SIX MONTHS after Cyprus and Qatar signed a basic framework agreement, and three years after the initial memorandum of understanding, the real estate development deal has yet to be finalised.
In November 2008 Qatari Diar Real Estate Investment Company and the government signed an MoU to conduct feasibility studies and land evaluation for a new project in Nicosia, Cyprus. The project will be located on a prime site in Nicosia opposite the Hilton hotel and will be a mixed-use development. It involves construction of a luxury hotel, apartments, shops and offices which would be available to Cypriot and foreign investors.
Qatari Diar is an investment vehicle wholly owned by the Qatar Investment Authority. It has separate management and leadership, but it is chaired by Sheikh Hamad bin Jassim bin Jabr al -Thani, who also controls the QIA
In May this year, the government spokesman said both sides had signed the agreement which, as he put it, was “final”
The formula discussed by the two sides before the reported agreement centred on the government offering the state-owned land at a value of €50 million, instead of €145 million as it had been valued by the Land Registry Office and €135 million by a private land surveyor appointed by the state. In return, Cyprus would pocket any profits above the reference price the Qataris believed the completed real estate could sell for.
What the two states signed back in May was a basic framework agreement, said government spokesman Stefanos Stefanou, who insisted that the project is on track.
Since then, a six-member council has been set up comprising three members from each country. The council is primarily responsible for hammering out the details – legal, technical and financial – of the final agreement, he said.
Stefanou denied local news reports claiming that Qataris are backing out because the Cypriot side wants to renegotiate the value of the real estate, bringing it up to €70 million.
“It would be insane for us to do something like that,” he commented.
It turns out that when in May the government said the agreement was “final,” it was final only insofar as it was a commitment in writing from the two sides to press ahead with the project.
That document was barely a page-long outline of the understanding reached between the government and Qatar.
Under the deal, the Qataris could opt-out in the event that Cyprus did not make the land plot available within an agreed timeframe.
The venture had stalled for several months due to delays in clearing out the plot, which had housed National Guard offices.
For a time parliament had refused to release the totality of the funds allocated to relocate the army installations. The funds have since been released and the plot is empty.
And although Cyprus had not stuck to the timetable for making the plot available, the Qataris nevertheless did not move to terminate the agreement, said Pambos Papageorgiou, who sits on the six-member council.
The Qataris had been expected to make a stopover in Cyprus on November 20 to meet with the Cypriot members of the council.
The meeting was cancelled. Its purpose was to amend the initial MoU after the signing of the agreement between the two sides in May, Papageorgiou said.
He could not place a date for when the meeting would be rescheduled.
Ex-finance minister Christos Mavrellis, who also sits on the council, likewise said he did not know when the two sides would get together to revise the MoU. At any rate, he added, the amendments concern technical aspects of the deal and are not “substantial” in nature.
He attributed the delays to a number of reasons, including the May parliamentary elections here, the summer break, Ramadan and a Muslim holiday earlier this month.
Mavrellis said the task of the six-member council is to run the venture on behalf of the two shareholders (Cyprus and Qatar) once it is off and running. Unlike the government spokesman, he said the council’s role at present is limited to advising the state, which is in charge of the negotiations.
