The government broke contractual conditions and possibly even the law when it approved recent masterplan changes that will see more of the Smartcity land in Ricasoli being used for residential development and retail instead of office space, the Malta Development Association said on Monday.

It explained that Smart City was planned to be a futuristic ‘internet city’ but it was instead being turned into a speculative residential and commercial project.

In 2007, it recalled, the government at the time handed over some 316,000 square metres of land for less than €5 per square metre to build the promised internet city by foreign investors. Heavy penalties were meant to be imposed on the acquiring company if it breached its obligations, including heavy fines and the possibility of contract termination and repossession of the land.

"Not only has the government failed to enforce its rights under the contract, to the detriment of Maltese taxpayers, but, conversely, it has approved the latest masterplan modifying the scope of the project in its entirety. The new modifications reduce the total floor for office space from 51% to 9% whilst also increasing residential space from 20% to 40% and commercial space from 29% to 51% when compared with the original masterplan from 2009."

The MDA said the granting of public land for a cheap price only for it to be resold distorted the market and undermined the level playing field.

"These actions become all the more worrying in light of the fact that developers pay hefty taxes on private projects and undergo harsh scrutiny over minor details," it said, pointing out that a handful of individuals stood to gain from speculative concessions with favourable terms and accommodating modifications.

Public land, it argued, should not be given for speculation. It should only be sold in the interest of the Maltese public giving due consideration to the best use of the land. 

It said it also had doubts on the legality of the procedures of this particular case, especially in light of EU Law and was considering legal remedies.