Almost two-thirds of the signed contracts for residences that the Corinthia Group had for its luxury village in the outskirts of Tripoli were wiped out by the Libyan conflict, according to a company announcement.
Mediterranean Investments Holding, which is owned by Corinthia Palace Hotel and Kuwait’s National Real Estate Company, yesterday reported that 162 contracts were cancelled from the 282 signed deals in hand at the beginning of the year.
However, despite the turmoil in Libya, MIH still managed a profit after tax of €119,041 in the first six months compared to a loss of €229,421 in the same period last year.
Through a subsidiary company, MIH built and runs the luxurious Palm City Residences village, which consists of 413 residential units in Janzour on the outskirts of Tripoli. More than 70 per cent of the property had been leased by the end of last year.
The company is also responsible for the construction of the 40-storey Medina Tower in Tripoli, which has stalled because of the ongoing conflict.
In its mid-year report, the company said that the six-month running conflict caused “significant disruption” to the business environment in Libya but it noted that Palm City had not suffered any damage to its assets.
The report said that management had partially replaced contract leases by “short-term lets mostly to the local community”, adding that the unrest was “at a considerable distance from the village”.
The modest profit generated by MIH jarred with the mid-year loss suffered by Corinthia’s International Hotel Investments, which runs a number of hotels in various countries including Libya.
In a company announcement yesterday, IHI reported a loss after tax of €11.2 million in the first six months, which is higher than the loss of €9.2 million sustained in the same period last year.
The company reported increasing revenues from its various hotels across Europe but noted that the conflict in Libya had a negative impact on the operational capacity and the financial performance of its landmark hotel in Tripoli.
The company said that when the conflict in Libya started all expatriate staff was evacuated with the exception of a small nucleus of executives who were entrusted with managing day-to-day operations.
The group was tasked to maximise revenues, match costs with demand levels and maintain and safeguard the property.
The company acknowledged that the value of property in Libya had dropped but the extremely fluid and volatile situation did not allow a reliable quantification of the anticipated decrease.
However, the Libyan crisis was only one factor in an uncertain economic climate that had an impact on the company.
Slow economic growth and a debt crisis in a number of eurozone countries might “in all probability impact the value of some of the group’s properties” this year, the report said.
It said the company would continue to pursue a multifaceted strategy intended to achieve growth in occupancy levels, in room rates and contain costs.
ksansone@timesofmalta.com