By Styliani Demetriou*
Data from the RICS-KPMG Property Price Index for the first quarter of 2026 indicate that, following an extended period of sharp growth, the real estate market is entering a stage of relative maturation.
Variations across individual categories remain contained, with apartments displaying the greatest resilience—particularly in Paphos and Famagusta, which recorded an annual increase of 4.09%. Conversely, commercial properties lag behind, while tourism properties maintain a positive yet milder trajectory.
Regulatory Changes and Tax Compliance
This stabilization coincides with significant shifts in the regulatory and tax framework governing property transactions in Cyprus.
The abolition of stamp duty on property transfers effective January 1, 2026, alters both the total cost and the procedural structure for drafting relevant contracts. At the same time, stricter conditions for applying the reduced 5% VAT rate to a primary residence require eligibility checks for every transaction and the adaptation of sales contracts to the new legislative framework to avoid subsequent challenges to their tax treatment.
Beyond tax changes, the revision of the legislative framework for preventing money laundering is currently underway, aiming to expand the supervisory obligations of professionals involved in real estate transactions. Following MONEYVAL Committee recommendations, the revision is expected to reinforce industry obligations regarding the verification of ultimate beneficial owners, documentation of fund origins, and the exercise of adequate due diligence before contract execution.
Building Permits and Supply Dynamics
First-quarter data shows the market maintaining stability despite upcoming regulatory changes. However, the core issue lies in supply rather than demand.
During the first quarter of 2026, 2,276 building permits were issued compared to 1,580 the previous year, marking a 44.1% increase, while approved residential units rose by 58.4% to 5,403. In the January-April four-month period, permits increased by 35%, value by 46.1%, floor area by 45.5%, and units by 65%. Road permits surged by 307.1% and plot division permits by 67.8%, pointing to new developments in the coming years.
Nevertheless, the increase in permits is not expected to immediately boost supply or lower prices during 2026-2027. For buyers, the short-term outlook remains pressured, particularly in the apartment markets of Limassol, Paphos, and Larnaca. For investors, the critical question centers on the price justifying the acquisition of available stock when more than 5,000 units stem from just a single quarter of permits.
For land developers, cost constitutes an essential factor: the Construction Materials Price Index in June 2026 recorded an annual increase of 3.12%, with metallic products rising by 5.02%. Ultimately, the market is driven by the pace at which permits translate into habitable square meters. This year’s figures show that the mechanism has accelerated noticeably, leaving the question of whether licensing procedures and title deed issuances can keep pace.
*Senior Legal Advisor
KPMG Law
Theodorides, Georgiou, Iacovou & CO LLC
