Cyprus continues to attract international investors despite growing concerns over energy costs, bureaucracy and limited international connectivity, according to EY Cyprus research.

The EY Cyprus Attractiveness Survey found that 83% of investors consider the island attractive for foreign direct investment, while 62% plan to expand their operations over the next 12 months. Among investors without a presence in Cyprus, half plan to establish one, while 60% expect the island to become more attractive over the next three years.

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President Nikos Christodoulides separately said substantive foreign investment in Cyprus rose by about 10% in 2025.

Tax And Stability Remain Key Advantages

Cyprus’ tax regime remains its strongest competitive advantage, receiving a positive assessment from 90% of respondents. Quality of life, political and social stability, EU membership, professional services and the legal system also received strong ratings.

At the same time, energy costs emerged as a major concern, cited by 50% of investors. Access to finance and bureaucracy remain recurring weaknesses, while 74% identified geopolitical tensions as the biggest threat to Cyprus’ investment appeal.

Limited international connectivity, rising regulation, labor shortages and energy price volatility were also among the concerns. Andreas Anastasiou of EY Cyprus said the island’s location creates both exposure to regional instability and opportunities as an EU base near strategically important markets.

Real Estate And Technology Lead Investment Opportunities

Real estate and construction ranked first among investment opportunities, followed by tourism and leisure, information and communication technology, and financial services.

Investors also called for stronger foundations for future growth. Some 62% want better technology and AI infrastructure, 59% seek greater government support, and 56% cite the need for more specialized skills. Labor availability was identified as a serious issue by 53%.

Sustainability remains part of investment decisions, with 68% of respondents saying ESG considerations influence their strategies. Renewable energy, financing for sustainable projects and supportive regulation were among their priorities.

Banking And Administration Need Improvement

Banking procedures remain a source of friction, particularly onboarding and know-your-customer requirements, followed by transaction processing, access to finance and customer service.

Invest Cyprus CEO Marios Tannousis said foreign companies often face the same administrative challenges as local businesses but need more guidance because they are less familiar with the system.

“Investors needed to know from the beginning what was required, how long a licensing procedure would take and whom they should contact when something went wrong,” he said.

Foreign Policy Adds To Cyprus’ Investment Case

Irene Georgalla, head of the Office of the Deputy Minister to the President, said foreign policy is increasingly relevant to investment decisions. Cyprus combines EU membership with links across the Eastern Mediterranean, while stronger ties with the US and India are creating opportunities in energy, technology, innovation and financial services.

Former Portuguese undersecretary for European affairs Bruno Maçães described the global environment as “metamorphic,” with technology, institutions and power relationships changing rapidly.

For Cyprus, maintaining investor interest will depend on preserving its existing advantages while addressing costs, bureaucracy, skills, connectivity and other business fundamentals.