Cyprus Tightens Foreign Capital: A Strategic Turning Point Amid a Real Estate Boom and Tourism Labour Shortages

Cyprus is entering a major economic shift – from tightening controls over foreign direct investment (FDI) to protect strategic infrastructure, to a real estate market heating up under the influence of the banking sector, while the tourism industry, despite record visitor numbers, still struggles with staff shortages.

The decision to establish a national mechanism to monitor FDI was approved by the Cabinet on Wednesday, in line with EU security and transparency standards. President Nikos Christodoulides described it as “an important institutional reform” that will elevate the country’s credibility, while Finance Minister Makis Keravnos stressed that it is directly linked to safeguarding national interests.

Cyprus’ banking system saw liquidity drop by €4.5 billion in 2024, reaching €19.2 billion by year-end. However, according to EY Cyprus’ annual survey, banks have overtaken the government as the most influential force in the real estate market. The sector continues to attract investors from Israel, the UK, Europe, and the Middle East, driven by demand for residence permits, personal security, and quality of life. Yet, risks remain from high interest rates, complex bureaucracy, and geopolitical tensions.

The tourism industry employed 49,592 people directly in 2024 but many hotels are still struggling to hire sufficient staff. The Cyprus Hotel Association (Pasyxe) is working with the Human Resource Development Authority (Anad) to bring workers aged 55–65 back into the sector.

Cyprus’ unemployment rate stood at 3.6% in May 2025, below the eurozone and EU averages. Retail trade in May rose 8.4% in value and 10% in volume year-on-year. Meanwhile, the Bank of Cyprus won two international awards for its €300 million green bond issuance, which was oversubscribed more than fourfold.