€300 million private investment in project on ITS site
Government has struck a deal with db San Gorg Property Limited Group regarding the development of the ITS site in Paceville, despite the Paceville master plan review.
The db San Gorg Property Limited will be investing €300 million in the building of a Hard Rock hotel, a residential complex and commercial centre on the former ITS site in St George’s Bay, it was announced yesterday.
The agreement was signed yesterday between the group and the government property division at Castille, in the presence of Prime Minister Joseph Muscat. The land granted is through a temporary emphyteutical grant for 99 years. The project is subject to Planning Authority approval. The group will pay €60 million for the land, and it is estimated that through taxes etc, government will receive a further €60 million.
Articles which had appeared in the local press many months ago had reported that the land would be sold for some €6.5 million, however in an interview with The Malta Independent, db Group CEO Arthur Gauci said that in view of ongoing negotiations, he was not in a position to divulge how much the company is offering for the land. But he previously insisted that the amount is “much more” than the €6.5 million reported in the media.
db Group Chairman Silvio Debono said that this contract is the first step in the project becoming a reality.
Parliamentary Secretary for Lands Deborah Schembri said that the government has every intention to continue with the master plan, however she stressed that this does not mean planning permissions will stop being granted anywhere until then, and this project will be subject to current regulations.
“According to law, if you apply for a permit now, when there is no master plan in place, you are applying under the current rules,” she said. If there are changes in the future, and the developer wants to adjust to those changes, then they have every right to do so, but for the first time, if more developable area is given to the developer, then he would have to pay accordingly to the developable area.”
Minister Konrad Mizzi also at the event, said that back in November 2015, a request for proposals was issued by Projects Malta. An evaluation committee went over the proposal by db Group, which included a business plan, and on the basis of the submissions, db Group was announced as the preferred bidder.
He explained that government ordered an independent valuation of the project by Deloitte on the mixed-use development, to formulate the price government was to be paid for the land etc.
A Deloitte representative addressed the conference, and said that their objective was to help government negotiate the value that reflects a fair market value. “We conducted a detailed analysis on the documents the bidders submitted, and on the economic impact assessment done by bidders’ consultants. We met with many stakeholders including developers involved in projects near St Julian’s, with architects as well as representatives of the Malta Developers’ Association.”
He said that after looking at projections with regards to market prices etc., they felt they had to move the proposed amount offered closer to what they believe was the realistic market current prices, “and we arrived at the value we felt should be given to the land.”
The site footprint is nearly 24,000 m2. It was also said that a new methodology was used by the Lands Department for the valuation of the land, and when compared with Deloitte’s valuation, amounted to nearly €60 million. This new valuation method will be used in all government valuations, it was said. The aim, Dr Schembri said, is to maximise the fair value of the land for government.
There will be around 209 residential units, and the two towers will each be around 30 storeys high. The hotel will have around 315 rooms, in addition to suites.
The new ITS site at Smart City will cost around €75 million, Dr Alex Sciberras, a government representative, said, adding that this will include new facilities as well as a hotel on site. If one were just to replicate the current ITS site at Smart City, then the cost would be circa €7 million, he explained.
Prime Minister Joseph Muscat spoke of Malta’s tourism industry, and said that this year Malta intends to attract two million tourists.
He spoke of the importance of continuing to raise Malta’s tourism product, and spoke of the need to raise the quality of the Paceville area. “We need quality hotels to attract quality tourists who are ready to pay more.”
Turning to the new ITS campus that will be built at Smart City, he said that the project is aimed at turning Malta into a tourism hub. He said that the institution will have new facilities and will also have a hotel to service tourists.
Turning back to the project at hand, he stressed that the project needs to pass through all planning processes.
He said that no private investor has ever paid so much for public land, and that government included serious conditions in the agreement. If the master plan allows the site to develop further, he said, then the developer would need to pay more for the land.
The project, he said, would create around 1,500 jobs.