It should be owned entirely by the public sector and operated by both semi-government entities and the private sector 

By Erol Riza

The decision reached at this week’s meeting at the president’s office has been welcomed by all parties, and it is to appoint Hellenic Republic Asset Management Fund (HRDAF) as the project advisor to provide the concept design for the development of the marina and the port of Larnaca. 

The government has selected an adviser which has a good track record of land development and infrastructure in Greece and has very useful project planning services, but the question is whether this was the most desirable choice given the opportunity to have a unique project in Larnaca that will put the town and country on the map of international business and visitors. 

The major flaw in the process decided, in my opinion, is the decision to offer the private sector the opportunity to be the investor which is not ideal given the experience hitherto. An alternative roadmap which is still possible is to have HRDAF provide the planned project development and for the public sector to develop it.

The vision of the Ministry of Transport, Communications & Works and Larnaca local authorities is as follows:

The creation of a unified coastal front, extending from a fully developed marina to an innovative port, achieving the highest standards. It is with this in mind that I submit my considered views based on research conducted on a global scale.

The project concept design

Larnaca is the second largest port of Cyprus and has some existing infrastructure which serve yachts moored in the marina and various commercial and trade uses of the port. The land that is in between the marina and port infrastructure is prime property and lends itself for a unique mix of development that will serve Larnaca, the region and the Cyprus economy.

The project vision must serve the public interest as a priority and not private interests. Thus, the concept design proposed below will reflect the landscape that will allow both visitors and residents to enjoy the facilities of the development of the Larnaca marina port (LMP) project. Community engagement and sustainability are key features which are the common theme. The model of development proposed is Public Ownership Private Operations (POPO).

The concept design takes into account the needs of Larnaca which has waited for two decades to see the project developed. These needs are the creation of an attraction that will enhance its tourism services, a hospitality complex, a multi-purpose port to create jobs and a major project that will minimise the damage to the environment having regards to embodied and operational carbon.

The existing Larnaca marina

The proposed use of the marina area is to develop the following:

  1. A five-star hotel plus branded residences. The gross floor area of the hotel should total 10,000m2 while the branded residences should comprise of two and three bedrooms. The branded residences will be built to rent (BTR) and not for sale. The hotel should cater for MICE (meetings, incentives, conferences and exhibitions) to be able to compete with international coastal hotels.
  2. A hybrid co-living co-working complex which will be developed BTR for lease to an existing international operator with experience in the sector. The target market will be to attract international companies that seek to have a base in Cyprus and wish to have this at affordable cost and at a convenient location for the staff who are relocated. The size of this complex should be for at least 200 studio rooms (30m2 each) plus 5m2 for common areas, with amenities amounting to 7,500m2. Flexible office space should be for at least 3,000m2.
  3. A sports complex open to residents and visitors that would include four padel courts, a club house with changing rooms and showers, a gym, two swimming pools and some room for a bistro type restaurant. This should take up to 2,500m-3,000m2
  4. A Virtual Reality (VR) indoor theme park that will offer unique visual experiences to both children and adults. This should have various zones of reality experience. This VR theme park will be both educational and for entertainment and should be a unique attraction for the whole island and visitors. The size will vary depending on how many visitors can be safely managed and the range is for 3,500-5,000m2
  5. A public garden for use by the community of Larnaca and visitors alike. An ideal theme would be to have a botanical garden with running water. This should be of the size of 5,000m2
  6. A small covered short term parking area for 50-100 cars.

The proposed use of the port area is the following:

  1. Upgrade the passenger terminal for increasing substantially the number of passengers above 50,000 per annum compared to the present 17,000.
  2. Upgrade current warehouse space of about 18,030m2 into a modern logistics facility with technology introduced in terms of digitalisation. Logistics can be developed to meet non-port demand and should at least be 20-30,000m2.
  3. The use of the 30-40,000m2 for a 10MW plant to produce green hydrogen to be used as feedstock for power generation on-site. This may be then leased to a supplier who will provide energy for the whole project (marina and port use) and any excess to be sold to the EAC. Green hydrogen will be produced by using solar PV which can be bought under a long term PPA with a major supplier preferably the EAC.

Green hydrogen/energy can be used to offer yachts/boats which use non-fossil energy at a discounted cost for using the marina. Hence attracting green marine vessels may be a first in Cyprus.

  • A large, covered parking area for cars and trucks that can accommodate 500 cars and 50 trucks at any one time with EV charging points for vehicles and the offer of hydrogen for trucks which may have such engine transmission.
  • The proposed marine college which Larnaca municipality desires can be built in the port area together with a marine/yacht club. Using the port zone for educational purposes and for sea sport is a very suitable development since it can attract students who can live in the co-living complex.
  • A green area of about 7,500m2 to complement the small botanical garden in the marina zone would make the port area also biophilic and should host a cafeteria.
  • A bus terminal and parking plus EV charging for 25 buses so that residents of the marina and passenger arrivals can efficiently travel in Larnaca and Cyprus
  • A marine centre and a parade of shops to cater for the residents of the marina, the port users and locals. This can include a micro supermarket, a pharmacy, marine equipment, doctor’s offices etc.

Project ownership and management

In view of the successive failure of the Design Build Operate & Transfer with the private sector the proposed approach should revisit the project ownership and development to benefit the state, the economy of Larnaca and the whole island. This can only be achieved if the infrastructure and supporting built up environment is owned entirely by public sector and is leased on a long-term basis to both semi government entities (SGEs) and the private sector for operation as in the POPO model described above. 

The proposal to have the public sector as the asset owner of the LMP is for the following reasons;

  1. The public sector does not have to tender the new concept but tender for project advisors of international experience in such integrated projects, architectural firms that have experience in such projects and project development contractors.
  2. The LMP land asset is prime location and therefore it should be the public sector that derives the Land Capture Value (LCV) and not a private entity. Such LCV is very valuable, and the public sector will maximise its revenue from leasing the infrastructure and facilities once completed. In the hitherto model all the LCV was for the benefit of the private sector.
  3. The public sector can raise funding form various EU sources for much longer and at a lower cost than the private sector. EU various funding sources can support such a critical project that will boost the prospects of the Larnaca as a hub of services for tourism, nautical services, commercial activities and of the port.
  4. The public sector has the responsibility and authority to determine the priorities for the sustainability of the project since the decision now to be taken will impact the town of Larnaca for the next 30-40 years.
  5. The public sector can set up the project ownership structure that will allow it to develop and fund in accordance with the targeted priority. For example, a master Special Purpose Vehicle (SPV) can be set up for the sole purpose of the development.
  6. Having the public sector as the owner of the LMP project will mean that there will probably be better risk weighting for the financing that may be sought from banks. It is important to have early discussions with the European Central Bank and Cyprus Central Bank on how to achieve a 20 per cent risk weighting on any loans granted by banks.
  7. The public sector should appoint a project advisor who should be tasked to draft project documents based on international best practice and who will oversee the tendering services as well as the oversight of the project so that government payments are made in accordance with project progress.
  8. The public sector can set a very tight submission of bids for the project advisor so that by the first quarter of 2025 there is appointment made and works timeline agreed for the phased development.
  9. The public sector should establish an oversight committee to ensure the Low Carbon Pathway (LCP) concept that is expected for such a project. The LCP will support an integrated approach among the policymakers, the project developers, finance providers and operators.

Sustainability and design

The size and functionality of the LMP project should include some criteria which the public sector must observe given the legacy the project will leave for decades. Apart from the environmental impact assessment that is produced special attention must be given to the following:

  1. Embodied and operational carbon with whole lifecycle emissions estimated; in this regard low carbon concrete and steel should be used;
  2. Certification of Scope 1,2 & 3 categories will be desirable and it should be taken into account at the design and development stage;
  3. Digital connectivity and environmental footprint to be assessed very early so that the measurement is timed to coincide with the development delivered.
  4. Climate resilience addressed given risk of coastal areas in the Mediterranean
  5. Green supply chain where it is possible to be included in operators’ conditions of lease.
  6. LMP water management.
  7. LMP waste management.
  8. Renewable energy apart from green hydrogen such as solar PV in buildings.