Dorita Yiannakou
The war in Iran is not shutting the door on investment and business activity in Cyprus. Despite the uncertainty and broader concern weighing on the market, international investors are still watching closely, assessing the landscape and looking for opportunities that can deliver long-term returns.
Some sectors are already drawing strong interest from investment funds in the Middle East and Europe, while others are expected to slow down in 2026 after a wave of major deals has already been completed. Market experts say there are seven key factors pointing to continued strong investment activity this year.
According to insiders, significant deals in healthcare, education, hospitality and real estate are already at an advanced stage and are expected to materialize over the next two years. At the same time, as previously reported, 2026 is shaping up to be a year of mergers and acquisitions marked by fewer, but more strategic, deals. The trend suggests the market is moving past a boom phase and into a more mature cycle, with fewer transactions but higher value.
Where the interest lies
Deals in real estate and education are already well advanced, while in healthcare, ongoing discussions are expected to bear fruit by 2027.
In contrast, the banking and insurance sectors are likely to enter a period of pause in 2026, as most of the deals that could take place were already completed in 2025 and early 2026. Any remaining activity is expected to focus mainly on the acquisition of performing or restructured loans from banks.
This shift toward “clean” or restructured loan portfolios is now being seen as the next phase for Cyprus’ financial system. In fact, the first major attempt to create an organized secondary market for such portfolios is underway, led by Themis Portfolio Management, with a package valued at around €140 million.
Key sectors attracting investors
Healthcare, education, hospitality and real estate are emerging as the main magnets for investment funds, particularly from the Middle East, Israel and the United Kingdom.
In education, especially secondary and higher education, interest is picking up, driven largely by UK-based investment funds. Hospitality is also showing strong potential, with private investors exploring opportunities for hotel developments in both mountain and coastal areas.
Real estate is expected to see major investments as well, including marina developments and other infrastructure projects, provided the government handles planning and approvals effectively. These investments are likely to come mainly from Middle Eastern and Israeli investors.
On the other hand, investments in healthcare are expected to take longer to materialize, as certain conditions still need to fall into place. That said, interest from private funds in Cyprus’ hospital sector remains strong and targeted.
The seven drivers behind deal activity
Experts point to seven key factors shaping mergers and acquisitions in Cyprus:
First, family businesses are increasingly facing leadership succession challenges. More often now, companies are being handed over to third parties rather than staying within the family, largely because there are no willing successors. As a result, selling the business is becoming a realistic, and often successful, exit strategy. At the same time, more mature second- and third-generation family businesses are becoming more active buyers, seeking growth through acquisitions.
Second, the business environment is becoming more demanding. Rising costs, tighter margins and growing competition, especially from technology and AI, are putting pressure on companies and raising concerns about long-term sustainability.
Private equity funds are also showing growing interest in Cyprus. Just a few years ago, the country was not a primary investment destination due to its size and transaction challenges. But as opportunities shrink in larger European markets, Cyprus is increasingly coming into focus, often as part of a broader strategy that includes Greece, treating the region as a single investment hub.
At the same time, Cyprus’ push toward a more outward-looking economy over the past two years is attracting investors from the United States, Israel, Canada and India. Many are not only looking to acquire businesses but also to establish a presence in the country. This effort to position Cyprus as a gateway to Europe and the wider region is already showing tangible results.
Liquidity remains another strong factor, with capital readily available in the market. Combined with the conditions above, this creates a favorable environment for further deal-making.
In addition, certain sectors such as education, healthcare, energy, hospitality and food are showing strong momentum, making them particularly attractive to investors. This is another reason why mergers and acquisitions are expected to continue into 2026.
Finally, Cyprus starts from relatively low historical levels of 'mergers & acquisitions' activity. This means there is built-up demand, especially given the large number of small and medium-sized businesses in the country.
Timing is everything
Despite the generally positive environment, timing remains critical. Market players stress that delays can easily derail a deal, often due to human factors such as disagreements between parties or shifting priorities.
In the end, beyond the broader economic conditions, success depends on readiness, quick decision-making, and the ability to seize the current window of opportunity while it lasts.
