In Cyprus, the number of real estate properties transferred into the management of credit-acquiring companies has grown, while the share of non-performing loans (NPLs, or “red loans”) in the country remains extremely high.
According to the Central Bank of Cyprus, between June 2024 and June 2025, the total loan portfolio decreased from €20.98 billion to €19.7 billion. Of this, non-performing loans fell by €1.13 billion, amounting to €18.53 billion. Despite this decline, such loans still represent around 94% of the total, highlighting a systemic issue in the country’s financial sector.
The number of borrowers with problematic loans has also dropped — from 73,815 in 2024 to 69,494 in 2025. This suggests that part of the debt is being restructured, written off, or settled through the sale of collateralized property.
Real Estate Market and Hidden Risks
The real estate sector shows interesting dynamics. Over the year, the number of properties transferred to credit management companies increased from 7,610 to 8,079, but their combined market value fell from €1.1 billion to €974 million. This trend may indicate either the sale of more expensive properties or the inflow of less liquid assets into company portfolios, creating new challenges for the market.
Judicial Barriers and Institutional Problems
The main obstacle to resolving the debt crisis in Cyprus lies not so much in the economy, but in the weakness of the judicial system. The IMF and the European Commission have repeatedly stressed that lengthy legal proceedings — especially in bankruptcy and foreclosure cases — discourage both creditors and borrowers. The lack of predictability hampers debt restructuring and fuels social tension.
The creation of specialized courts, digitization of procedures, and reform of the foreclosure mechanism are steps that authorities must urgently implement. For now, however, with 94% of loans remaining non-performing, a full economic recovery remains blocked.
Social and Economic Dimension of the Problem
The issue of “red loans” is not just banking statistics — it represents tens of thousands of families and businesses living under uncertainty. It means frozen capital, illiquid real estate, and lost investment opportunities. The economy loses growth momentum, while society risks splitting into “two speeds”: those who manage to escape the debt trap and those who remain stuck in it.
Outlook for 2025
Experts believe that 2025 could be a turning point. It is not only about reducing figures in reports but also about creating conditions for sustainable economic growth. Solving the debt crisis will require not only the efforts of credit management companies but also active state involvement — above all, through judicial reform.
Against the backdrop of geopolitical and economic instability in Europe, strengthening Cyprus’s financial resilience is becoming a key factor in its competitiveness. If reforms are implemented, the country could not only reduce its stock of NPLs but also lay the foundations for new investment and sustainable growth.