Cyprus is aiming to drastically reposition itself as a global tech and innovation hub, with a strategic plan to further diversify its economy, bolster its local startup ecosystem, and attract investment from all over the world.
With countries from every region in the world vying to do the same, I visited 2025’s Reflect Festival in Limassol, Cyprus, to gain insight into the country’s plans to significantly boost its economy.
When visiting Limassol, it isn’t hard to understand why the city is an attractive place for prospective businesses, both in the financial sector and beyond, to settle in. Aside from the obvious lifestyle benefits, like residing right by the coast with great weather, there are also plenty of positive business-based factors.
But this hasn’t always been the case. In 2013, a serious economic crisis hit the island, eventually leading to anyone with more than €100,000 in savings losing money as banks attempted to survive. Since then, Cyprus has come a long way and has its sights set on achieving further growth.
Now, Andreas Papadopoulos, head of commercial banking at Cypriot lender Hellenic Bank, says that Cyprus is in “the golden age” of its economy. While on stage at Reflect Festival, he explained just how far it has come since 2013, using Eurobank Group’s investment in Hellenic Bank as an example: “This was a cash transaction of €1.3billion, showing we have something worth looking into and that our private sector is robust. We have strong banking infrastructure now, and very good government budget surpluses.”
Cyprus’ tech sector contributed 16 per cent of the country’s total GVA in 2024, representing a 12.6 per cent increase on 2023, according to KPMG Cyprus.
Stylianos Lambrou, co-founder and CEO of The Doers Company and Reflect Festival, says that Limassol plays a huge role in this growth, calling it “the heart of the tech sector” in Cyprus.
Overcoming Cypriot housing challenges
While it’s clear that Cyprus boasts a number of positives to build on, its geographical location also positions it with a unique opportunity. It sits in the middle of Europe, the Middle East, Asia and North Africa, with a favourable timezone and historical connections which are favourable for doing business with these other markets.
But while Cyprus looks to establish itself as a gateway for global development, it must first overcome challenges closer to home. Speaking to people during both days of Reflect Festival, issues surrounding a housing shortage came up multiple times.
Lambrou explained that he believes that, while demand is increasing for residential properties, there is a significant lack of supply, which is not increasing anywhere near quickly enough. He urged the government to address issues that delay efforts to build new properties and restore old ones, to drive growth and create more supply.
While issues remain, March 2025 saw the government unveil a range of initiatives in a move to improve this housing situation and make property more affordable to rent and buy.
Talent and tax
With Cyprus so intent on bolstering its economy, particularly through its tech ecosystem, it faces one challenge prominent across the globe: a talent shortage. With the local startup scene rapidly growing, Cyprus doesn’t have enough talented individuals to fill newly created roles.
“Cyprus, for many years, would lose a lot of its most talented youth to larger countries for higher growth and more tech-oriented opportunities,” explained Antonis Polemitis, CEO at the University of Nicosia.
But Cyprus has also already taken steps to remedy the challenge. The local government has launched its ‘brain gain’ strategy, ultimately hoping to convince a proportion of the Cypriot community who live abroad to return to the island, bringing their newly acquired skills with them. Expanding on tax legislation introduced in 2022, it is now increasing tax exemption for returning Cypriots to 25 per cent on their first employment earnings, while opening up the requirements to enable Cypriots who have spent seven years away from the island, up from 15, to access the benefits.
Irene Piki, Deputy Minister to the President of the Republic of Cyprus, broke down the importance of the strategy, and why it had settled on making the eligibility include those who spent seven years abroad: “Seven years is a reasonable timeline for people to study abroad, work abroad, and build up a good level of experience that they can bring back to Cyprus.”
Piki also stressed the importance of creating a ‘soft landing’ to further entice this talent to come home, recognising the importance for people to be able to find housing and schooling opportunities. “We’re creating a platform where they can find all this information to help create a soft landing for them. We’re also considering other incentives regarding schooling, to further ease the re-entry process.”
Building on current success
As Cyprus looks to build on the momentum it has created over the last five to 10 years, it has also set longer-term goals to ensure it stays on track. At Reflect, Demetris Skourides, Chief Scientist for Research, Innovation, and Technology of the Republic of Cyprus, broke down how Cyprus could position itself as an AI hub for the region by leveraging its regulatory alignment with the EU. While the world’s superpowers have been busy committing billions into AI development over the past couple of years, he noted that, once again, Cyprus’ geographical location could contribute to making it a leader in its own right.
“We need to get to the point where we connect Cyprus to the rest of the world, not because we’re disconnected, but because, if Cyprus builds a tech data centre that helps startups, tech innovation companies here, those companies, can benefit from the MOUs or the government relationships we’re building with the UAE, Saudi, Israel, and other areas. In essence, it’s an opportunity where we glue Cyprus to the EU, while also glueing it to the GCC.”
The key is collaboration
Towards the end of the event, Papadopoulos took to the stage and urged more local businesses to begin partnering with the local banks. “Banks won’t always be available to offer financing. However, you can use us – even exploit us – as partners, to gain insights, statistics, and ideas. If we cannot finance you, we can partner with you. Anything you do which adds value to the country, we want to support you because you’re adding value to our business in the long run.”
This sense of community and desire to partner with one another was a clear theme throughout the entire event, highlighting the vibrancy of the Cypriot banking, tech and startup ecosystems. It’s clear to see exactly why Cyprus has such lofty ambitions, and how it’s creating an environment that is helping new and existing companies thrive.
