One of the key effects of the credit rating upgrade is the expected continuation of the strong pace of real estate transactions in Cyprus. With improved economic outlooks and reduced financial risks, local and international investors are more confident in making property investments. This confidence is reflected in the ongoing interest from foreign buyers, especially in prime locations like Limassol, Larnaca and Paphos. The stability in Cyprus’ economy provides a reassuring foundation for those seeking both residential and commercial real estate, allowing transactions to continue at a solid rate.

The real estate market in Cyprus has been experiencing a healthy balance between supply and demand in 2024, which is crucial for ensuring long-term market stability. Following the credit rating upgrade, this balance is expected to persist. Developers are likely to continue building in line with demand, which is particularly driven by both domestic needs and the influx of foreign investors. Given the balanced nature of the market, property prices are expected to remain relatively stable in the short term, while still offering opportunities for growth, particularly in high-demand areas.

Another major factor contributing to the positive outlook for Cyprus’ real estate market is the increasing number of international companies establishing their headquarters on the island. The government’s efforts to attract foreign companies through favorable tax incentives, coupled with Cyprus’ credit rating upgrade, make the country an attractive destination for multinational businesses. As these companies set up their operations in Cyprus, demand for commercial real estate offices, and other commercial properties is expected to rise. This will likely lead to an increase in demand for premium office spaces, boosting the commercial real estate sector.

In addition, the government’s efforts to attract and establish management offices of primarily high-tech companies in Cyprus have yielded positive results. The Plan targets sectors such as High Technology, Shipping, Innovation, Research and Development, Biogenetics, and Biotechnology. We believe that it will continue to have a positive impact on various sectors, attracting investments, generating high and sustainable economic value, creating new jobs, increasing demand for domestic services, and contributing to the redefinition of the country’s development model.

In recent months, there has been a noticeable uptick in interest from foreign buyers, particularly from European countries such as Germany, the Netherlands, and the Scandinavian countries. These markets have shown an increasing preference for Cyprus as a destination for both investment and relocation. The upgrade to the credit rating provides a further boost to the island’s attractiveness, as these buyers seek stable and secure environments in which to invest.

British buyers, traditionally a significant presence in Cyprus’ property market, are also contributing to the positive trend. With the economic outlook improving, British investors are expected to maintain or even increase their activity in the Cypriot market.

The upgrade of Cyprus’ credit rating to “A” by Moody’s, Fitch, and Standard & Poor’s is undoubtedly a game-changer for the real estate market. In the short term, the country is poised to maintain a strong pace of transactions, with a healthy balance between supply and demand. The growing number of companies establishing headquarters in Cyprus, and the demand for the real estate market from foreign buyers beyond the traditional and usual countries, points to a bright future for the Cypriot real estate sector.

Demos Georgiou MSc, ΜRICS
BSc (Hons) Property Management and Investment