2025 was an absolute record year for the Cyprus real estate market. The total value of transactions reached €6.5 billion, which was 8% higher than the previous year. The number of transactions amounted to 25,600. The number of building permits issued increased by 9%, while their total value rose by 28%. The picture is clear: Cyprus is building more than ever before.
And yet, the rental market is moving in the opposite direction. The annual rental rate analysis conducted by the Cyprus Department of Lands and Surveys for the period from September 2024 to September 2025 reveals an alarming trend. For example, the average rent for a three-bedroom apartment in Nicosia jumped from €950 to €1,300 in just one year.
Perprice recorded rental growth in three of the four major cities between August and October 2025 alone. In Paphos, rents increased by 4.8% in just two months. Rental listings are becoming increasingly scarce. The availability rate of rental housing in Limassol now fluctuates between 2% and 4%. Properly priced properties disappear from the market in less than three weeks. Cyprus is building more than ever before, yet the rental market continues to move in the exact opposite direction.
Why Rents in Cyprus Continue to Rise
Eurostat has published particularly interesting data. Between 2010 and the end of 2024, house prices across the European Union increased by 55.4%, while rents rose by 26.7%. Cyprus, however, followed a completely different path: housing sale prices remained almost at their 2010 levels, while rents continued to increase year after year — by 4.5% in 2023 and 4.6% in 2024.
Besides Cyprus, a similar situation was observed only in Italy. For comparison, house prices increased by 228% in Estonia, 234% in Hungary, and 105% in Luxembourg. If the housing market functioned as a single mechanism driven by supply and demand, rents would be expected to follow sale prices. But that is not happening. Rents are rising independently. This clearly demonstrates that Cyprus effectively has two separate real estate markets. One is aimed at investors and property buyers, while the other serves people who live and work on the island and need rental housing.
What Is Actually Being Built in Cyprus?
Cyprus is not facing a shortage of square metres. It is facing a shortage of the right type of housing for the right people under the right rental model. What do we see today? Large houses occupied by small families. Coastal villas that welcome guests for only a few weeks each year. What is missing on the island? Modern, professionally managed long-term rental housing at reasonable prices — the kind of accommodation that young professionals and families moving to cities for work actually need.
The homes exist. But they are not available in the format demanded by the market. Here is the uncomfortable truth hidden within the PwC figures: almost every property sold in 2025 was built for sale rather than for rent. Some of these properties eventually enter the rental market, but only by chance, under the owner's conditions, and often as short-term rental accommodation.
According to the PwC Cyprus 2025 survey, residential real estate remained the market's main driver, accounting for €4.5 billion or 69% of total sales volume. Apartments were the key growth segment, representing around 60% of the overall increase in transaction value. Demand from foreign buyers rose by 16%, with the three coastal cities — Paphos, Larnaca, and Limassol — collectively generating approximately 80% of that growth.
What Is Build to Rent and Why Is It Being Discussed More Frequently in Cyprus?
The Build to Rent model has been developing actively across Europe for many years. It involves constructing residential complexes specifically for long-term rental purposes. In Germany, Austria, the Netherlands, and Denmark, a significant share of the rental market is owned by institutional investors, pension funds, housing cooperatives, and professional developers. In Germany, for example, renters already outnumber homeowners, accounting for 52.8% of the population compared to 47.2% at the end of 2024.
These companies build entire residential complexes exclusively for rental purposes. They do not sell apartments individually but instead manage the buildings themselves, provide maintenance services, and focus on long-term tenant stability. In Cyprus, this model is still largely absent, although experts increasingly identify it as a potential solution to the island's housing crisis.
What Is the Cyprus Government Already Doing?
At the Land Development Conference in March 2025, Interior Minister Konstantinos Ioannou acknowledged the housing problem, citing rising construction costs, high interest rates, and strong demand from foreign workers as key factors.
More than €100 million was allocated in 2025 to address housing challenges. Government policy is based on two main objectives: increasing housing supply and strengthening citizens' purchasing power.
The Build to Rent scheme is already operating in Cyprus. To date, 39 applications for planning permits have been submitted using incentives and additional development coefficients. This is expected to deliver more than 2,500 housing units over the next two years, including 275 affordable apartments. In a further 22 applications, developers opted to purchase additional building density, generating €11.5 million for the Special Affordable Housing Fund of the Cyprus Land Development Corporation. The government is also constructing approximately 500 homes on state-owned land in Nicosia, Limassol, Larnaca, and Paphos.