The abandoned Villa Sans Souci could soon be incorporated into a new home for the elderly if the Planning Authority approves a development application on the ODZ site.
Under the proposed plans, the villa on the outskirts of Marsaxlokk will be restored and converted into a restaurant, wellness centre, clinics, and administrative offices.
The villa has long been considered one of Malta's most haunted buildings but there is no specific gruesome event linked to the site.
Next to the abandoned villa, developer Daniel Zahra wants to construct a four-storey, 74-room building to be used as an elderly home.
Works will also include the excavation and development of three basement levels designated for ancillary facilities and parking, according to the submitted plans (PA/01293/25).
Planning policies allow for elderly homes to be constructed outside the development zone, but only if alternative sites within development zones are first considered.
The planning application is the second recent attempt to bring the villa back into use.
In 2005, an application to convert the villa into a five-star hotel was withdrawn.
The villa has long been considered one of Malta's most haunted buildings. Many who visit the derelict site describe feeling a sense of dread as soon as they enter.
Built in the late 19th century, the villa was first used as the residence of Malta's chief medical officer, Salvatore Luigi Pisani, before becoming a hotel for British servicemen.
It is later said to have been used as a brothel before being abandoned.
Reuben Abela, who heads heritage NGO wirt Iż-Żejtun, said it was unclear why the villa developed a reputation for being haunted.
There was no murder or similar event that people point to when talking about why it was associated with the paranormal, the 57-year-old told Times of Malta.
"My guess is that the officers who used to visit the brothel spread rumours that the villa was haunted so that people from the area would stay away," he said.