With an increasing number of developers and new projects emerging across Cyprus, discerning the difference between a genuine investment opportunity and a marketing bubble can be challenging. For investors to make informed decisions, a closer examination of the supply-demand dynamics in Cyprus’s four major cities is essential.

Demand Analysis: Sales Contracts as an Indicator

A reliable indicator of housing demand is the number of sales contracts issued. Here are the figures for April 2024:

  • Nicosia: 308
  • Limassol: 440
  • Larnaca: 309
  • Paphos: 252

Despite rising interest rates and inflation, data from the Department of Land indicates that the volume of sales contracts has either remained stable or increased over the past year. This stability is largely driven by an influx of immigrants fleeing conflicts in Ukraine and Israel, and those attracted by Cyprus’s residency investment programs.

Supply-Demand Ratios

Examining the supply-demand ratio provides deeper insights. This ratio is calculated by dividing the current inventory (sourced from the largest real estate sales offers database) by the number of sales contracts in the last month:

  • Nicosia: 10,487 / 308 ≈ 34
  • Limassol: 9,123 / 440 ≈ 20
  • Larnaca: 7,029 / 309 ≈ 23
  • Paphos: 6,194 / 252 ≈ 24

The data indicates that, apart from Nicosia, all cities exhibit relatively similar supply-demand ratios, each with notably high inventory levels. Nicosia, however, shows an even higher inventory level relative to demand.

Housing Market Segmentation: Apartment Sizes

The distribution of small (1-2 bedrooms) versus large (4-5 bedrooms) apartments varies significantly across cities:

  • 1-2 Bedrooms:
    • Nicosia: 48%
    • Limassol: 44%
    • Larnaca: 60%
    • Paphos: 27%
  • 4-5 Bedrooms:
    • Nicosia: 32%
    • Limassol: 17%
    • Larnaca: 9%
    • Paphos: 24%

Larnaca’s market is predominantly comprised of small apartments, offering ample opportunities for investors targeting this segment. In contrast, family-sized homes are notably scarce, particularly in Limassol and Larnaca.

For investors, the abundant inventory of small residential properties presents opportunities for competitive deals. However, the limited supply of larger family homes in cities like Limassol and Larnaca suggests potential for significant price appreciation in this segment as families grow and demand increases.

In summary, understanding the nuanced supply-demand trends and market segmentation in Cyprus's major cities can guide investors towards lucrative opportunities. Whether targeting the bustling markets of Nicosia and Limassol or the distinct dynamics of Larnaca and Paphos, strategic investment based on thorough market analysis promises the best returns.