Apartment prices in Cyprus jump 6 per cent in a year, report says

Cyprus’ retail property market is increasingly shaped by a broader real estate cycle that remains resilient but uneven, with strong momentum in residential and offices contrasting with a more polarised outlook for retail, according to Danos and Associates’ Market Insight Report.

The report shows that Cyprus’ property market entered 2024 on solid footing, following one of its strongest years in more than a decade.

It also demonstrated that residential activity remained the main driver of momentum.

In the first quarter of 2024, apartment prices rose by around 6 per cent year-on-year, while rental values increased by 9.3 per cent, extending the upward trend seen throughout 2023.

House prices recorded quarterly gains across all districts, with annual increases ranging from 2.6 per cent in Paphos to 10.9 per cent in Famagusta.

The breadth of those gains emphasises the persistence of demand pressures at a time when supply remains constrained.

This strength in residential property is closely tied to wider demographic and investment dynamics.

Foreign buyers acquired around 6,900 properties in 2023, marking a 16 per cent increase compared with the previous year.

Limassol continued to absorb the largest share of transaction value, despite a modest contraction, while Larnaca and Paphos helped offset the slowdown, recording increases in transaction values of 22 per cent and 4 per cent respectively.

At the same time, supply indicators point to continued development activity, albeit under growing constraints.

Building permits issued between January and April 2024 rose by 8.3 per cent year-on-year, while the total area covered expanded by 15.7 per cent.

The value of permits increased by nearly 9 per cent, and the number of planned residential units jumped by more than 24 per cent, signalling sustained construction momentum.

Even so, Danos flags rising construction costs, tighter sustainability requirements and higher financing costs as factors increasingly shaping the scale, design and timing of new projects.

Within commercial property, office space has emerged as one of the strongest-performing segments.

Demand for business space reached its highest level in five years, supported by foreign investment and the expansion of international companies.

Grade A offices remain in short supply, pushing rental levels higher across all major cities.

In Limassol, office rents rose to between €25 and €50 per square metre in the first quarter of 2024, up from €20–€45 a year earlier.

Larnaca recorded the sharpest increase, with rents almost doubling to €15–€20 per square metre, while Nicosia and Paphos also posted gains.

Despite this upward pressure on rents, office sale prices have remained broadly stable, reinforcing a pattern of income-led performance rather than capital appreciation.

Retail, however, presents a more complex picture.

On the consumption side, retail trade growth slowed noticeably.

Retail sales rose by 2.6 per cent year-on-year in May 2024, down from 5.2 per cent the previous month and marking the weakest performance since October 2022. The slowdown was most evident in non-essential categories.

Sales of information and communication equipment almost stalled, while declines were recorded in household equipment and automotive fuel. Growth in clothing and footwear also softened.

By contrast, food, beverages and tobacco continued to show resilience, both in specialised and non-specialised stores, pointing to a shift towards essential spending amid ongoing cost-of-living pressures.

That divergence in consumer behaviour is clearly reflected in retail real estate performance.

According to Danos, shopping malls remain the most sought-after retail locations in Cyprus, significantly outperforming street-level shops in both demand and rental performance.

Commercial centres, both existing and planned, continue to operate with waiting lists that include well-known international clothing brands and fast-food chains.

As a result, prime shopping mall rents have risen to around €70 per square metre per month, up sharply from approximately €45 before the pandemic.

The report links the resilience of malls to their ability to offer a controlled environment that combines retail, food and entertainment, allowing tenants to benefit from stable footfall and longer dwell times.

Consequently, mall rents have remained strong despite the slowdown in retail sales growth, reinforcing a structural shift towards organised retail formats.

Street-level retail, by contrast, remains fragmented and highly dependent on location.

In Limassol, retail rents range between €25 and €50 per square metre, reflecting the city’s stronger population growth, higher purchasing power and tourism activity.

Danos notes increasing pressure from rising operating costs and competition from shopping malls. Parts of Makariou Avenue, in particular, are gradually transitioning away from pure retail towards offices, banking and lifestyle uses, signalling a broader rebalancing of city-centre functions.

Nicosia remains the most affordable retail market. Street-level rents range between €20 and €45 per square metre, broadly unchanged from 2023.

Retail activity is concentrated mainly along Ledra Street and surrounding areas, where foot traffic from offices, tourism and cross-border movement continues to support fashion and catering outlets.

Nevertheless, limited parking and the growing pull of shopping malls continue to constrain wider high-street performance.

In Larnaca, street retail rents increased to between €10 and €25 per square metre in 2024, up from €6–€20 a year earlier, supported by coastal demand and improved tourism flows.

In Paphos and Famagusta, rental levels remained at 2023 levels, between €10 and €25 per square metre, reflecting smaller markets and more limited demand.

Capital values reinforce the same pattern. Retail sale prices in Nicosia remained stable at €4,000–€5,000 per square metre, while Limassol continued to command the highest levels, between €5,500 and €6,500.

Larnaca recorded a modest increase to €2,500–€3,000 per square metre, while prices in Paphos and Famagusta remained unchanged at €2,000–€2,500.

Future supply could further test the balance. Danos highlights plans for two large shopping mall developments in eastern Limassol, both environmentally approved.

One is promoted by Atterbury Europe, while the other involves a partnership between Nicosia Mall and the Papantoniou Group.

Each project is expected to exceed €120 million in investment and feature more than 100 stores if delivered.

The report cautions that while additional space may ease pressure on existing malls, it could also intensify competition among commercial centres without materially benefiting street-level retail.

Beyond retail, the report notes that Cyprus’ broader economic backdrop remains supportive.

GDP growth is projected to approach 3 per cent in 2025, unemployment has fallen to around 6 per cent, and public finances remain in surplus, providing a stable environment for property demand.

Logistics is highlighted as a longer-term opportunity, supported by the island’s strategic location and improving infrastructure, while risks in the banking sector remain contained.