The Corinthia Group will be paying the government just €17 million to build up to 100,000 square metres of residential and office property in St George’s Bay, The Sunday Times of Malta can reveal.
Tourism Minister Konrad Mizzi, who is piloting the deal, conceded that the €17 million premium – on a piece of land which according to real estate agents carries a current market price tag of at least €700 million – is to be paid in several installments over a long number of years.
The Sunday Times of Malta is also informed that for the first three years after signing the deed, when the hotel group can already start marketing its multi-million apartments and possibly sign promise-of-sale agreements, the Corinthia Group is only expected to fork out €4 million.
A source close to the negotiations on Saturday shot down declarations made in Parliament by Dr Mizzi that the Corinthia Group will be paying €52 million for the concession.
“Minister Mizzi is playing with words as the hotel group is only paying a premium of just €17 million. The other figures being bandied about by the minister are ground rents and mostly the eventual conversion from temporary to perpetual emphyteusis of the residences and office space, which will be forked out by third parties or included in the future price tag of the sale of property,” the source said.
In his presentation, Dr Mizzi had no qualms in stating that the negotiations conducted with Corinthia were carried out on the same lines as the controversial deal he had negotiated with the Seabank db Group in 2017 on the adjacent ITS site.
Even in that case, the deal stirred controversy over the low price secured by the government for prime public land, which was marketed by the government as a sale of 25,000 square metres for €60 million.
The other figures being bandied about by the minister are ground rents and mostly the eventual conversion from temporary to perpetual emphyteusis
However, when the actual contract was published, it emerged that the land was sold for just €15 million, paid in installments over a 10-year period.
The ITS deal is now under investigation by the National Audit Office while the government has not yet published the deal it negotiated with the Corinthia Group.
As part of the then public policy to boost the still developing tourism industry, the government had agreed in the early 1990s to grant a concession of land to the Corinthia Group to develop the San Ġorġ and the Marina Hotels.
The public land, given over for 99 years, had to be used only for hotels.
A few years ago, the Corinthia Group also acquired the Radisson Bay Point Hotel from previous owners who had been given the same concession in the 1990s, for €33 million.
Corinthia now wants the government to withdraw the concession restrictions of the 1990s and instead allow it to build a maximum of 100,000 square metres of residences and offices to speculate and sell them on an open market at prevalent market prices.
According to Corinthia chairman Alfred Pisani, this concession swap will also form part of the group’s plan to convert the St George’s Corinthia into a ‘six-star’ hotel of excellence.
In a similar way to what happened in the case of the ITS sale, the building industry, particularly developers and real estate agents, are opposing this deal, accusing the government of selling public land on the cheap.
Real estate agents have warned the government that the deal could be the beginning of the end of the prosperous period the building industry has been in for the past few years, as it is outpricing private developers while flooding the property market.
They said that currently, a tumolo of land in the same area, without sea views, is fetching a minimum of a million euros.
The Malta Developers Association on Friday issued a statement accusing the government of “distorting the property market and abandoning the concept of a level playing field for all the players in the market”.