Driven by surging foreign investment, robust domestic demand, and an expanding pipeline of large scale developments, Cyprus’ property and construction sectors are demonstrating remarkable growth entering the second half of 2026.
According to the latest research report from Eurobank Research, key market fundamentals, spanning building permits, physical output, sales volume, and mortgage activity, show sustained upward momentum across the island, underscoring strong underlying resilience even as regional geopolitical dynamics evolve.
Record Foreign Investment Powers Broad Property Demand
Buyer appetite across the island reached new heights during the first six months of 2026. Data highlights broad-based strength across both domestic and international market segments:
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Sales Contracts Surge: Property transactions surged by 15% year on year during H1 2026, touching 10,007 completed sales contracts. This builds directly on the 15% annual growth recorded throughout 2025.
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International Capital Focus: Foreign buyer activity expanded by a robust 23%. Demand from European Union buyers surged by 29%, while non-EU transactions grew by 20%, confirming Cyprus’ position as a preferred international investment hub.
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Solid Local Demand: Domestic acquisitions by Cypriot nationals increased by 10% year on year, supported by a 19.5% rise in new mortgage lending over the first five months of the year.
€1.3 Billion Development Pipeline Signals Strong Developer Confidence
Building permit data for the first quarter of 2026 points to rapid expansion in high value, large scale projects:
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Permit Volume: Approved building permits jumped 44% year on year to reach 2,276.
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Housing Units & Area: Approved residential units surged by 58% to 5,403 homes, while total approved floor space expanded by 40% to hit 1.0 million square metres.
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Project Valuations: Total approved development values scaled by 41%, reaching €1.3 billion.
Eurobank Research emphasizes that developers are increasingly prioritizing larger, premium assets, reflecting long-term confidence in market liquidity and pricing power.
Economic Output and Construction Activity Expand
The surge in project approvals is translating directly into ground-level economic output. Sector gross value added (GVA) expanded by 4.9% year on year in Q1 2026 (up from 3.9% in Q1 2025), while the construction production index climbed to 120.7.
At the same time, construction output prices rose by 4.7% year on year (reaching an index level of 129.5). This indicates that developers maintain strong pricing power, allowing them to capture healthy margins despite operational cost pressures.
Industry Dynamics and Outlook
The report notes that the industry continues to navigate ongoing structural dynamics, notably a tightening labor market, where 38% of firms site workforce availability as a primary operational consideration and broader regional uncertainty.
However, Eurobank Research concludes that Cyprus’ construction and real estate sectors enter H2 2026 from a position of fundamental strength. Backed by solid institutional financing, accelerating foreign capital inflow, and sustained local end-user demand, the island’s property landscape remains well-positioned for continued progress through the remainder of the year.
Source: Cyprus Property News