The Cypriot real estate market is experiencing one of its most dynamic periods of the past decade. Investments are on the rise, transactions are hitting new highs, and new developments are gradually changing the landscape of cities.

At the same time, however, for thousands of people living and working in Cyprus, finding a place to live is becoming increasingly difficult. Rents continue to rise, availability remains limited, and access to quality, affordable housing is one of the greatest daily challenges.

It is no coincidence that housing policy is now at the center of public debate. Recent announcements regarding the construction of 10,000 new homes represent a significant development and indicate that there is now broader political recognition of the problem. The next step, however, is even more important: how will these announcements be turned into actual homes, and how will we ensure that they meet the real needs of the market?

Because the issue today is not just how many homes are being built. It is what kind of homes are being built.

2025 was yet another record-breaking year for the real estate market in Cyprus. The total value of transactions reached €6.5 billion, an increase of 8%, while approximately 25,600 property transfers took place. At the same time, building permits increased by 9% in number and by 28% in value.

In other words, Cyprus is building more than ever before. One would expect that increased construction activity would gradually lead to a greater decline in rents. However, the data show something different.

According to the annual analysis by the Land Registry Department, in just one year, the average rent for a three-bedroom apartment in Nicosia rose from approximately €950 to €1,300. Similarly, even smaller apartments are showing a steady upward trend, while data from Perprice confirm further increases in most of the country’s major cities.

At the same time, the number of properties available for long-term rent remains very low. In Limassol, vacancy rates are now estimated to be between 2% and 4%, while properly priced homes are snapped up within a few weeks.

This creates a paradox. Construction activity is increasing, yet pressures in the rental market are not only failing to ease but are actually intensifying. The explanation lies in the nature of the new supply.

Eurostat data reveal a particularly interesting picture. Between 2010 and 2024, housing prices in the European Union rose by a total of 55.4%, while rents increased by 26.7%. Cyprus followed a different trajectory.

It was one of the very few countries where home sales prices remained nearly at the same levels as in 2010. In contrast, rents continued to rise year after year. This picture suggests that there are now two distinct markets operating. On the one hand, there is the home sales market, which primarily serves homeowners and investors.

On the other hand, there is the rental market, which meets the needs of workers, young couples, families, and people who commute between cities for work. When these two markets do not develop in parallel, an increase in new construction does not automatically translate into more available rental housing.

In other words, the country is not simply facing a housing shortage. It is facing a shortage of housing that meets current demand. In practice, large homes, luxury villas, or projects designed primarily for sale continue to be built. What is still missing is the type of housing sought by a young worker, a family, or a professional who needs a modern, safe, and stable home with long-term prospects.

The public debate over the 10,000 new homes therefore presents a significant opportunity—not only to increase the number of homes entering the market but also to focus on their type. After all, the success of housing policy will not be judged solely by the number of homes announced, but by whether they meet the actual needs of citizens.

This is precisely the gap filled by the Build-to-Rent (BtR) model, which has seen significant growth in many European countries in recent years. Unlike the traditional development model, where housing is built for sale, Build-to-Rent is designed from the outset for long-term rental. Entire buildings remain under a single owner and professional management, creating a stable housing stock that remains available on the rental market.

The difference is not just business-related. It is primarily social. Tenants gain greater security, better management services, and a more predictable relationship with the landlord. At the same time, the market gains a permanent housing stock that is not easily withdrawn for resale or other uses.

In countries such as Germany, Austria, the Netherlands, and the United Kingdom, a significant portion of the rental market is now operated by institutional investors, pension funds, pension funds, and specialized housing management entities.

The common feature of all these models is that they treat housing as a long-term investment rather than a product for immediate sale.

Cyprus is still in the early stages of this discussion. However, the data indicate that the need is growing. Between 2014 and 2024, the percentage of Cypriot households living in rental housing rose from 27.1% to 30.6%. This is a significant structural shift that reflects the new demands of the labor market, greater worker mobility, and the difficulties many families face in accessing homeownership.

This trend indicates that the rental market is no longer a temporary option for a select few. It is a key pillar of housing policy for the coming years.

Recent policy announcements regarding the construction of thousands of new homes mark an important starting point. They show that the problem has now been recognized at the highest level and that there is political will to increase supply.

True success, however, will not be judged by the numbers cited in the announcements. It will be judged by the number of homes that are delivered, by the speed with which projects are implemented, and by whether the new homes meet the actual needs of the market.

This means that the public debate must gradually shift from announcements to the tools for implementation. How can the permitting process be expedited? How will state-owned land be utilized? What incentives will encourage investment in long-term rental housing? How can a stable institutional framework be created that will allow private capital to invest with a long-term perspective? These are the questions that will determine whether the current situation will lead to a substantial increase in supply or whether yet another opportunity will be lost.

Cyprus does not need to reinvent the wheel. Most European countries that have faced similar housing pressures have reached a common conclusion: no single party can solve the problem on its own.

The government can create the appropriate institutional framework, streamline procedures, utilize public land, and design targeted incentives. The private sector can provide capital, expertise, speed, and the capacity to implement large-scale projects.

It is the collaboration between the two that has yielded the best results in countries that today have more mature and balanced housing markets.

Cyprus already has a strong real estate development sector, significant experience in attracting investment, and a construction industry that has proven its ability to carry out complex projects.

The next step is to channel more of this momentum toward creating housing that will remain available to those who truly need it.

The conversation about housing in Cyprus has changed. Until recently, we were mainly discussing whether there was a problem. Today, we are discussing how to increase supply. This in itself represents significant progress.

Announcements regarding new housing units present a unique opportunity to design a more comprehensive housing policy—one that will not only count how many homes are being built, but also determine who they are intended for, under what management model, and what long-term impact they will have on the market.

Cyprus has already proven that it can attract investment and build. The next big challenge is to ensure that a larger portion of this growth translates into more, higher-quality, and more affordable housing for those who live and work in the country.

After all, the success of housing policy will not be measured solely by the number of new homes announced. It will be measured by the number of people who can actually find a home they can call their own.