TechIsland meeting Town At the Limassol Real Estate Hall , experts and market leaders discussed a critical issue: how can Cyprus continue to develop if its population is losing the financial means to afford a quality living? Developers, economists, bankers, and executives from major companies participated in the discussion. The key theme was that purchasing and renting residential property has become a challenging task not only for vulnerable segments of the population but also for the young professionals the country is seeking to attract and retain.
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Market under pressure: statistics and reality
In recent years, property prices in various areas of Cyprus have reached highs not seen since the banking crisis of 2012–2013. According to the Central Bank’s index, residential property prices will have risen by approximately 6.5% year-on-year by the end of 2024. Apartment prices, however, are rising even faster—by almost 9%.
Rental prices are particularly under pressure. In the Limassol area , rental rates are almost twice as high as in Nicosia, Larnaca , and Paphos. Experts predict this gap will only widen unless new supply enters the market.
The situation is complicated by several factors:
- Construction slowdown: the number of building permits in 2024 has fallen by 5%.
- Aging housing stock: More than 75% of residential real estate in the country is over 40 years old. Many buildings were constructed long before modern energy efficiency standards were introduced .
- Mismatch with demand: Older homes with poor insulation and a lack of quality maintenance are offered at prices that match those of high-end properties.
Quality of life as the main criterion
Leaders of large organizations note that young professionals often face a paradox: they can find a one- or two-bedroom rental option, but it is a low-quality residential property that consumes more than half of their income.
Experts emphasize that if people can’t live on the island in a dignified and environmentally friendly manner , they will start leaving. This is a question not only of personal comfort but also of Cyprus’s global competitiveness. The problem also affects education: international students and teachers are forced to compete with local residents for the limited number of available facilities.
The system of the past versus the needs of the future
Developers acknowledge that the current urban planning system doesn’t meet modern needs. Regulations developed decades ago dictate minimum floor sizes and layouts that were relevant in the past. Today, the market demands flexibility—small, functional one- and two-bedroom apartments for mobile professionals and young couples.
The permitting process in popular areas can take years, creating a supply shortage in the future. Due to uncertainty and rising construction costs, developers often either postpone projects or focus exclusively on the luxury segment.
Build-to-Rent Model : A Stabilization Tool
One solution being discussed is the Build-to-Rent ( BtR ) model . This approach has been successfully implemented in the UK, the Netherlands, and Germany. It involves constructing entire residential complexes specifically for long-term rental rather than for sale. These properties are managed by professional companies and offer:
- Stable rental conditions and high-quality service.
- Common spaces for residents and developed infrastructure.
- A variety of options – from studios to multi-bedroom family apartments.
The Cypriot banking sector expresses its readiness to support such large-scale initiatives, noting that institutional leasing models can bring long-awaited stability to the market.
An integrated approach to the problem
However, the BtR model is not a panacea in itself. Its success requires a coordinated government strategy, including:
- Updated regulations: revision of development density and requirements for the area of properties in popular areas.
- Tax incentives: VAT exemptions or fiscal stability for long-term rental projects.
- Transparency: Clear standards for tenant protection and contracts.
Increasing the supply of quality residential property will help reduce price pressure, expand choice for citizens, and make Cyprus’s districts more attractive to live and work. The key question remains whether politicians, developers, and financial institutions are prepared to take decisive and coordinated action.
