Sky-rise buildings hosting leading tech companies are changing landscapes across Cyprus. As more companies relocate, they require properties for their offices, and to house their employees. This, along with the rise of short-stays and AirBnB bookings, increases the cost for rent and property values.

While the ICT sector contributes an estimated €2.3 billion to Cyprus’ GDP, and the considerate impact of new businesses coming in and properties being developed, a sense of doom looms over the question: is this sustainable? 

Influx of Foreign Businesses and Property Purchases

Cyprus has emerged as a magnet for tech companies seeking to establish a presence in a strategic and business-friendly environment. From favorable tax laws to extensive public sector efforts to make the establishment or relocation of businesses more lucrative than in other neighboring countries, the advantages of moving to Cyprus seem to be countless. 

Data from Eurostat shows that Cyprus is home to more than 1,200 relocated foreign companies. Each of those companies has employees that relocate to the island as well, increasing the demand for apartments and homes. 

Although on a much smaller scale in Cyprus than in the US, a parallel trend has been observed in cities like San Francisco, where the tech industry's expansion has led to a surge in property purchases by tech giants and startups alike, reshaping the city's real estate landscape source.

The relocation of tech professionals and entrepreneurs has fueled a surge in property purchases by non-Cypriot residents. PwC highlighted a 30% increase in real estate transactions involving foreign buyers in 2023, with Limassol and Paphos emerging as hotspots for investment. Their real estate market review of 2023 also reflected that foreigners bought 1,706 properties across the island, a 35% year-on-year increase compared to 2022.

The same report from PwC finds that the average price for apartments and homes to buy has increased significantly, rising to an estimated €210,000, and the average salary of locals in Cyprus sitting at €24,720. Simply observing the changes in local’s earnings throughout the past decade and comparing them to rising costs and stringent regulations on bank loans tells us that the current model is not sustainable for the people of Cyprus.

A rapid growth of demand for property and development is mixed with the rise of short stays and AirBnB in Cyprus, reflecting how the new generation wants to live, and that markets are evolving towards less “permanent” residencies for all.

Impact of Short Stays and Airbnb

The rise of short-term rentals, facilitated by platforms like Airbnb, one of the greatest disruptors of the real estate industry in history, has played a role in reshaping the real estate landscape in Cyprus. Limassol, in particular, has witnessed a proliferation of Airbnb listings, catering to tourists and business travelers alike. According to Eurostat findings in 2023, short-term rentals recorded an approximate 153 million nights in the latter half of 2023, noticing a 16% increase from 2022.

Similar trends have been observed globally, with cities like Barcelona grappling with the impact of short-term rentals on housing affordability and community cohesion. Regulatory measures have been implemented to curb the proliferation of Airbnb listings and address concerns about housing availability for local residents.

While short stays offer flexibility and convenience for travelers, they have raised concerns about their impact on local communities and housing affordability. The rapid expansion of Airbnb listings has led to a reduction in long-term rental options and an increase in rental prices, especially in popular tourist destinations like Limassol and Paphos.

Cyprus' booming tech sector and the influx of foreign businesses have driven economic growth and property development. However, this growth is accompanied by rising property prices, making housing unaffordable for many locals. 

Short-term rentals, like those on Airbnb, exacerbate the issue. Rising housing costs are outstripping local incomes in Cyprus, forcing residents towards the city outskirts—a clear and pressing issue.

Get in touch with M.Residence today, where we can help you spot market movements and understand the science of real estate to help you make more informed decisions.

Until Next Time,

M.Residence Team.