Cyprus’ investment drive overlooked housing costs

Tasos Iasemidis
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Cyprus’ investment drive overlooked housing costs

Cyprus’ strategy to attract overseas investment has delivered economic benefits. But without proper planning for housing, it has also added pressure to rents and left some groups carrying more of the housing costs, argues the author writing in Politis.

Over the past decade, Cyprus has built much of its growth strategy around attracting foreign capital, companies and workers. Policies have included permanent residency schemes linked to investment, tax incentives, support for company relocations and the employment of third-country nationals.

These policies should not be judged in purely positive or negative terms. After 2013, Cyprus urgently needed capital, new industries and a broader tax base. The measures helped support recovery, created a significant technology and services sector, increased public revenue and brought skilled workers into a relatively small labour market. The direction was right.

The challenge was the speed of change and the failure to plan for its consequences. The policies all increased demand for housing, but supply takes years to respond, from planning approval to completion. When demand outpaces construction, prices rise before more homes become available.

Investment schemes affected housing in different ways

It is important to distinguish between the policies, because they affect the housing market through different channels.

Residency schemes linked to property purchases did not necessarily create the same demand for homes to live in as company relocations did. Instead, they influenced what developers built. Developers naturally focused on projects with a reliable buyer at a known price. Land, labour, finance and planning capacity were directed towards properties that were often not occupied permanently. In effect, this redirected construction resources.

Company relocations and the arrival of their employees created a different kind of demand: people looking for somewhere to live, often with families, schools to consider and a need to be near particular urban centres. Much of this demand was for rental homes.

New arrivals on higher salaries then competed with local tenants for the same limited supply, putting pressure on rents. The impact was concentrated in three or four areas rather than spread evenly across the island. Cyprus therefore faced local housing pressures with national consequences.

I am not aware of a comprehensive, published housing impact assessment carried out before these policies were introduced. Decisions were assessed by their economic inputs: how many companies, how much investment and how much revenue. The question “Where will these people live?” was not part of the calculation.

What should have been assessed?

A proper assessment would have considered the homes genuinely available in each area and price bracket, rather than the total number of properties.

It would also have examined how quickly the construction sector could respond, taking account of planning times and labour availability. Demand forecasts should have included a range of scenarios, from cautious to extreme, and stated what proportion of new arrivals might seek rental homes. Schools, transport and other infrastructure should have been included as part of the analysis.

No single ministry holds all the relevant information. Investment policy, tax incentives, planning permission and local development are handled across different departments and levels of government. Without a system to bring these strands together, each decision may make sense on its own while creating problems collectively.

Benefits were real, but shared unevenly

The benefits should not be underestimated. They included corporation tax, VAT and social insurance contributions, jobs for Cypriots in well-paid roles, growth in professional services and more demand for shops and restaurants. Private education and healthcare also expanded.

But the gains were concentrated in property, construction and professional services, and in a small number of urban centres. Workers outside these sectors saw housing costs rise without a corresponding increase in income.

That amounts to a transfer from tenants to property owners. The benefits were felt nationally, while the housing costs fell more heavily on particular groups, especially younger people and lower-income households.

A fair assessment needs more than a balance sheet

A fair review should include the net fiscal impact of each programme, the real economic contribution of those who came to Cyprus, and an analysis of who gained and who lost. Without the distributional analysis, the debate remains accounting rather than economic—and risks losing the public support needed for these policies to last.

The main lesson from the past decade is that investment schemes need clear safeguards and formal oversight from the outset. These should not be added years later. Cyprus has seen the risks of running a scheme for years with loose criteria, unclear supervision and no systematic review. The cost is not only fiscal or economic; it is also a loss of credibility. For a small, outward-facing economy, credibility is among its most valuable assets. It can be lost quickly and take a long time to rebuild.

Safeguards should be specific and measurable. They should include robust checks before approval, verification of where funds come from, and evidence of real economic activity rather than formal compliance alone. Beneficiaries should be reviewed regularly, with the option to withdraw approval where necessary. Independent oversight should have access to data and clear accountability. Quantitative and geographic thresholds could trigger automatic reviews, supported by an annual public report.

These measures are not about burdening investors with bureaucracy or treating them with suspicion. Clear rules and predictable oversight can attract serious investors by giving them confidence that the status they receive will remain secure. The greater risk to Cyprus’ appeal is not scrutiny, but the absence of it.

Measure results – and be ready to change course

Every policy should be assessed by its results and impact, not only by the intention behind it. That means setting indicators from the start, measuring performance regularly and publishing the findings. It also means being ready to amend or end a scheme if the evidence shows it is failing or causing greater harm than benefit.

The assessment must go beyond how much capital entered the country. It should examine what stayed in the real economy, who benefited, who carried the costs, and what pressures were passed on to housing costs and infrastructure.

Reviewing a policy is often treated as an admission of failure. It is the opposite: it allows a policy to adapt in time and gives it a better chance of lasting.

By Tasos Iasemidis
Adapted from an article published by Politis

DLGO steps up action on dangerous buildings in Larnaca

Nigel Howarth
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DLGO steps up action on dangerous buildings in Larnaca

The Larnaca District Local Government Organisation (DGLO) is stepping up its efforts to make dangerous buildings safe, with hundreds of properties across the district now assessed.

So far, 335 buildings have been classed as dangerous. Of these, 189 are considered the highest risk and are being dealt with first, the DGLO said.

One recent example was an abandoned building on Stavrodromiou Street in Larnaca. After repeated interventions by the DGLO, the owner paid to have it demolished, removing a hazard that had concerned local residents for some time.

The DGLO says similar action has been taken in Larnaca and Tersefanou. Some demolitions followed partial collapses; others came after residents raised concerns or inspectors visited the properties.

In each case, the owners covered the cost following repeated notices and intervention by the DGLO. The demolitions show that the work is moving beyond identifying and assessing risky buildings to dealing with them on the ground, helping protect residents and neighbouring properties.

More than 1,100 possibly dangerous buildings in Larnaca

The DGLO took responsibility for dangerous buildings on 1 April 2025, inheriting records of 563 properties thought to pose a risk. Since then, it has updated its records, carried out site visits and received reports from residents, municipalities and local communities. Its register now includes 1,101 buildings that may be dangerous.

To speed up assessments, the it brought in specialist private-sector civil engineers. They have been commissioned to carry out 378 visual inspections and have submitted 372 technical reports. So far, 335 buildings have been classed as dangerous, including 189 in the highest-risk category.

It has also taken steps to reduce risks. These include putting up barriers and other safety measures, work carried out by owners, and demolitions. Seventeen buildings have been formally declared dangerous, while action on a further 22 is well advanced.

Owners responsible for building safety

The DGLO has reminded property owners that they are responsible for maintaining their buildings and dealing with any safety risks.

When owners act, the it says that it will work with them to make their properties safe as quickly as possible. If they do not comply and the danger remains, the DGLO says it will use the powers available under the law, including procedures that could lead to demolition. It will continue to prioritise the buildings considered most dangerous.

Its aim is to ensure that no building formally deemed dangerous is left without the necessary safety measures indefinitely. Public safety, it says, cannot be put on hold.

(Adapted from an article published by StockWatch)

Housing crisis debate: Should foreign buyers face limits?

Nigel Howarth
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Housing crisis debate: Should foreign buyers face limits?

Following yesterday’s report, “Cyprus housing shortage reaches 39,000 homes as prices rise“, economist Dr Stelios Platis and Polys Kourousides, president of the Cyprus Property Valuers Association, have set out different approaches to the housing crisis and rising property prices.

Both say people should find it easier to buy a home. But they disagree on how to achieve that: Platis wants limits on some overseas demand and cheaper finance for permanent residents, while Kourousides argues that Cyprus needs to build more homes.

Platis calls for a radical change

Platis says housing should be treated as a social issue, not just a property market concern. He describes a home as a source of security and stability for families.

He argues that the government should consider cheaper finance for people who live and work permanently in Cyprus and want to buy a main home.

Platis also proposes setting a cap on the share of homes in large residential developments that can be sold or rented to third-country nationals. He says this could help keep more new homes available to permanent residents.

As an example, he cited a development of 100 flats where 30% might be reserved for the domestic market. In his view, this could reduce overseas demand for that portion of the development and put downward pressure on the prices paid by eligible buyers.

He also called for special protections in areas where land is naturally scarce, including coastal zones and places of environmental or social importance. One option, he said, would be a cap on ownership by third-country nationals in these areas.

Kourousides warns that subsidies could push up prices

Kourousides agreed that young people and couples need access to affordable finance. But he warned that helping buyers spend more, without increasing the number of homes available, could raise demand and push prices higher.

“The solution to the housing crisis is not subsidising demand. It is increasing the supply of housing,” was his central argument.

Building new homes takes time, he said. If demand rises before the market can add more homes, prices could increase further.

The debate over foreign buyers

The sharpest disagreement concerned whether Cyprus should restrict property purchases by third-country nationals.

Kourousides warned that the property market is closely linked to wider economic activity. A sudden fall in demand, he said, could create problems for the sector. He pointed to earlier periods when property sales fell sharply, alongside the effects of the wider economic crisis in Cyprus.

Platis said his proposal would not stop construction. Instead, he argued, it would limit the share of homes in certain developments that could be sold to specific categories of overseas buyers, directing more of the new supply towards the domestic market.

He also argued that overseas demand is a significant factor behind rising prices. Without intervention, he said, Cypriot buyers would continue to compete with buyers who have greater spending power. Platis also criticised what he sees as the influence of large developers on policymaking.

Kourousides cautioned against measures that could cause a sudden drop in demand. If the supply of new properties rises significantly while overseas demand falls, he warned, the market could face a sharp price correction.

Call to raise the 5% VAT threshold

Kourousides also proposed a more immediate measure for people buying a main home: raising the price threshold linked to the reduced 5% VAT rate.

He said the threshold is currently €350,000 and was set in 2023. Given the cumulative rise in property prices since then, he argued it should increase to €400,000. That could help buyers who now pay more because of higher prices retain access to the reduced rate.

Kourousides said the change could be introduced quickly and offer financial relief to households buying a main home.

He also cited a roughly 68% rise in building permits in 2026 compared with the previous year. On that basis, he expects property supply to increase in the coming period. He warned that a sharp simultaneous fall in overseas demand could lead to a strong market correction. The 68% figure was cited by Kourousides during the discussion.

Two routes to more affordable homes

The debate set out two different economic approaches to Cyprus’ housing problem.

Platis favours cheaper finance for permanent residents; more homes directed to the domestic market and limits on third-country nationals demand in some developments and areas.

Kourousides sees an increase in the overall supply of homes as the main answer. He supports targeted steps such as raising the threshold for reduced VAT but warns that sudden restrictions could weaken demand and construction.

Both agree that the housing crisis has become a serious concern for young people and households. They also agree that action is needed to improve access to affordable homes.

(Adapted from an article published by StockWatch)

Cyprus housing shortage reaches 39,000 homes as prices rise

Nigel Howarth
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Cyprus housing shortage reaches 39,000 homes as prices rise

Cyprus’ housing shortage stands at an estimated 39,000 homes, with rising prices and rents adding pressure for residents. New construction and government-backed affordable housing schemes could increase supply, but labour shortages and strong demand remain challenges according to the EU 2026 CY Housing Annex.

House prices rose by around 28% between 2020 and 2025, broadly in line with the EU average. Demand from non-resident buyers, investment in housing and higher construction costs have all contributed to the increase. Housing transactions have more than doubled since 2020.

Coastal cities face the sharpest price pressures

Prices vary across the island. In coastal areas including Limassol, Paphos and Larnaca, house prices are reported to be 39% above the national average. Demand linked to tourism and foreign businesses, alongside the use of homes for short-term lets, adds pressure in these locations.

Rents have risen faster than house prices. Across Cyprus, rent accounted for 22% of household income in 2025, matching the EU average. But that figure masks greater pressure on lower-income households: rent represented 28.3% of income for households at risk of poverty.

Affordable housing plans target four cities

The government announced plans in December 2025 to build 500 affordable homes in Nicosia, Limassol, Larnaca and Paphos, at a cost of €70 million. A wider housing strategy is expected to add more than 1,900 units, with nearly 200 designated as affordable.

Other measures include affordable rental projects, grants for young homebuyers and support for student accommodation. Their impact will depend on how quickly the homes are delivered and whether residents can afford them.

Construction faces labour shortages

Residential construction is expanding, and investment in dwellings reached around 8% of GDP in 2024, the highest share in the EU. Building permits also point to further growth in supply.

However, labour shortages could slow progress. In October 2025, 41.4% of Cypriot construction employers expected worker shortages to limit production, compared with 27.5% across the EU. The construction sector’s productivity was also about 67% of the EU level.

Short-term rentals and housing quality add to the challenge

Registered short-term rental listings almost doubled between 2023 and 2026. More than 9,000 registered properties offered nearly 40,000 beds, while authorities estimated the actual supply was higher. In mid-2024, more than 7,000 of 14,446 short-term rental properties were reported to be unregistered.

Housing quality is another concern. As reported in the EU 2026 CY Housing Annex, in 2023, 32.1% of people in Cyprus lived in homes affected by leaks, damp or rot, compared with an EU average of 15.5%. The annex also reports that social rental housing accounts for close to 0% of the housing stock, against an EU average of 8%.

Cyprus is building more homes and has announced new affordable housing schemes. With an estimated shortfall of 39,000 dwellings, the key test will be whether new supply reaches the residents who need affordable, secure housing.

€11m Coral Valley scheme wins fresh environmental approval

Nigel Howarth
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€11m Coral Valley scheme wins fresh environmental approval

A €11 million residential development in Pegeia has received environmental approval for a second time, clearing a further hurdle for Harbourshore Estates Ltd Coral Valley scheme.

The development is planned in Pegeia, in the Akamas municipality. It will include 68 residential units and a biological wastewater treatment plant to serve the scheme.

The project is expected to take five years to complete once construction begins. Some building work had already started on the site under earlier approvals.

Previous permits have expired

Coral Valley previously secured planning and building permits. Those permits have since expired, so they will need to be reissued. The new permits are expected to cover the previously approved development and the proposed wastewater treatment plant, which was included in the former building permits.

The development site covers 11,432 sqm. The treatment plant is planned for part of plot 8 and will serve Coral Valley as well as an already approved residential scheme on the neighbouring plot.

That neighbouring scheme comprises 119 homes, designed to accommodate 314 people, along with a restaurant and a swimming pool. It has a site area of about 8,057 sqm., with a proposed floor area of 5,796.79 sqm. and a building footprint of 3,444.05 sqm. Plans provide for 125 bedrooms and pools with a combined capacity of 320.8 m3.

Apartments and villas planned for Coral Valley development in Pegeia

Coral Valley’s plans include apartment blocks and houses:

  • Blocks B3 and B4: Each block will contain 16 apartments: nine two-bedroom and seven one-bedroom homes.
  • Block M2B: Three homes, each with a basement, ground floor and first floor, around 60 sqm. floor area and two bedrooms.
  • Villa M3BS: A three-bedroom, two-storey home of about 129 sqm., with a private 24 m3 pool.
  • M3B villas: Eight two-storey, three-bedroom homes of about 130 sqm. each, with private pools ranging from 24 to 33.6 cubic metres.
  • MGS home: A three-bedroom, two-storey house of about 121 sqm..
  • Block MG4: Four three-bedroom, two-storey homes of about 113 sqm. each. One will have a 37.6-cubic-metre pool.
  • MG5 villas: Two three-bedroom, two-storey homes of about 115 sqm. each.
  • M1 villas: Four three-bedroom homes, each with a ground and first floor and an area of about 470 sqm. each.
  • Block C3: A three-storey apartment building with 13 apartments, ranging from one to three bedrooms and measuring between 55.46 and 110.25 sqm.

The scheme will include 82 parking spaces: four for disabled users and 10 for visitors.

Landscaping and environmental conditions

Construction of the Coral Valley development in Pegeia is expected to involve the removal or disturbance of plant species on the site that have not already been affected. Permits are required to uproot, fell or lop the tops of Aleppo pine and Mediterranean cypress trees above specified trunk-diameter thresholds.

The architects say the landscaping plan will use endemic or native species to protect the area’s ecological and visual value. A large public green space is also planned next to the site. The developer intends to prepare a separate landscaping plan using endemic or local plants and trees.

Environmental conditions for the development’s operation include a ban on discharging pollutants into soil, groundwater, surface water or coastal waters. Wastewater, including domestic sewage and swimming-pool filter backwash, must not be sent to soakaways or drainage trenches.

Packaging waste must be managed under the relevant packaging waste legislation. Other waste produced during the operation or maintenance of equipment must be handed to a licensed waste manager.

(Translated and summarised from an article in StockWatch)

Israeli buyers flock to Cyprus as property debate grows

Loucianos Lyritsas
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Israeli buyers flock to Cyprus as property debate grows

More Israelis have been buying property, investing in businesses and moving to Cyprus in recent years. The trend is bringing new capital to the island, while raising questions about housing affordability, land ownership and the scale of foreign influence.

The prolonged insecurity in Israel after the October 7, 2023 attacks and the wars that followed has led some Israelis to consider Cyprus as a place to live. For some, the nearby island is no longer just a holiday destination or investment opportunity, but a permanent home or a contingency plan.

“I want to have a Plan B in case the situation in Israel gets more difficult,” one Israeli who recently bought a home in a large residential development in the Limassol district told Deutsche Welle, speaking anonymously.

Another buyer cited the island’s closeness and familiar climate: “It’s a 40-minute flight, the same landscape, the same climate. It’s like being in Israel without actually being there.”

A third interviewee said business considerations also played a role, as Israeli companies have moved some operations to Cyprus to make it easier to work with European Union countries.

Buyers, residents and second homes

The Republic of Cyprus has a population of fewer than one million. Estimates cited by Israeli media put the number of Israeli families living permanently on the island at 3,000 or more, with several hundred additional families arriving each year.

Israeli media have also reported that tens of thousands of Israelis own property in Cyprus. Israel Hayom, has estimated that around 20,000 Israelis own property in Cyprus without living on the island year-round.

Cyprus Land Registry figures presented to parliament recorded 3,851 property transfers and sale contracts involving Israeli buyers between 2021 and 2024 in the coastal districts of Larnaca, Paphos and Limassol.

Israeli investment also extends to tourism and large development projects. Hotel group Fattal has invested hundreds of millions of euros in Cyprus, with properties in Limassol, Paphos and Larnaca.

In Larnaca, investors with Israeli interests are involved in the redevelopment of the historic Palm Beach hotel, a project valued at more than €110 million, and the approximately €40 million Aqua Residences development. The latter plans two 15-storey towers along the seafront.

In the Limassol district, Uriel Kertesz, a Hungarian-Israeli businessman and investor has proposed restoring about 60 homes in the long-abandoned village of Trozena and adding tourism facilities, a campsite and a winery. The project lies within a Natura 2000 protected area. It has drawn opposition and prompted an investigation by the authorities after some work reportedly began without the necessary planning and building permits.

Services for a growing community

A more established Israeli presence is visible in the services and businesses opening across Larnaca, Limassol and Paphos. These include places of worship and restaurants offering kosher food. Hebrew-language advertisements, including political campaign material, have also appeared on roadsides. Last summer, billboards for Gadi Eisenkot’s Yashar party targeted Israeli voters in Cyprus.

A planned private Jewish school in Polemidia, near Limassol, could accommodate up to 1,500 students – another sign of the community’s growing permanence.

The developments have intensified a wider debate about foreign investment and property ownership. That discussion is also shaped by critics’ concerns about Cyprus’ diplomatic support for Israel and memories of the Russian capital inflows that followed the 2013 financial crisis, when the country expanded its citizenship-by-investment program.

Political criticism and response

Stefanos Stefanou, secretary general of the opposition Progressive Party of Working People (AKEL), has warned about what he described as uncontrolled sales of Cypriot land to foreigners. He specifically cited Israeli purchases and the development of gated residential communities with their own infrastructure.

Fidias Panayiotou, a member of the European Parliament and leader of the Direct Democracy party, has gone further, claiming that “Israel is buying Cyprus” and warning that the Cypriot economy could become too dependent on Israeli capital.

Israel’s ambassador to Cyprus, Oren Anolik, rejected claims that Israelis wield excessive influence. He said Israelis who live and do business on the island have become part of its social and economic fabric. Anolik also warned that singling out a nationality and invoking stereotypes about “foreign economic power” could fuel antisemitism.

The government has made attracting foreign investment a priority. President Nikos Christodoulides has repeatedly presented Cyprus as a destination for international investors. In 2025, then-Energy and Commerce Minister George Papanastasiou said the government was pleased that Israeli businesspeople were active in sectors including tourism, technology, energy, health and real estate.

Proposed restrictions on land purchases

The issue has reached parliament, where lawmakers are considering proposals to restrict land purchases by non-EU nationals. The proposals come from the country’s two largest parties: the left-wing AKEL and the centre-right Democratic Rally (DISY).

DISY MP Nikos Georgiou told Deutsche Welle that foreign land purchases had reached “unprecedented proportions” in recent years, affecting demographic patterns, land values and, in some cases, national security. He said his proposal was not aimed at any specific country or its citizens, and called for debate “without scaremongering” or rhetoric against people from third countries.

AKEL has put forward a similar proposal. MP Giorgos Koukoumas said mass property purchases by foreign nationals were among the factors pushing prices beyond what many Cypriots could afford to buy or rent in urban areas.

Koukoumas also pointed to concerns about Israeli acquisitions of major businesses and large areas of land. He cited Israeli media reports about the creation of a “second Israel in Cyprus,” as well as concerns about Israeli intelligence activity on the island and closer Cypriot-Israeli defence and security ties.

The debate now brings together competing priorities: Cyprus’ effort to attract international investment, the effect of property demand on local residents, and the question of how to discuss foreign ownership without directing hostility at a nationality or community.

By Loucianos Lyritsas, Limassol | Edited by Aingeal Flanagan
Adapted from an article published by Deutsche Welle

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