Will Qatar deal go through?

 * Diar upset as Cyprus tries to prop up price *

A high-level Qatari delegation is expected in Cyprus over the next few days to determine whether the multi-million luxury office and hotel project in Nicosia, already a year behind schedule, will go ahead after all.
The deal seems to have faltered on the government’s attempts to prop up the value of the land from 50 mln euros to 70 mln in order to secure a bigger amount of cash from the Qatari joint venture partners. This is a far cry from the initial estimates of 135 mln euros, which the government had said last year would regard it among the biggest foreign direct investments on the island. A Qatari evaluation found the property of 50,000 sq.m. to be worth 38 mln and Cyprus officials had hoped the deal would compromise at 100 mln.
According to sources close to the deal, the Qataris are upset by the government’s tactics, using “other offers” by Cypriot investors as a ruse to raise the amount.
Qatari Diar Cyprus Ltd., as the joint venture has been named, also faces a problem of ownership rights, which may be challenged in local courts.
The initial donor of the land had set a condition that the property be used for the benefit of the people of Cyprus, which is why it initially housed a mental hospital and later became an army barracks, ending up as a military police station and army recruitment centre. Descendants of the original donors now claim that the property cannot be sold, as in effect the government would be selling it to the joint venture.
The development, located across the street from the MIG-owned Cyprus Hilton and next to the Nicosia Technical School, would have included a five-star hotel with about 200 rooms, apartments, shops and offices available to Cypriot and foreign investors.
Qatar was expected to contribute directly by paying money for the land earmarked for development and through the sale of properties built on it.
Meanwhile, the Competition Protection Commission (EPA) earlier this month gave its nod of approval to the joint venture, saying that the nature of the development did not constitute any monopolistic action.
Qatari Diar is the investment arm of QD Hotels & Property Investment, which in turn is a subsidiary of the Qatar Investment Authority (QIA), the fund established in 2005 to channel out the revenues earned from the emirate’s gas and crude oil exports.
The Christofias administration had approved the agreement last May, just days prior to the parliamentary elections.