Cyprus is poised to implement significant changes to its corporate registration process amid rising national security concerns. New legislation under discussion will empower authorities to block the registration of companies controlled by non-EU nationals, with a particular focus on entities where Turkish individuals hold the ultimate beneficial ownership.

Targeted Reforms And Enhanced Scrutiny

Lawmakers have raised concerns about potential espionage risks and the strategic acquisition of immovable property by companies linked to Turkish interests. Parliamentary discussions referenced multiple cases in which companies with Turkish ultimate beneficial owners were registered in Cyprus. Registrar of Companies Irini Mylona-Chrysostomou said authorities are already monitoring attempts by individuals with such connections to establish companies, with the registrar’s office coordinating with district authorities before approvals are granted.

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Regulatory Adjustments To Combat Loopholes

A key component of the proposed reforms is stricter disclosure requirements for Turkish nationals acting as ultimate beneficial owners of companies or partnerships operating in Cyprus. In line with EU Anti-Money Laundering directives, the framework requires identification of any natural person holding more than 25% of shares or voting rights. Officials say the measures aim to close existing loopholes and strengthen oversight. Two separate bills are under review, one focused on corporate entities and another covering partnerships. The proposed legislation would also allow authorities to remove companies from the registry when national security concerns arise.

Calls For Swift Legislative Action

Several political figures have called for rapid adoption of the reforms. DIKO MP Zacharias Koulias, Chair of the House Audit Committee, argued that the issue has remained unresolved for too long and urged lawmakers to approve the measures before parliament dissolves in April ahead of legislative elections. AKEL representative Christos Christofides said authorities are already reacting to developments rather than preventing them, warning that acquisitions of land near sensitive locations such as airports and military facilities raise broader security concerns.

Evolving Real Estate Dynamics

The proposed changes come amid increased scrutiny of foreign investment in Cyprus’ real estate market. Recent data shows that non-EU nationals, including investors from Lebanon, Israel, Russia and China, account for more than one-quarter of property transactions recorded in 2024. Officials note that companies controlled by non-EU beneficiaries are often classified as domestic entities, a factor that complicates oversight and has prompted calls for clearer regulation.

The forthcoming legislative measures reflect a broader trend in European regulatory practices, balancing open economic policies with strong safeguards to protect national interests. As Cyprus navigates these challenges, the new rules promise to build a more resilient framework to counter potential threats posed by unscrupulous foreign investments.

The latest data from the Cyprus Statistical Service (Cystat) shows that the Price Index of Construction Materials in Cyprus reached 118.89 points in January 2026, based on a 2021 average of 100. Compared with December 2025, the index increased by 0.12%, indicating gradual price adjustments across the sector.

Year-Over-Year Growth

On an annual basis, the index recorded a 1.09% increase compared with January of the previous year. The rise reflects ongoing changes in contractor costs and highlights evolving market conditions within the construction industry.

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Commodity-Specific Movements

The report provides a detailed breakdown by material category. Minerals recorded the strongest annual increase at 2.91%, followed by electromechanical products at 2.55%. Products made from wood, insulation materials, chemicals and plastics rose by 1.19%, while mineral products increased by 0.97%. In contrast, metallic products declined by 0.49%.

Volatility In Sub-Categories

More pronounced changes were observed within specific sub-categories. Mineral aggregates rose by 8.34%, while stones increased by 4.97% compared with January 2025. Electrical fixtures posted a 4.65% increase. Iron and steel products declined by 1.73%, and ceramics and cement continued to trend lower, falling by 1.47% and 1.38% respectively.

Methodological Insights

The index is calculated as a weighted average based on the expenditure share of sampled materials during the 2021 base year. Prices are collected monthly from a range of suppliers, using the 15th of each month as the reference date and excluding VAT. The Construction Costs Index applies specifically to new residential buildings.

This detailed analysis not only sheds light on current market trends but also offers stakeholders a robust framework for understanding the underlying cost dynamics in Cyprus’s construction materials market.

Strong Growth In Cyprus Collective Investments

The Cyprus Securities and Exchange Commission (CySEC) reported continued expansion in the collective investments sector, with assets under management reaching €11.4 billion in the third quarter of 2025. The figure represents a quarterly increase of 7.5%, reflecting stronger investor activity and shifts in asset allocation across multiple sectors.

Comprehensive Sector Overview

According to CySEC’s quarterly bulletin, regulators oversaw 312 management companies and collective investment undertakings during the period, compared with 323 a year earlier. The sector includes externally managed and internally managed UCIs, as well as external fund managers. The market structure comprised 46 AIFMs, 44 sub-threshold AIFMs, two UCITS management companies and three entities operating under dual licenses.

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Asset Allocation And Investment Trends

Total assets under management were partitioned among various investment strategies: 63% by AIFMs, 17% by AIFMs and UCITS management companies jointly, 10% by UCITS management companies, 9% by sub-threshold AIFMs, and 1% from regulated UCIs managed by foreign fund managers. Within the UCITS segment, 85.8% of assets were directed toward transferable securities, while AIFs, AIFLNPs, and RAIFs notably invested 30.7% in private equity, 17% in real estate, and 14.5% in hedge funds.

Dominance Of Private Equity Investments

Private equity remains a core component of the sector’s portfolios. Multi-strategy capital accounted for 38.9% of private equity investments, followed by growth capital at 34.1% and venture capital at 16.9%. Mezzanine financing represented 0.5%. Additional exposure included equity capital, fixed income, cash and cash equivalents, infrastructure and commodities, each contributing smaller shares to overall allocations.

Regional Investment Focus And Sectoral Exposure

Approximately 69.7% of assets were held within 205 UCIs domiciled in Cyprus, including 11 UCITS, 51 AIFs, 40 AIFLNPs and 103 RAIFs. Of the 230 UCIs in operation, 165 invested at least partially in Cyprus, totaling more than €2.8 billion, or nearly one-quarter of total assets under management. Within these investments, 71.1% were directed toward private equity projects, while 12.8% were allocated to real estate.

Investor Demographics And Sector Specific Investments

Investor profiles differ across fund types. The UCITS segment remains predominantly retail-driven, with retail investors accounting for 99.2% of participants, totaling 8,727 individuals. In contrast, AIFs, AIFLNPs and RAIFs attracted a more diversified investor base, including 64.7% well-informed investors, 26% professional investors and 9.4% retail investors.

Sector-specific allocations included €471.6 million in energy, €106.9 million in fintech, €581.8 million in shipping and €97.9 million in sustainable investments.

An Evolving Landscape

The latest figures underscore a robust expansion of Cyprus’ collective investments sector. With private equity leading the charge, these developments not only emphasize strategic shifts in asset allocation but also highlight Cyprus’ growing prominence as a critical hub for global investment activities.

Overview Of Climate-Related Risk Exposure

Recent data from the European Banking Authority’s ESG risk dashboard shows that Cypriot banks continue to maintain lower exposure to climate-sensitive sectors compared with many European peers. In the second quarter of 2025, Cypriot institutions reported that 59% of their corporate exposure was linked to non-financial companies operating in climate-sensitive industries. This places Cyprus among the lower-risk countries in the European Union, below the EU average of roughly 62%.

Sector-Specific Exposure Analysis

A closer look at portfolio composition shows that real estate activities represent the largest share of exposure at 16.7%. Retail and wholesale trade, including vehicle repair, account for 16.4%, while industry, transport, storage and construction represent 11.1%, 9% and 7.5% respectively. The distribution reflects a diversified exposure profile across sectors, supporting a more balanced approach to risk management.

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European Landscape And Comparative Risk Profiles

Across the European Union, exposure to climate-sensitive sectors remains a defining factor in corporate lending strategies. Countries such as Denmark at 81%, Finland at 80% and Estonia at 79% report significantly higher exposure levels, reflecting differences in economic structure and sector concentration. At the opposite end, Luxembourg at 13%, Slovakia at 27% and Malta at 41% show lower exposure, illustrating varying national risk profiles and market dynamics.

Regulatory Developments And Enhanced Data Quality

Aside from sector exposure metrics, regulatory actions continue to influence the landscape. The European Central Bank (ECB) recently imposed a fine of €7.6 million on Credit Agricole for non-compliance with supervisory decisions related to climate and environmental risks. Additionally, improvements in environmental data quality have emerged as banks record more robust energy-performance information on real estate-backed exposures. A decline of approximately 10 percentage points in the reliance on proxy indicators since December 2023 further reflects enhanced sustainability assessment and reporting frameworks.

Conclusion

The latest data highlights the growing importance of climate risk management within Europe’s banking sector. By maintaining relatively lower exposure to climate-sensitive industries, Cypriot banks demonstrate a more cautious risk profile at a time when environmental considerations are becoming increasingly central to financial regulation and long-term stability.

SMEs: The Backbone Of Cyprus’ Economy

Small and medium-sized enterprises (SMEs) remain a central pillar of Cyprus’ economy, supporting employment, innovation and local production networks. Their long-term competitiveness increasingly depends on access to modern technologies, operational upgrades and targeted investment that improves efficiency and productivity.

The Thalia Initiative: A Strategic Investment Framework

The Thalia 2021–2027 Program plays a key role in supporting this transition. The initiative provides financial assistance to both new and established SMEs, particularly in manufacturing and selected economic sectors, helping businesses modernize infrastructure, upgrade technology and improve production capacity. With a total budget of €50 million and co-financing from the European Union, the program aims to strengthen competitiveness while encouraging entrepreneurship and job creation.

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Case Study: Pivo Microbrewery’s Production Revolution

Pivo Microbrewery illustrates how targeted investment can accelerate growth. Before receiving funding, co-owner Thanasis Poluneikis identified limited production capacity as a major obstacle to meeting rising demand. The introduction of modern machinery and updated technology has significantly improved production processes. According to Poluneikis, the new equipment has increased precision and consistency in quality control, helping maintain product freshness and standards throughout distribution. The upgrades also allowed the company to expand production and develop new partnerships, supporting broader market reach.

Enhancing Product Offerings: The Vanilla Aroma Bakery Experience

Vanilla Aroma Bakery represents another example of modernization through investment support. Owner Giannis Toumpas used the funding framework to upgrade both the facility layout and production equipment. The improvements have accelerated operations and increased efficiency, enabling the bakery to refine existing products while introducing new offerings. These changes have strengthened customer experience and reinforced the brand’s position in a competitive market where quality and presentation remain key differentiators.

Financial Support As A Catalyst For Growth

These examples highlight the role of the Thalia Initiative as a financing tool that translates investment into measurable business development. By supporting equipment upgrades, technology adoption and infrastructure improvements, the program contributes to the long-term sustainability of SMEs, encourages innovation and supports job creation. The continued modernization of small and medium-sized enterprises is helping build a more resilient and competitive business environment that supports broader economic growth in Cyprus.

Cyprus is entering one of the most difficult periods in its modern water management history. Reservoir levels have fallen to 17.6%, while demand continues to grow by an estimated 4% to 6% annually. Despite recent rainfall, officials warn that the country could face a fourth consecutive year of drought.

Facing an Unprecedented Hydrological Challenge

The first three months of the current hydrological year have been among the weakest in decades. Prolonged dry conditions have reduced the reliability of traditional water sources, increasing dependence on centralized government supply systems. At the same time, longer tourism seasons and rising temperatures have placed additional pressure on infrastructure, with aging distribution networks contributing to higher water losses.

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Decentralizing Water Production

In response, Cyprus is shifting its strategic focus toward decentralizing water production. The government is pioneering private desalination initiatives within the hotel sector to ensure sufficient supply during what is anticipated to be a particularly challenging summer.

Comprehensive Government Response

The government has launched a broader strategy that includes 28 measures supported by a €200 million investment program. During a recent briefing on licensing private desalination units for hotels, Agriculture, Rural Development and Environment Minister Maria Panagiotou stated that centralized solutions alone are no longer sufficient. She emphasized the need for a wider plan that incorporates stakeholder feedback and addresses implementation challenges early in the process.

Enhancing Desalination Capacity

Officials are moving forward with seven new mobile desalination units expected to increase production capacity by 32%, adding approximately 77,000 cubic meters of water per day. Plans are also underway for two permanent desalination plants as part of the broader infrastructure program aimed at reducing system losses and improving long-term water security.

Innovative Support For The Hotel Sector

A new grant scheme for 2025–2026 will allocate €3 million to support the installation of small-scale private desalination units in hotels. Under the program, businesses may receive grants of up to €300,000 for systems capable of producing up to 1,500 cubic meters per day. Officials view the initiative as a practical way to strengthen supply during peak tourism periods.

Cyprus’ strategy combines infrastructure investment with public-private cooperation in an effort to address growing water security risks. As the country adapts to increasingly unpredictable climate conditions, policymakers hope these measures will stabilize supply while offering a potential model for other regions facing similar challenges.

National Loss Fund And Confiscated Assets

In its recent session, the Parliamentary Committee on Refugees revisited the law proposal aimed at securing the National Loss Fund for the Use of Confiscated Assets. A representative from the Ministry of Finance affirmed that the accompanying regulations are under preparation and will be submitted once finalized, while also voicing opposition to the creation of an independent agency.

Legislative Proposals And Fiscal Perspectives

Originally introduced by DISY in September, the law is supported by two amendments tabled by AKEL and anticipates the incorporation of forthcoming regulations from the Ministry of Interior into legislation governing the Central Agency For Equitable Resource Distribution. Committee member Nikos Kettseros emphasized that with funding of €20 million, roughly four in ten confiscated property owners would receive about €2 per month, a figure that remains modest even under a €100 million scenario. The proposed amendments include reallocating unassigned funds from the Agency into a dedicated loss-of-use fund to bolster financial support.

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Housing Loan Subsidies And Transition Measures

Additional amendments under discussion involve the subsidization of housing loans at a 0% rate and the establishment of a six‐month transitional period starting January 1, 2027, to integrate older loans into the governing framework. The Ministry of Interior has stated that the regulations will focus on land valuation, clarifying that those who have sought refuge in the committee regarding confiscated assets will not be entitled to compensation. These measures indicate that the fund could operate effectively under the existing structure without necessitating a separate independent body. DISY legislator George Karoulas has advocated for a legally entrenched national fund with sustainable financing, while also expressing concerns about potential delays in finalizing the regulations.

KtiZó Initiative And Housing Regulations

The session also addressed the KtiZó initiative, designed to provide grants for existing multi-family buildings in government housing projects. Senior official Eirini Giannakou from the Department of Urban Planning and Housing announced the completion of a new guide spanning approximately 500 pages, which clearly defines procedures and responsibilities. Despite this progress, stakeholders noted ongoing challenges related to beneficiary contributions and property ownership classifications. Giannis Sofokleous, a senior official from the Ministry of Interior, confirmed that the guidelines are currently under review and will undergo legal scrutiny, with the expectation that minimal further revisions will be required thereafter.

Property Issues In The Industrial Zone

The committee also examined property disputes and delayed contracts affecting displaced residents in the Pane Polemidion Industrial Zone. The committee chair announced that a formal letter will be dispatched to the Minister of Interior, with the matter slated for further discussion on March 17. Local officials from the Municipality of Kato Polemidion and representatives of refugee organizations raised issues regarding access, parking, and property rights, calling for immediate remedial action.

New data from the Statistical Service of Cyprus reveals a robust upward trend in the nation’s road freight sector, signaling stronger economic momentum as the first three quarters of 2025 outperform the same period in 2024.

Domestic Freight Sees Steady Gains

Between January and September 2025, the total weight of goods moved domestically increased by 0.7%. This modest yet positive rise underscores a recovery and gradual expansion within the local transport network.

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Cross-Border Transport Accelerates

More notably, cross-border road freight experienced a significant surge of 8.7%, reflecting heightened economic activity and growing demand. Experts attribute this surge to increased trade volumes and a reinvigorated logistics sector.

Quarterly Insights: Third Quarter Performance

During the third quarter of 2025, comparative analysis shows a 1.4% rise in domestic freight operations, while cross-border movements skyrocketed by 16.4% compared to the equivalent period in 2024. These figures highlight a dynamic shift in transport patterns and a robust confidence in the logistical infrastructure.

Economic Implications

The accelerated growth in cross-border road transport is not only indicative of increased commerce but also reinforces the critical role of efficient logistics and transportation networks in bolstering a country’s economic framework. Stakeholders view this performance as a positive indicator for future economic prospects in the region.

Chinese Tech Outpacing Global Benchmarks

OpenAI CEO Sam Altman recently underscored the remarkable advancements made by Chinese technology companies. The progress across diverse fields, notably artificial intelligence, symbolises a strategic shift as China intensifies its race with the United States to develop artificial general intelligence (AGI), a technology poised to mirror human capabilities and reshape societal functions.

Strategic Investments And Business Model Evolution

In tandem with these industry shifts, OpenAI is actively maneuvering to secure new revenue streams. Having already attracted nearly $70 billion in investor capital, according to data provided by Dealroom, the company is nearing the closure of a purported $100 billion fundraising round. This pivotal move is designed to secure profitability while sustaining its technological leadership.

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Innovative Approaches To Advertising

One promising avenue under exploration is the integration of dynamic in-chat advertising within ChatGPT. Altman shared insights that draw parallels with social discovery models seen on platforms like Instagram, where unexpected, engaging content meets user interest. Though the advertisement format is still evolving, the potential to redefine user engagement through innovative ad placements is evident.

Insightful Projections And Future Challenges

Despite China swiftly approaching the technological frontier in many areas, Altman acknowledged that there remain aspects where improvement is necessary. These candid observations highlight the competitive nuances that tech giants worldwide must navigate as they work to incorporate AGI into mainstream applications.

Breaking Developments

This report is part of a developing story. Readers are encouraged to refresh the page for the latest updates as the landscape of AI and technology continues to evolve at an unprecedented pace.

ECB Underlines Banks’ Strategic Involvement

The European Central Bank is charting a course for the digital euro that reinforces the central role banks have long played in the euro zone’s payments infrastructure. In a rapidly evolving digital economy, the ECB is ensuring that traditional financial institutions and European card schemes are not sidelined in the transition to central bank digital currency.

Preserving Bank-Centric Payment Ecosystems

Designed as a currency managed directly through accounts held at the central bank, the digital euro initiative is positioned to secure banks’ presence in payment flows, countering the potential disintermediation posed by private digital solutions, including stablecoins. ECB Executive Board Member Piero Cipollone highlighted in his recent address to Italy’s banking association ABI that the evolving payments landscape, marked by the rise of private digital currencies, could erode banks’ traditional roles unless proactive measures are taken.

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Competitive Fee Structures To Bolster Domestic Schemes

The policy framework for the digital euro intends to advantage domestic payment networks. The ECB has committed to setting fee structures that are more favourable to merchants than international networks such as Visa and Mastercard, without completely undercutting the lower charges typically seen in national systems. This deliberate pricing strategy is designed to protect lucrative revenue streams and crucial customer data, ensuring banks retain both transactional control and the ability to offer higher margin services.

Enhancing European Economic Security

Recent endorsements by the European Parliament and the EU Council have pushed the digital euro into the spotlight as a key asset for Europe’s economic security. With a significant share of European transactions currently processed through international networks, the digital euro initiative not only enhances payment efficiency but also reinforces the strategic autonomy of the euro zone by favoring domestic schemes and traditional banking structures.