Cypriot property market faces oversupply risk amid high-end growth
The Cypriot property market underwent significant changes from mid-2023 onwards due to several global and regional factors, according to Pavlos Loizou, CEO and co-founder of real estate firm Ask Wire. Loizou pointed out that the absorption of
The Cypriot property market underwent significant changes from mid-2023 onwards due to several global and regional factors, according to Pavlos Loizou, CEO and co-founder of real estate firm Ask Wire.
Loizou pointed out that the absorption of pent-up demand following the Covid-19 lockdown, combined with the war and the migration of people from Russia, Ukraine, Belarus, and elsewhere, drove property prices across Cyprus and Greece to new highs.
This period also emphasised the transformational impacts of the work-from-home trend, which reshaped office demand. “Grade B and C offices faced declining interest,” said Loizou.
He added, “Grade A spaces, logistics hubs driven by e-commerce, and data centers linked to AI and cloud infrastructure are becoming increasingly sought after.”
The migration of Russian speakers significantly influenced the market during this period. Loizou observed, “Many migrants are committing to medium- to long-term stays, establishing businesses, enrolling children in schools, and even securing local financing.”
This trend, combined with the release of post-pandemic pent-up demand, led to a surge in property prices across the region.
By 2024, overseas interest in Greece surged, fueled by the Golden Visa program, geopolitical instability in Israel and Arab countries, and an economic slowdown in China.
Additionally, investment activity from Israelis and Lebanese grew, targeting both residential and commercial sectors.
Meanwhile, construction activity concentrated on high-end projects aimed at buy-to-let investors and short-term rental opportunities such as Airbnb, as well as real estate as a store of wealth.
However, Loizou warned, “The financialisation of real estate is creating significant affordability challenges, sidelining middle-class households and driving up rents.”
In response to these challenges, governments in both Cyprus and Greece introduced measures aimed at addressing imbalances.
Tax evasion related to rental income and real estate transactions became a focal point, with authorities intensifying enforcement efforts.
Grants and housing projects were announced to improve accessibility for lower-income families and essential workers, while EU-aligned grants targeted the refurbishment of older properties to enhance energy efficiency.
“These programs are critical for ensuring the market remains accessible and sustainable in the long term,” Loizou noted.
Looking ahead to 2025, the property market presents both opportunities and risks, the Ask Wire CEO mentioned.
High-end developments are expected to continue rising, driven by geopolitical demand and real estate’s reputation as a safe investment.
“However, there is a risk of oversupply if demand in this segment slows,” Loizou cautioned.
At the same time, the preference for Grade A office spaces is set to persist, while interest in Grade B and C spaces is likely to decline further.
Additionally, governments are expected to intensify their focus on addressing tax evasion, particularly in rental income and transactions.
Loan servicers are anticipated to accelerate the sale of foreclosed properties, aiming to capitalize on rising prices while returning funds to investors.
At the same time, grants and affordable housing projects are expected to expand, offering developers opportunities to cater to untapped market segments.
On investment strategies, Loizou advised caution for smaller portfolios. “For portfolios with less than 15 per cent allocated to real estate, ETFs offer better liquidity and diversification,” he said.
For larger portfolios, he recommended acquiring entire buildings or multiple residential units in city centers, emphasizing their steady demand.
He also emphasised energy-efficient refurbishments as a key area for investors. “Leveraging EU grants to upgrade second-hand properties adds value and aligns with sustainability goals,” he added.
According to Loizou, the real estate market in 2025 presents opportunities and challenges shaped by global trends and local policies.
“While real estate remains a preferred investment, focusing on sustainability, affordability, and practical use can unlock long-term value,” he said.
“Investors, bankers, and developers should approach this dynamic environment strategically, aligning with market needs and regulatory shifts,” Loizou concluded.
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