Contractors and developers are fuming over the deal struck between the government and the DB Group, which was granted a site at St George’s Bay for 99 years for a premium of €15 million.
This newspaper learnt yesterday that the Malta Developers’ Association has called an urgent meeting for Monday. Its annual general meeting will be held this evening. Both the Prime Minister and the leader of the Opposition are expected to attend.
The government insisted it would receive “every single cent of the €60 million valuation” of the site occupied by the Institute of Tourism Studies.
MDA president Sandro Chetcuti would not comment on the association’s stand on the matter when contacted, saying that it would be known next week and “will be very straight to the point”. The issue was being discussed internally, he said.
Major developers and estate agents contacted by the Times of Malta described the deal as “obscene”, as it did not reflect the current market value.
“In general, developers are buying land in the area at much higher rates than those which the government agreed on for the ITS site. It is obvious to us the land was given on the cheap, and this will create unfair competition in the case of other developers buying land at market prices,” one of them said.
Another developer, currently in the process of investing millions of euros in the area, commented that “everyone in the field has eyes to see”. “The group,” he added, “which made this deal with the government has struck gold. I would have said good luck to them were this not public land. However, it is now clear to all of us [developers] that we were taken for a ride by the government, and we will let them know very clearly,” he said.
It is now clear to all of us [developers] that we were taken for a ride by the government, and we will let them know very clearly
Real estate agents said land in the area was valued well above the €15 million premium the government would be getting from DB Group.
“In reality, according to the contract, the group will be forking out less than €15 million when one considers that they will be paying the whole sum over eight years.
“Also, the government cannot oblige future owners of properties to redeem their ground rent, so the €60 million figure that was quoted is just a very innovative way of how one looks at this deal.
“What is for sure is that DB Group will definitely not be paying the €60 million mentioned by the Prime Minister,” a disappointed real estate agent said.
An exercise carried out by this newspaper indicated that, according to the the contract published by the government, the 24,000-square-metre ITS site, to be developed into three hotels and luxury residences, will cost DB Group €15 million.
According to the contract, €5 million was paid upon the signing of the contract and €10 million will be paid over a period of eight years in seven equal annual instalments.
Also, while the payments would be interest free, the government accepted that, until the project was completed, the new owners of the site would pay €1,000 in annual ground rent instead of the €1.5 million due annually.
Reacting to a report in the Times of Malta titled ‘Sea Bank Group to pay just €15m for ITS site’, the government said it “will be collecting every single cent of the €60 million valuation of the ITS”, adding that the premium to be paid by the DB Group would amount to €15 million.
According to the government, the rest of the €60 million would come from the redemption of the ground rent “if such residential properties are redeemed”.
It said that if the ground rent due from the future owners of the residential properties was not redeemed, “the investor will pay circa €250 million over the 99-year lifetime of the lease of public land”.
That would amount to €2.5 million a year over a property which, according to the government’s Paceville master plan, has a market value of €212 million.
The government said the valuation of the land had been done by Deloitte. The study it conducted has not been published yet by the government.
ivan.camilleri@timesofmalta.com