The Seabank Group is planning to rake in tens of millions of euros from the controversial public land deal signed with the Labour government last year for the price of just €15 million.
According to an economic impact assessment of the St George's Bay project, conducted by audit firm KPMG, the sale of apartments in the 37-storey residential tower alone should bring in at least €123 million for the group over the first three years of the project.
This is over and above the multimillion-euro turnover and profits which the group is expected to generate from the five-star Hard Rock Hotel, a casino, shopping malls and lido facilities incorporated in the massive project, dubbed City Centre.
According to the KPMG study, the development of the project will take at least three years, and some 1,000 employees will be needed, half of them deployed directly on site on a 24-hour basis.
The study says that during certain phases of the project, which will include a massive excavation of the area, some 900 workers are expected to be deployed on site.
The study confirms earlier reports by The Sunday Times of Malta that the owners of db San Gorg Property Ltd – an offshoot of the db Group owned by Seabank entrepreneur Silvio Debono – will pay just €15 million for the 24,000 square metres of prime public land acquired from the government known as Malta’s ‘Golden mile’.
While €5 million has already been paid on the signing of the deed, the group managed to negotiate very good payment terms with the government. It will stagger the rest of the payments for the acquired land in several instalments over seven years starting from this year.
READ: Auditor general asked to probe St George's Bay land deal
The government also exempted the group from paying the full €1.5 million in annual ground rent, accepting instead to discount the sum due to just €1,000 until the completion of the project.
The Sunday Times of Malta is informed that while no permits have been issued yet for the massive project, as the group has just finalised its development application with the Planning Authority, real estate negotiators are already marketing and selling parts of the still-unbuilt and unpermitted residential tower.
A leading property agency is marketing a one-bedroom, 122 square metre apartment on the 21st floor of the tower overlooking Pembroke and St George’s Bay for just under €1 million (€975,000).
The largest of the apartments on the same floor, a three-bedroom, 256 square metre flat with a 51 square metre terrace, is being offered for sale for €2.1 million.
The project envisages 162 apartments in the residential tower.
A one-bedroom apartment is going for just under €1 million
According to Planning Authority documents, the permit is expected to be discussed and decided upon in mid-August, when Malta will be in peak holiday mode.
READ: Pembroke residents concerned about mega-project's impact on their lives
Artistic impressions of the project provided to the Planning Authority by Landmark Architects, the designers, show the massive building dominating the landscape of St George’s Bay. The building and particularly the tower will be visible from several kilometres, while current hotels in the same area, including the Corinthia St George’s Bay, the Corinthia Marina and the Radisson Blu Resort, appear insignifcant next to the City Centre development.
Thousands of residents in Pembroke, including those in flats just metres from the proposed development, will have their surroundings completely changed, with their views dominated by City Centre.
While the KPMG study, signed by advisory services partner Mark Bamber, concludes the project will have many positive economic effects, as it will generate massive business, it also points out its environmental consequences. “Environmental externalities may arise as a result of the City Centre development... The project may generate an increase in the overall level of pollutants in the area, mainly from an increase in traffic, waste, noise and consumption of electricity,” the study warns.
“The execution of this project and multiple other projects planned in the locality may collectively necessitate additional infrastructural investment by the authorities and diverse utilities. While infrastructural upgrading contributes to an enhanced quality of life, the works necessary to upgrade various infrastructural assets will further contribute to miscellaneous pollutants during the development period.”
City Centre view from a residential area in Pembroke.How the ITS site was given to db Group
In November 2015, under the stewardship of Cabinet Minister Konrad Mizzi, Projects Malta, a State agency, issued a Request for Proposals for the design, building and operation of an upmarket mixed tourism and leisure development at St George’s Bay with the intention of awarding a 99-year concession for the site currently occupied by the Institute of Tourism Studies.
Only the db group submitted a formal proposal despite the Corinthia Group – owners of three hotels in the area – having originally also shown an interest in the government concession.
In February 2016, the government announced the db Group as the preferred bidder and started formal negotiations.
A year later, in February 2017, the government and the db Group signed the deed for the acquisition of the 24,000 square metres of prime public land.
Price tag and conditions
In a press conference at Castille, Prime Minister Joseph Muscat and Minister Konrad Mizzi had said that the developers would be paying €60 million for the ITS concession. However, it was later discovered that this was not the case.
According to the signed contract, the db Group will only be paying €15 million and were bound to invest €150 million in the project and not €300 million as the Prime Minster had announced.
It later also resulted that the db Group got very favourable payment terms in the deal negotiated with Dr Mizzi.
The contract stipulated that while €5 million were to be paid upon the signing of the deed, the remaining €10 million will be paid over the span of seven years in annual instalments to start in January 2018.
According to estimates quoted in a draft master plan for the area, commissioned by the government, the ITS site had a market value of €212 million.
Defending the deal following harsh criticism, including from the Malta Developers Association, Dr Mizzi said the valuation of the land negotiated with the db Group was based “on an innovative model” designed by audit firm Deloitte.