At the start of 2025, Cyprus’ real estate market is experiencing remarkable growth, driven by several key factors that are shaping the demand for properties across the island, including in cities like Nicosia, Limassol, and Larnaca.
One of the primary drivers of this growth is the country’s robust economic expansion. Cyprus’ economy is projected to grow by 3.2% in 2025, slightly lower than the 3.4% growth rate in 2024, but still a strong indicator of economic resilience. This economic progress is resulting in increased job opportunities, particularly in major urban centers like Nicosia, Limassol, and Larnaca, which in turn fuels the demand for housing. Both local and international professionals are moving to these areas, further strengthening the real estate market.
The surge in property sales, especially among first-time buyers, is another major factor driving the market. For instance, Limassol saw 429 property sales in January 2025, a 36% increase from 315 sales in January 2024, while Nicosia experienced a 13% increase in sales. Larnaca, a city often regarded as the gateway to Cyprus, is also seeing growing interest. Larnaca’s appeal lies in its combination of cultural landmarks, proximity to the beach, and developing infrastructure. The city is increasingly favored by investors seeking more affordable options compared to the traditionally more expensive Limassol and Nicosia. The government’s initiatives, including grants for first-time buyers, have made homeownership more accessible across the island, particularly in Larnaca, where property prices remain more affordable than in the larger cities.
Rental yields are also rising across Cyprus, including in Larnaca. The rental market in Larnaca is becoming increasingly attractive due to its growing appeal as a tourist destination and the ongoing development of its airport and port. In 2023, Cyprus saw an overall rental price increase of 18.57%, with areas like Limassol experiencing apartment rents increasing by 25.3%. Larnaca, while not seeing the same steep increases, has experienced consistent rental demand as both long-term residents and short-term tourists seek quality accommodation in the city. The presence of Larnaca International Airport makes it a prime location for short-term rentals, a trend that is likely to continue in 2025.
The booming tourism sector in Cyprus is another key driver of real estate demand, particularly in coastal cities like Larnaca, Limassol, and Paphos. Larnaca, with its rich history, beautiful beaches, and the recent revitalization of its marina, is becoming increasingly popular with investors looking for holiday homes or rental properties. Cyprus attracts millions of visitors each year, and Larnaca’s tourism industry is benefiting from significant investment in infrastructure, such as the expansion of its international airport and improvements to local attractions. This makes it an increasingly attractive option for those seeking properties for short-term rentals.
Foreign investment in Cyprus’ real estate sector continues to rise, with billions being poured into new developments. This influx of capital is not only enhancing infrastructure but is also boosting the availability of high-quality properties. Larnaca is receiving a portion of this investment, with several luxury developments in the works, particularly near the beach and the airport. These projects are aimed at attracting both international buyers and those interested in vacation homes.
The Cypriot government has also played a crucial role in supporting the real estate market, particularly in regions like Larnaca. Favorable policies, such as tax incentives and grants for first-time buyers, have made it easier for local and foreign investors to purchase property. The government’s active promotion of Larnaca as a desirable place to live and invest is helping to position the city as a key player in the real estate market.
Developers across Cyprus, including in Larnaca, are increasingly focusing on sustainability and technology, making the market even more appealing. Green building practices and smart home technologies are being incorporated into new developments, meeting the growing demand for environmentally friendly and modern living spaces. Larnaca, in particular, is seeing a rise in eco-conscious developments, with several projects incorporating renewable energy and energy-efficient features.
With these combined factors—economic growth, government incentives, rising rental yields, booming tourism, foreign investment, and a focus on sustainability—Cyprus’ real estate market, including in Larnaca, is poised for continued growth throughout 2025. This creates a wealth of opportunities for both local and international investors looking to capitalize on the island’s thriving property sector.
