Limassol’s ambitious plan to deliver hundreds of affordable rental homes has been cast into fresh uncertainty as a growing rift between the municipality and the Cyprus Land Development Organisation (Koag) threatens to stall the project.

According to Politis, both sides remain in favour of continuing the cooperation, recognising the scale of Limassol’s housing problem and the need for more affordable rental options. However, new financial, planning and design issues have complicated the project, which was first discussed around a decade ago and was originally intended to deliver about 600 apartments.

The scheme has so far moved ahead with a 36-apartment building in Ayios Nikolaos, while another four buildings are expected to begin within the next 12 months, bringing the total to 138 units.

However, the wider target remains some distance away, with questions now emerging over the next phases in Ayios Ioannis and Ayios Nikolaos. These include phases B1 and B2, which concern 180 apartments, and phase C, which covers a further 280 units.

The first major point of concern relates to municipal plots in Ayios Ioannis, on Goethe Street, where old social housing owned by the municipality is expected to be demolished. The original plan provided for 180 new units on the site.

However, the value of the land has risen significantly, particularly because the area is now close to major developments in the city and near Aktaia Odos. As a result, the municipality is raising the issue of fair compensation, since the land’s current value is now seen as almost equivalent to the construction cost.

This could substantially alter the balance between the municipality and Koag. In Ayios Nikolaos, the split is understood to be around 68 per cent for Koag and 32 per cent for the municipality. In Ayios Ioannis, however, the new land values could lead to a much more balanced share, potentially close to 50-50.

The organisation has already prepared construction plans and applied for a planning permit for phase B1, which concerns 87 units. The application was forwarded by the district authority to the Limassol municipality for comments but has remained pending, as the municipality’s consent is required for changes linked to green space and road planning.

Both sides acknowledge that a final compensation agreement cannot be reached before construction bids are received, as these will determine the exact cost of the project. However, the longer the process takes, the more the value of the land continues to rise.

The matter has also reached Interior Minister Constantinos Ioannou, who sent a letter to Limassol mayor Yiannis Armeftis at the end of April asking whether the municipality’s position had changed.

In the letter, the minister said it had been brought to his attention that reservations were being expressed by the municipality and that alternative options outside the urban fabric, on the outskirts of Limassol, were being considered.

He also stressed the importance of the project for the Interior Ministry and requested clarification on the municipality’s position.

The issue was subsequently discussed by the Limassol municipal council, which unanimously expressed support for the continuation of the project, provided that the compensation process is carried out properly and fairly. In practice, this would mean a larger ownership share for the municipality.

At the same time, councillors again raised the need for state guarantees that beneficiaries will meet their obligations towards the municipality. This concern follows existing cases involving municipal housing, where beneficiaries have accumulated significant debts.

Armeftis also raised the need to clearly distinguish affordable housing from social housing. He said that “if the intention is to pursue social housing, then different solutions and new housing models, including examples from abroad, should be considered.”

Another issue that could affect the next stages of the project is the municipality’s request for architectural competitions to be held for all future phases.

Until now, the architectural plans have been prepared internally by Koag, something the municipality has objected to. The municipal council has now unanimously decided to ask for architectural competitions to be used, starting with the remaining development potential of the Ayios Ioannis plot.

The municipality also considers this a red line for the third and largest phase of the project in Ayios Nikolaos, which concerns 280 homes.

In addition, the municipality wants the principles of the New European Bauhaus to be incorporated into the project’s design, including participatory processes and the involvement of future users in determining uses.

The municipality is also referring to the recent state decision to announce architectural competitions for 500 homes across Cyprus, although in that case the competitions concern the concept rather than the full project.

The request is expected to be forwarded to Koag and the Interior Ministry, which will have to take a position. However, reservations are expected, as such a process would almost certainly increase the cost of implementation.

Beyond the 600-home project, the Limassol municipality is also putting forward other ideas for affordable or social housing in the city.

It has said it is ready to allocate a large municipal plot within the administrative boundaries of Polemidia municipality for the development of a major housing complex, which could potentially include more than 1,000 units and other additional uses.

The municipality is also considering asking the Cabinet to allow unused building capacity from other municipal plots, including the Enaerios plot, to be transferred elsewhere, in order to increase the buildable area available for new homes.