The Cyprus Land Development Corporation (KOAG) is entering a fundamentally new level of financing. The government-approved budget for 2026 is almost twice as large as in 2025 and reflects a strategic shift toward the active development of affordable housing, renovation of the aging housing stock, and the expansion of rental support programs.
The budget decision was approved by the Cabinet of Ministers in mid-December and submitted to Parliament before the Christmas recess, underscoring its priority status. Financial projections indicate that KOAG’s revenues and expenditures in 2026 will approach €42 million, compared with much more modest figures in 2025.
A new scale of revenues and property sales
In 2026, KOAG is expected to generate nearly €42 million in revenue. The main source will be active sales of residential units and land plots designated for affordable housing schemes. A substantial share of income will also come from state subsidies provided by the Ministry of the Interior and funding through European programs aimed at addressing the housing crisis and supporting young families.
Particular attention is being given to the affordable rental project in Limassol, which is already regarded as one of the country’s key social housing initiatives. In 2026, its funding will be expanded, allowing for an increase in the number of apartments offered at fixed, socially oriented rental rates.
Where the money will go in 2026
Almost the entire budget will be allocated to capital investments. These include the construction of new residential complexes, the acquisition of land, modernization of the older housing stock, and financing of the “Renovate and Rent” program. Under this scheme, the state incentivizes owners of vacant homes to refurbish their properties and rent them out at regulated prices.
The budget also covers debt servicing, administrative costs, and staff expenses. However, the expenditure structure clearly shows a focus not on maintaining bureaucracy but on direct investment in housing and social projects.
Financial stability and surplus
Financial forecasts indicate that KOAG will maintain a solid budget surplus. By the end of 2025, a positive balance exceeding €15 million is expected, with a similar level of reserves planned for 2026. This demonstrates that Cyprus is increasing investment in housing without jeopardizing financial stability.
Why this matters for Cyprus’s real estate market
Against the backdrop of record growth in rental and purchase prices—especially in Limassol, Nicosia, and Paphos—state investment in affordable housing has become one of the key tools for market stabilization. Expanding KOAG programs should increase the supply of apartments with fixed prices and rents, which is particularly important for young families, professionals working in Cyprus, and new residents.
Experts are already calling 2026 a potential turning point for the island’s housing sector, marked by a stronger emphasis on sustainability, social responsibility, and a fairer real estate market.