Cyprus Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in cyprus, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Defense/Security
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Overview

Republic of Cyprus

The defense and security sectors in the ROC were closed to U.S. businesses from 1987 to 2021 due to restrictions under the U.S. International Traffic in Arms Regulations (ITAR), which prohibited the transfer of U.S. defense goods and services to Cyprus.  In September 2022, the U.S. Department of State announced the lifting of ITAR restrictions on an annual, renewable basis, allowing for the “approval of exports, re-exports, and transfers of defense articles” for the first time in 35 years.  These restrictions have been suspended for the fiscal years 2023 through 2026, with defense items purchased legally during this period eligible for delivery and servicing even if the restrictions are reimposed.  The U.S. Congress is considering extending the waiver renewal period for the arms embargo from one year to up to five years.  Furthermore, under the January 2025 U.S. Presidential determination, the ROC joined the Foreign Military Sales (FMS) program, the Excess Defense Articles (EDA) program, and other U.S. initiatives that provide training and equipment to foreign national security forces.

Leading Sub-Sectors and Opportunities

Ministry of Defense and Cyprus Police Opportunities:   
The ROC Ministry of Defense and Police Department have announced plans to modernize their aging arms systems and weapons over the next five years.  In September 2025, the European Commission approved the allocation of over one billion euros to Cyprus under the Security Action for Europe (SAFE) program, which aims to strengthen defense capabilities through joint procurement initiatives among EU member states.  These developments present significant opportunities for U.S. defense and security companies to collaborate with local partners and participate in government tenders, laying the ground for deeper engagements in the Cypriot market.

Resources

Ministry of Defense
Cyprus Police
ROC E-Procurement Website

Distressed Assets 

Overview
Since the financial crisis of 2013, local banks have reduced their exposure to non-Performing Loan (NPLs) through loan restructuring and securitization, although Cyprus retains one of the EU’s highest NPL rates.  Cypriot banks are striving to reduce NPLs further, either by selling their portfolios of NPLs or enacting recently amended insolvency and foreclosure frameworks.

Leading Sub-Sectors and Opportunities

Long-Term Investments
Long-term investors may find opportunities to acquire distressed assets at discount prices either from the local banks or from debt-servicing companies (several relevant websites are listed below).  Property prices in the ROC bottomed out in 2014 and have been rising slowly since, making the acquisition of NPLs tied to property an attractive prospect.  Domestic property prices in most parts of the island (with the possible exception of Limassol city) are competitive with other southern European countries, including Portugal, Spain, and Greece, as well as neighboring Israel and Lebanon.  Prospective investors must have a legal presence in Cyprus and be vetted by the Central Bank of Cyprus.  Non-EU investors interested in acquiring large development projects in the ROC may be able to overcome restrictions concerning property size by establishing a company in the ROC.

Resources

Bank of Cyprus Real Estate Management Unit
Gordian Holdings
Altamira Asset Management (Cyprus)
Central Bank’s Property Index
Royal Institution of Chartered Surveyors (RICS) Cyprus Property Index
 

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