Lyra Amvrosidou: Real estate industry’s resilience "tested and proven", but not immune to broader global trends

Lyra Amvrosidou, Executive Director of Property Gallery Developers & Constructors Ltd, shares her views on the changing property market in Cyprus, the challenges facing the industry and the role that national and local government must play to support it.

What is your outlook for the real estate market over the next 12-18 months? Which segments do you expect to experience significant growth?

Looking ahead to 2025 and 2026, I remain fundamentally optimistic about Cyprus’ real estate trajectory. We’re seeing a strong continuation of interest from both local and international markets. What’s driving this is a combination of lifestyle migration, strategic relocation from tech companies and continued demand for second homes. Residential real estate will likely continue to outperform, especially in the premium and upper-mid segments. Luxury branded residences will be a growth story, especially as Cyprus becomes more attractive as a year-round destination. A clear example is our YOO Limassol project, created in collaboration with the legendary Philippe Starck. Located on a prime seafront plot, it offers not only five-star hotel amenities along with exceptional wellness and lifestyle facilities but also full freehold ownership – an important factor for investors who prioritise legal clarity and secure property rights. That said, I’m also watching the commercial sector closely. For example, demand for A-class office space keep rising. At Property Gallery, we currently have 5 business centres under construction in Limassol city centre, with almost of all of them being sold at the pre-development stage.

The local real estate market has demonstrated considerable resilience but it is not without its problems. What are the biggest challenges the industry will face this year and beyond?

The industry’s resilience has been tested and proven but we’re far from immune to broader global trends. The first major challenge I see is construction cost inflation. While global supply chains have begun to stabilise, material prices and labour costs in Cyprus remain significantly above pre-pandemic levels. This creates a ripple effect across the sector – developers face tighter profit margins, extended project timelines and increased financial risk. For end-users, it translates into higher property prices and reduced affordability, particularly in the mid-market segment. The second challenge is bureaucracy and licensing delays. Steps have been taken to improve the overall situation but slow processes continue to delay development, increase costs and test the patience of both local and foreign investors. The third challenge is the overreliance on foreign investment: while foreign buyers boost the market – especially in luxury real estate – this dependence makes the sector vulnerable to geopolitical or economic shifts, which can quickly dampen investor sentiment. To ensure long-term stability, the sector must stay agile and diversify its offerings.

Compared to other Mediterranean destinations, how competitive is Cyprus in attracting international clients and institutional investors? What are the country’s key advantages and where do you see vulnerabilities?

Cyprus is highly competitive – if not unique – in several respects. First, the legal and regulatory environment is based on British common law, which gives institutional investors a high degree of comfort. Add to that our strategic location, EU membership and favourable tax environment offering the lowest corporate tax rate in the EU, and you’ve got a compelling package. From a lifestyle perspective, we offer 340 days of sunshine, excellent healthcare, a thriving international school system and English widely spoken across the island. These are not trivial factors when attracting decision-makers and their families. Cyprus isn’t just about the sea. We’ve had a very positive experience developing the Petit Palais Hotel in the Troodos mountains, which is currently attracting visitors from around the world. This shows that the island’s appeal extends far beyond its coastline. In fact, we are now developing another hospitality project in Platres – the Pendeli Resort – featuring luxury facilities to meet the expectations of a highly discerning clientele. This diversity of offerings, from coastal resorts to mountain retreats, allows Cyprus to cater to a broader spectrum of international investors and visitors, positioning the island as a truly versatile destination. Our vulnerabilities lie in scale and bureaucracy. We’re a small country, which limits liquidity for very large institutional players. Additionally, although much progress has been made, certain regulatory processes remain slow or complicated.

The island’s high-end property market is drawing increased attention from institutional investors, private equity funds and family offices. In your experience, how is the influx of institutional capital reshaping the real estate landscape?

The influx of institutional capital is undoubtedly elevating the real estate landscape in Cyprus. Professional investors bring with them high expectations shaped by their experience in leading global markets. They demand the same level of quality, design and execution that they’re accustomed to elsewhere which, in turn, raises standards locally and pushes the market toward greater professionalism and transparency. Family offices, in particular, often seek tailored solutions aligned with their specific investment goals and budgets, which encourages more flexible and creative project delivery. As a result, we’re seeing a shift from ‘one-size-fits-all’ developments to more diversified, high-calibre offerings that better reflect international benchmarks.

It’s now a year since local government reforms were implemented. What has their impact been on the real estate industry and is there room for further improvement?

Local government reform was long overdue and its implementation is making a meaningful difference. However, its impact is still unfolding, particularly in terms of digital transformation. We’re currently in a transitional phase and it will take more time to see the full implementation and tangible results. A significant backlog from past years continues to slow progress, adding pressure during this adjustment period. Regarding the build-to-rent policy, its real effects will become clearer in the next three to five years, once developments are completed and operational. To support smoother implementation, it is essential to speed up processing times and increase staffing in key departments, ensuring that teams are properly trained and equipped to handle the workload efficiently.

To what extent are government policies shaping development trends in the real estate sector?

Government policies are playing a key role by improving transparency, efficiency and investor confidence. Tax incentives for foreign buyers, revised property and VAT regulations, and favourable residency schemes are driving both local and international demand. The prospect of Cyprus joining the Schengen area has further boosted interest from third-country nationals. Green building policies, while initially raising costs, are pushing the sector toward more sustainable, energy-efficient construction. The build-to-rent programme is a relatively new concept in Cyprus but one that responds well to demographic shifts and evolving preferences, especially among younger professionals and digital nomads. It enables the expansion of housing supply and eases pressure on rental prices, aiming for a more balanced market. Meanwhile, digital transformation efforts – particularly in land registration and the issuing of permits – are streamlining procedures and attracting greater institutional investment.

• This article was published in the May issue of GOLD magazine. Click here to view it