Cyprus's property market in 2024 and 2025 is presenting a fascinating dichotomy. Residential properties are offering exceptional affordability and space when compared to other European nations. However, the commercial sector, particularly retail spaces, has witnessed a significant increase in rental costs due to high demand and development limitations. Recent analyses from Danos & Associates and Landbank Analytics have highlighted this stark divergence.
For more than a decade, from 2010 to 2024, house prices across Cyprus have remained remarkably stable. This contrasts sharply with the rising inflation experienced throughout much of Europe. Consequently, Cypriot households are enjoying unparalleled housing affordability. In 2024, they allocated only 11% of their disposable income to housing, well below the EU average of 19%. Furthermore, a very small proportion of residents face housing costs exceeding 40% of their income. Cyprus also boasts the lowest rate of overcrowded housing in the EU, with just 2% of its population living in cramped conditions, significantly lower than the EU's 17% average.
However, this residential affordability is overshadowed by rising rental expenses in the commercial property sector. Prime retail units in desirable shopping centres are now commanding monthly rents of up to €70 per square metre. This represents a substantial increase from the approximately €45 per square metre observed before the COVID-19 pandemic. Limassol is particularly notable, with average retail rents around €39 per square metre, though premium locations can reach an astonishing €94 per square metre. Nicosia and Larnaca, while generally less expensive, also show significant price points in their prime areas.
The surge in commercial rental prices is primarily driven by strong demand from major retail chains and fast-food businesses. This is compounded by lengthy delays in obtaining approvals and licenses for new shopping centre developments. The Architects' Association has expressed concern that recent policy decisions, seemingly focused on immediate profits and foreign investment, may have unintentionally worsened these market pressures. In response to concerns about housing affordability for younger generations, who typically leave home at 27.5 years old, the government has announced plans to construct 500 new housing units. However, the Architects' Association has cautioned against relying solely on mass production, emphasizing the need for vision and comprehensive planning.