Prices aren't going down anytime soon.

Over the last 30 years Cyprus has attracted foreigners for tourism, real estate and business purposes. This has brought significant sums of money into the economy, transferred experience to the locals and supported business amongst the more affluent clientele.

However, with the outbreak of war between Russia and Ukraine in early 2022, more than 20,000 Ukrainians, Belarusians and Russians moved to Cyprus, many of whom settled in Limassol to take advantage of the favorable tax regime. Cyprus has also attracted financial and technology companies from warring countries and neighboring Belarus, bringing new wealth and talent. The Russian-language communications company Herald of Cyprus reported that in May 2022 they had 3,000 new IT professionals whose employees earn more than €5,000 a month. The mayor of Limassol estimated that more than 10,000 Ukrainians have moved to the city since the war began. The Cypriot government's "headquarters" initiative has also attracted foreign companies to set up offices on the island, resulting in 4,524 families applying for relocation until August 2022.

In addition, recent political changes in Israel have caused a surge in emigration requests from its citizens, with Ocean Relocation receiving more than 100 requests per day since January 2022. Cyprus is also a popular destination for Israelis, with around 10,000 applications for Cypriot residency since 2020. Information International reported that about 12,000 Lebanese have also traveled to Cyprus, mostly between the ages of 25 and 40. These developments have brought new challenges and opportunities to Cyprus and its residents.

The influx of migrants to Cyprus has led to an increase in demand for rental accommodation, especially in popular destinations such as Limassol and Paphos. Many of these migrants earn much higher salaries than the average local worker, sometimes 5 times the average salary of a local manual laborer. As a result, paying €1,500 for rent is not a problem for these highly paid migrants.

In 2016 it was possible to rent a one bedroom apartment in Paphos for around €300 and in Limassol for around €400 per month. Now the minimum rent for a one-bedroom apartment in Paphos is €1,000 and in Limassol it can exceed €1,400 per month. This means that many locals cannot afford such accommodation, especially in the more attractive areas of the island. Rising rental prices have also had a direct impact on the sales market, as foreign investors look to buy properties yielding around 6%.

The rental income generated by a property is a key factor in determining its value, as investors are willing to pay more for apartments that can be rented out for higher amounts. For example, if an apartment can be rented out for €1,000 per month, an investor is willing to pay up to €200,000 to buy it. However, if the same apartment can only be rented out for €500 per month, the investor is only willing to pay up to €100,000 for it. This highlights the close relationship between rental prices and sale prices in the real estate market.

People who have recently moved to Cyprus and are currently working online or in financial technology companies have not only invested their time and effort in establishing themselves in the country, but have also made substantial investments in the local real estate market. This means that they are likely to stay in Cyprus for the long term and will not be in a hurry to leave. As a result, unless the government intervenes, it is unlikely that real estate prices will fall significantly in the near future. The government may need to introduce certain measures to regulate the real estate market and prevent it from overheating, such as placing more restrictions on foreign investment or introducing incentives to encourage investment in other sectors of the economy. However, until such measures are taken, the real estate market in Cyprus is expected to remain stable, with prices continuing to reflect demand from both local and international buyers.