Cyprus Property Growth Cools

Cyprus entered 2026 with a stable but more selective property market: residential assets continued to outperform commercial real estate, rents rose faster than sale prices in several segments, and retail property remained the weakest part of the market. The latest RICS Cyprus Property Index with KPMG in Cyprus shows no broad-based price surge in the first quarter, but demand for apartments, holiday assets and offices remained intact.

Cyprus property prices rose at a measured pace

All main property categories in Cyprus recorded annual price growth in the first quarter of 2026, but the pace remained moderate. Apartments increased by 4.09% year on year, houses by 3.60%, warehouses by 3.48% and offices by 2.91%. Retail property rose by only 0.72%, again making it the weakest asset class in the index.

Quarterly price movements were even more restrained. In many districts and asset categories, values were unchanged or moved only marginally. Apartments were the main exception. Prices rose by 1.67% quarter on quarter in Paphos and by 1.24% in Famagusta. Limassol posted a 0.62% increase, Nicosia rose by 0.59%, while Larnaca showed no quarterly change.

House prices were more selective. Famagusta recorded a quarterly increase of 1.37%, Limassol 0.82% and Paphos 0.33%. Larnaca and Nicosia were flat. The data point to a market where coastal and tourism-linked areas are still able to generate price momentum, while other locations are moving more slowly.

Apartments remained the strongest residential asset

Apartments continued to lead the Cyprus residential market. Their annual increase was higher than that of houses, and the strongest quarterly gains came in districts with tourism demand, foreign buyer interest and rental-market depth.

The long-term index also shows that residential property has recovered more strongly than most commercial categories. By early 2026, apartments and houses were above many commercial assets on the long-term trend chart, while retail property remained far below its pre-crisis level.

The gap between housing and retail real estate is particularly important for investors. Apartments gained more than 4% over the year, while high-street retail assets rose by less than 1%. The market is still assigning more value to liquid housing stock than to a full recovery in physical retail.

Limassol and Paphos remained key demand centres

Paphos led quarterly apartment price growth. That matters because the city combines tourism demand, foreign buyer activity and limited supply of well-located modern units. Famagusta also showed visible momentum in residential property, especially apartments and houses.

Limassol remained positive but more moderate. Prices rose for apartments, houses and retail assets, though not at the aggressive pace seen in earlier phases of the cycle. Nicosia recorded gains in apartments, warehouses and offices, but houses and retail units were flat.

Larnaca was the quietest of the main markets in the first quarter. Most core residential categories were unchanged, and holiday assets also failed to post growth. That does not necessarily imply weak demand, but it shows that the early-2026 price impulse was not evenly distributed across the island.

Offices and warehouses showed localised gains

Office property rose by 2.91% year on year, but quarterly gains were limited to a few locations. Paphos offices increased by 0.83%, while Nicosia offices rose by 0.42%. Famagusta, Larnaca and Limassol showed no quarterly change.

Warehouses gained 3.48% year on year, almost matching houses. Yet quarterly growth was concentrated only in Nicosia, where warehouse values rose by 0.91%. Other districts were flat.

Retail property remained the weakest segment. Shops rose by 0.62% in Limassol and 0.13% in Famagusta during the quarter, but fell by 0.09% in Paphos. Larnaca and Nicosia were unchanged. The figures suggest that demand for retail space remains limited despite broader economic growth.

Holiday property kept growing, but more slowly

Holiday apartments rose by 3.66% year on year, while holiday houses gained 2.42%. Both categories remained positive, but the pace was more modest than during earlier quarters of stronger tourism recovery and foreign demand.

Famagusta recorded the strongest quarterly increase in holiday apartments, at 1.28%. Paphos rose by 0.24%, while Limassol and Larnaca were flat. In holiday houses, Limassol rose by 0.51%, Famagusta by 0.39%, Paphos by 0.30%, and Larnaca was unchanged.

The pattern suggests that buyers of holiday property have become more selective. Demand remains present, but price growth is concentrated in specific districts and property types rather than spreading evenly across coastal Cyprus.

Rents outpaced sale prices in key sectors

Rental values continued to rise faster than capital values in several categories. Apartment rents posted the strongest annual increase, at 5.10%. Offices rose by 3.03%, houses by 2.79%, holiday houses by 2.75%, warehouses by 2.58% and holiday apartments by 2.05%. Retail rents increased by only 0.66%.

This divergence matters for yields. When rents rise faster than sale prices, gross rental yields can hold steady or improve even in a cautious transaction market. In Cyprus, that was particularly visible in apartments and offices.

Apartment yields rose to 5.44% in the first quarter of 2026 from 5.39% a year earlier. Office yields edged up to 5.60% from 5.59%. Retail yields were almost unchanged at 5.77%, compared with 5.78% a year earlier. Warehouse yields slipped to 4.20% from 4.23%, holiday apartments to 5.67% from 5.76%, houses to 2.97% from 2.99%, while holiday houses rose slightly to 2.80% from 2.79%.

The index has a defined geographic scope

The index covers the urban centres of Nicosia, Limassol, Larnaca, Paphos and Paralimni-Famagusta. It tracks only areas under the effective control of the Republic of Cyprus and does not include the occupied north of the island. It monitors market value and market rent for offices in central business districts, high-street retail, warehouses, houses and apartments.

The methodology was developed by the University of Reading in the UK. The index is based on notional properties with defined characteristics, while price levels are estimated by accredited real estate professionals active in the relevant local markets. That makes the index useful for tracking market direction, but it does not replace a valuation of a specific asset before a transaction.

The economy supports demand, but tourism weakened

The macroeconomic backdrop remains comparatively strong. The European Commission expects Cyprus’s real gross domestic product to grow by 2.3% in 2026 after expanding by 3.8% in 2025, with inflation projected at 3.6% in 2026. The same forecast sees public debt falling to 50.4% of gross domestic product in 2026 and unemployment holding near 4.2%.

Tourism, a major driver of rental and holiday-property demand, had a weaker start to the year. According to Cyprus government statistics, tourist arrivals reached 407,339 in January-March 2026, down from 446,596 a year earlier, a decline of 8.8%. In March, the United Kingdom remained the largest inbound market with a 32.9% share, followed by Poland, Germany and Greece.

The report also flagged risks linked to the war in the Middle East, energy costs and tourism. RICS Chief Economist Simon Rubinsohn said weaker sentiment was already visible in the commercial property survey, although it had not yet fully appeared in the hard price data.

As reported by International Investment experts, Cyprus property remains resilient at the start of 2026, but the market no longer offers a simple “buy anything by the sea” strategy. Price growth has become localised, rents are stronger than capital values, and weak retail demand together with falling tourist arrivals show that asset selection is becoming more important. Liquid apartments in areas with real rental demand look better protected, while overpriced, poorly located or purely seasonal assets carry higher risk.