has not yet been completed, the sale would be treated as taking place under the new legislation.

A faster route to auction?

The proposed reforms could mark a major shift in Cyprus’s approach to forced property sales.

Private valuers would take on a larger role. Reserve prices would fall by a set 15% after an unsuccessful auction. Certain undivided properties would face a maximum of two auctions before an application is set aside.

For creditors, the changes could mean a faster route to sale. For buyers, clearer pricing rules could make forced property auctions easier to assess.

For property owners, however, the reforms could increase the pressure to resolve disputes and debts before a property reaches auction.

Note that the proposals are not final. They remain subject to public consultation and the wider legislative process. The final rules could therefore change before they come into force.

Cyprus housing fund raises €20m for affordable homes

Nigel Howarth
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Cyprus housing fund raises €20m for affordable homes

Cyprus’ Land Development Corporation (KOAG) has raised more than €20m by selling additional building density to property developers. The money will be used to build 250 residential units, which will either be offered at affordable rents or sold at a reduced price of €1,650 per square metre.

For an 80 sqm flat, the expected purchase price would be about €132,000. That compares with more than €180,000 for similar-sized flats in some parts of Cyprus, depending on the location.

Developers can pay instead of providing affordable homes

The €20m has been raised under Cyprus’ Affordable Housing Units Management Scheme. The scheme allows developers to increase the permitted building density of their projects. In return, they are normally required to provide some homes at affordable prices.

Some developers have instead chosen to pay the value of the additional building density they received. This allows them to sell all the homes in their developments at market prices while avoiding the obligation to provide discounted units through KOAG.

The option may appear more expensive at first. However, rising property prices mean that some developers see a financial advantage in paying the contribution and selling all their homes at market rates.

147 affordable homes expected from the scheme

Developers who use the building-density incentive and meet the affordable housing requirement are expected to provide homes for sale at €1,650 per sq m. KOAG estimates that 147 units will be created through this part of the scheme.

Affordable rental homes will also be offered at a discount. Rents are expected to be 30% below the average market rent in the area, based on market assessments by the Department of Lands and Surveys.

KOAG will also rent out its own homes at 30% below market levels. The organisation is considering an even larger discount in Limassol, where rental costs have risen particularly sharply.

Limassol rents could be cut further

The situation is particularly difficult in Limassol, where rents have risen sharply and many households are struggling to find suitable accommodation. KOAG is therefore considering offering some of its homes at an even larger discount.

The organisation’s director general, Eleni Simeonidou, said the possibility of a 40% reduction was being considered for Limassol. She said the city had its own particular housing pressures and that the level of any additional discount would be decided later.

KOAG is also considering allocating more of its new homes to affordable renting rather than affordable ownership. The reason is straightforward: some households cannot afford to buy a home, even when the property is offered below prevailing market prices.

245 homes are already being built

KOAG currently has 245 residential units under construction. A further 100 units are intended for affordable rental, while the organisation is also expected to make use of 135 plots of land.

KOAG has been looking at different ways to reduce the cost of delivering affordable homes. One option was to buy partly completed residential and tourism developments that had ended up with banks and property management companies.

However, the idea did not move beyond the planning stage. Some of these developments had planning permissions that had expired many years ago. There were also questions about their structural condition and whether they had been built to the relevant earthquake safety standards.

In some cases, demolition and rebuilding could have been necessary. KOAG concluded that starting new developments would be more economical than trying to repair or complete problematic buildings.

Affordable rental homes planned in Strovolos

KOAG has bought land from several property management companies at relatively favourable prices. The sites are in Strovolos and will be used to build affordable rental homes.

The organisation also considered buying good-quality prefabricated homes, but that option was eventually rejected. One advantage was that planning approvals could have been obtained around six months faster than for conventional buildings. However, construction costs would not have been significantly lower, so the proposal was abandoned.

KOAG becomes a key part of Cyprus housing policy

KOAG has become a central part of the Cyprus Government’s housing policy. The organisation, either directly or through its supervision, is involved in delivering many of the state’s housing programmes.

The Government is also relying on planning incentives to encourage private developers to increase housing supply and contribute to the affordable housing market.

Government targets 10,000 new homes

Interior Minister Konstantinos Ioannou recently told MPs that government housing measures and planning incentives could help lead to the construction of 10,000 new residential units.

The target includes homes delivered through state housing programmes and developments by private-sector companies using government planning incentives. One of the measures allows building density to rise by up to 45%.

So far, 47 applications have been submitted under the scheme. They represent more than 2,500 residential units, including around 400 affordable homes.

Developers who do not want to provide the affordable units can instead pay an amount linked to the additional building density they receive. The contribution was initially about €17m but has now risen above €20m.

Thousands of homes could enter the market

The Government has also highlighted its fast-track planning approval programme. Approved schemes include 930 apartment buildings and around 3,000 houses.

If each apartment building were developed with the maximum 20 flats, the potential number of new homes would be much higher. Even using a more conservative estimate of 10 flats per building, the programme could result in around 9,300 new apartments.

Together with the 3,000 houses, that represents more than 12,000 potential new homes. The figures underline the scale of Cyprus’ effort to increase housing supply and make homes more affordable.

For KOAG, the immediate priority is to deliver new homes at prices and rents that are below the increasingly expensive private market.

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