Smart City is selling land for development at the Ricasoli site earmarked for an IT village, The Sunday Times has learnt.
These co-development partnerships are formed to accelerate the project development
The company owned by Dubai-based Tecom Investments has approached a number of Maltese contractors to sell them parcels of land for the construction of office blocks and apartments.
Industry sources said contractors were approached through top real estate agents, who encouraged them to invest in the project.
According to plans prepared by Smart City and seen by this newspaper, the site has been partitioned into tracts of land each covering thousands of square metres. The plans also indicate the use of the different buildings on individual sites.
The company confirmed the practice, adding it was “industry norm” in large projects like Smart City to co-develop the site.
A condition imposed on contractors is that the buildings and landscaping have to be in line with the Smart City master plan approved by the planning authority.
Sources said Smart City’s asking price ran into millions of euros and depended on the location and size of the land parcel. They said the parcels were “quite large” but Smart City’s price tag was above current market prices.
A company spokesman defended the practice, adding that a number of “active and highly successful” Maltese and international contractors contacted Smart City or were approached by the company.
He said international hotel chains and multi-national companies preferred to build their own units in line with their organisation’s strict requirements instead of buying ready-made buildings. Free zones in Dubai and other places were built the same way, the spokesman added.
Smart City will consist of a town made up of high-end office blocks for IT companies, luxury apartments and villas, retail outlets and hotels.
When the Smart City deal with Tecom Investments was concluded five years ago, the government justified the investment on the basis it would create more than 5,000 new jobs, half of them in IT.
To date, although construction works are ahead of contractual obligations, very few companies operate from Smart City.
The move to parcel out land has raised questions on the company’s ability to continue financing the project itself, however the company spokesman insisted the company’s financials were “extremely healthy” and the project was on track.
“Phase two is expected to be ready by end 2012. It will consist of two office buildings, two retail buildings, the lagoon, the grand steps and the promenade.”
Apart from the normal annual budget allocation, he added, Smart City directly injected €35 million in the company’s capital earlier this year.
“This brings the capital to €66 million, confirming the company’s commitment to the project. This capital consists of a direct investment by Smart City Dubai and does not involve any borrowing or other external financing.”
The spokesman said the company had to work with other commercial partners with expertise in their respective fields such as hotels, apartments, malls and schools to bring the self-sustainable township to life.
“These co-development partnerships are formed to accelerate the development of the project, whereby relying on each partners’ expertise to the maximum. This is an industry norm and routine practice,” the spokesman said.
Smart City: a timeline
April 2007 – The Smart City agreement is signed between the government and Tecom Investments of Dubai.
June 2008 – Smart City launches phase one plans, reiterates commitment to create 5,600 jobs over an eight-year period.
October 2008 – The Malta Environment and Planning Authority approves outline permit for Smart City site.
September 2009 – Smart City chief executive Claudio Grech, Austin Gatt’s former right-hand man, resigns.
January 2010 – Smart City submits four more building applications.
October 2010 – First state-of-the-art office block is opened. By March 2011 only five companies open shop, including a bistro and a health clinic.
January 2011 – The second phase of construction gets under way.
October 2011 – A detailed analysis by The Times reveals that construction work at Smart City is on track but the number of jobs created is nowhere near what was promised. It transpires the company’s obligations related to job creation have not kicked in because the government reneged on its commitment to remove a pumping station.
February 2012 – Smart City injects €35 million in capital, reconfirms commitment to the Malta project.