Malta's Unholy Alliance: Developers, Environmentalists And PN Come Out Swinging Against Luxury Project
For €51.4 million, Corinthia will be allowed to construct apartments in one of the most desirable areas of the island
They can barely ever see eye to eye but an unholy alliance could well be bubbling up between Malta’s developers and environmental activists, with both strongly opposing a controversial land deal between the government and the Corinthia Group.
“This deal will open up Pandora’s Box as it will send a signal to all hotel owners to try and build apartments on their land,” Malta Developers’ Association President Sandro Chetcuti warned on Xtra last night. “The local plan lists the peninsula in question as land intended for touristic purposes, so it’s common sense to say all negotiations must be put on hold until the local plans are updated. The government risks committing economic suicide by distorting the market.”
“In principle, we disagree with dishing out public land for private interests,” Moviment Graffitti activist Andre Callus said. “You don’t need to be an expert to realise it is an absolute joke for the government to sell an entire peninsula for a mere €17 million.”
“I agree,” Chetcuti interjected.
Sandro Chetcuti and Andre Callus on Xtra last night
So what is so scandalous about this Corinthia deal that it has united two such diametrically opposed camps? Why, for that matter, has Opposition leader Adrian Delia made sure to criticise it in practically every public speech and interview he has given in the past few weeks?
Back in the early 1990s, the government granted the land in St George’s Bay on a long-term emphyteusis to the International Hotel Group (IHI) at a dirt cheap price, with the logic being that the private sector should be incentivised to boost tourism to Malta. The deal was signed on condition that all developments on the land must be touristic in nature.
However, with 73 years still to go on this lease, the government has now agreed to lift this waiver for €51.4 million, a move that will allow IHI to build luxury residences in one of the most sought-out areas on the island.
A high-rise project by the db Group has already been approved for the area
As part of the deal, IHI has agreed to upgrade the Corinthia Hotel into a six-star hotel and the Radisson into a five-star hotel targeted at business travellers, in line with a government policy to make Malta appealing for extremely wealthy tourists.
This change of land use will first have to be approved by Parliament, after which IHI will have to request the Planning Authority to update its local plans to allow apartments to be constructed in the area. Once this hurdle is cleared, IHI will then submit its actual plans for review.
If approved, St George's Bay will be turned into a playground for the super-rich, with a similar luxury project by the db Group already approved on the former ITS site.
It is unknown exactly how many apartments IHI intends to build on the land at this stage, but the revised deed states that the residential footprint must be no less than 13,330 square metres, which is some 17% of the developable land. This is over and above the 14,876 square metres of foreshore that cannot be developed by law.
IHI is insisting that it is crucial to landscape the majority of the land as overdeveloping the area risks putting off high-spending tourists.
“The starting point is that we already occupy the land, have over 70 more years remaining on our lease and are obliged to pay hundreds of thousands of euro in ground rent every year,” IHI chief executive Simon Naudi argued. “Malta stands to gain significantly from this deal, both directly in terms of our payment to the government and indirectly in terms of the spillover effects of high-quality tourism."
However, critics have warned that €51.4 million is way too cheap a price in return for the lifting of the waiver, and that it is a mere fraction of the money IHI stands to gain if it manages to sell its apartments in the current property market.
“[Tourism Minister] Konrad Mizzi is throwing the country’s assets into the dustbin,” Adrian Delia argued earlier this week. “The way he negotiated this deal shows he is either stupid or corrupt.”
PN leader Adrian Delia has said Tourism Minister Konrad Mizzi "must be either stupid or corrupt"
Sandro Chetcuti warned that this is nothing more than a speculative project and confirmed he will be seeking legal advice as to whether the deed constitutes illegal state aid.
“We are sick of seeing investors throwing dust in our eyes with grand concepts, such as Smart City, which was supposed to be an IT village but ended up as real estate speculation. Future generations will be ashamed of us if we keep on handing out public land to businesses on freehold deals at prices that are below the market value. If I was in government, I wouldn’t give out public land on a freehold basis to anyone.”
“The government cannot afford to be amateur when negotiating with such successful businesses [as IHI], but rather needs to enrol super negotiators for the public’s sake. There are people out there who cannot afford to rent and who cannot acquire social housing as there aren’t enough units in stock. The government needs to improve its negotiating tactics so as to earn more money and use it to help those people who cannot afford property.”