Issue link: https://maltatoday.uberflip.com/i/783519
maltatoday, WEDNESDAY, 8 FEBRUARY 2017 4 YANNICK PACE MINISTER without portfolio Kon- rad Mizzi did his utmost yesterday in parliament to fend off criticism of both the ITS land transfer, as well as his involvement in the Panama Pa- pers scandal. Replying to questions put to him by the opposition after a ministerial statement on the ITS land transfer, Mizzi said that he noted that many of the questions put to him were not about the ministerial statement he had just delivered, adding that this showed that the contract in ques- tion was in fact "a very strong one." Replying to criticism that the €60 million valuation of the land was significantly lower than the €200 million that was mentioned in the Paceville masterplan, Mizzi said that the rate was a "fair pre-con- struction rate." "The masterplan was saying that if you have a finished apartment and the government considers ex- propriating it, the market price would have to be paid. Here we are talking about undeveloped land," said Mizzi. He reiterated that the valuation had been carried out by Deloitte – one of the "Big four" auditing firms – using an internationally accepted method, adding that the method used would serve as a "benchmark for future projects." Comparing the valuation of the ITS land for the project to other projects by previous administra- tions, Mizzi said that "if one were to compare the valuation on the basis of the footprint, the price is great- er than €2,300 per square metre (sqm)," far greater than the €126.07 per sqm paid for Hal Ferh and the €345 per sqm for Manoel Island and Tigne. "The most interesting ground rate is the one paid for Smart City. The figure is of about €0.40 – what a difference from the independent evaluation we have today," he said. Mizzi stressed that an economic impact assessment of the project had been prepared by the bidder and that meetings were held with all stakeholders involved in other projects in the area as well as with the Malta Developers Association. Opposition leader Simon Busuttil rejected the government's assertion that it will be making €60 million from the land transfer. "The gov- ernment will be making €5 million immediately and €10 million over a period of time," said Busuttil, who asked for a clarification of "where the €60 million would be coming from." He questioned why the govern- ment had not secured the validity of the transfer by obtaining a par- liamentary resolution. Moreover, he criticised the government for al- lowing a development to take place that went against the local plan for the area. "Is it the case that an agreement was made with an in- dividual before the local plan was changed," asked Busuttil. Farrugia: Country should have made a lot more from former ITS site Democratic Party leader Mar- lene Farrugia has questioned how the ITS site, which the Paceville master plan had valued at €200 million, was transferred to Sea- port Franchising – the company owned by hotelier Silvio Debono – for €60 million. In addition to this, she said if one examines the contracts, it be- comes clear that "in practice, the people will only be getting €5 mil- lion," if Seaport Franchising does not decide to redeem the ground rent. The former Labour MP also questioned why the country was not being paid in cash for giving up such a valuable piece of land. Farrugia said that she was all for investment in the country but said that it was her job to make sure the country got a good deal. She criti- cised the government for issuing a call for expressions of interest for the development of the site during the Christmas period, and that the window within which individuals could submit proposals was "too short." Farrugia pointed to a number of unanswered questions, such as the cost of infrastructure required to make the project possible, the ef- fects it will have on the surround- ing area, as well as the overall ef- fect on property prices. "There must be a plan to guide these developments. We must en- sure that we maximise the posi- tive impacts and minimize the negative ones," she said. Questioned by journalists on the fact that an auditing firm had car- ried out the valuation of the land, Farrugia insisted that the "price of land is not determined by an au- diting firm but by the market." News Mizzi defends €60 million ITS land valuation as 'fair pre-construction rate' Hotel area at €50 per square metre is 4% of real estate price tag JAMES DEBONO A €60 million price tag for the land occupied by the outgoing In- stitute for Tourism Studies, now to be leased by the DB Group for 99 years, has been based on three different valuations for its various uses. The Hard Rock Hotel and its related facilities, which include a casino, will be built on land which was valued at just €50 per square metre for the hotel area, €325 per square metre for the commercial area, and a staggering €1,250 per square metre rate for the real estate component of the project. The valuation, carried out by au- dit firm Deloitte, means the land for the new hotel is valued at 4% the value of the land earmarked for real estate. That would mean that a 150 square metre apartment would have a strictly land value of €187,500 alone, excluding the cost of building and finishing the apart- ment, which will be geared towards the luxury, high-end purchaser. A commercial area within the hotel area has also been valued at €50 per square metre. But the total area of commercial space valued at €50 per square metre cannot ex- ceed a floor space of 9,500 square metres. This will include hops shops in- side the hotel and others in the "immediate and adjacent grounds" of the hotel. A Hard Rock casino will also be constructed over a total of 2,085 sqm on three floors, with 25 table games, 375 slot machines and a poker room. The hotel area will include "lido and water sport facilities", also val- ued at €50 per square metre. The land transferred to the company includes 237 square metres of pub- lic land on the coastline. DB Group CEO Arthur Gauci has claimed that the €50 rate means that the group will be "pay- ing more than what was paid for other hotels, including those in the vicinity and for other property de- velopments in general." The rest of the commercial ar- ea, at €325 per square metre for a 24,000 square metre shopping mall, is being valued at 26% of the value of the land earmarked for real estate. It is not clear from the documen- tation presented how much DB group will pay for this land. The development will consist of a floor space of 202,000 square metres, 140,000 of which will be above street level and another 70,000 which includes the shopping mall and the car park below street level. A new casino and Malta's "largest shopping mall" re among the pro- posals listed by the DB Group in documents presented to the gov- ernment in January. The shop- ping mall will cover almost 24,000 square metres on three levels and will be "solely dedicated to the most luxurious designer brands, in line with the recurrent upmar- ket theme of the project". The Big Bon Group, owned by Bernard and Mario Gauci, will be the lead oper- ator for the mall, to attract brands which are currently not present in Malta. Project set to be approved by August A time-frame for the project found among the documents sub- mitted to parliament, indicates that the Planning Authority will approve the project by 3 August, 2017 and that the developers will take possession of the site by No- vember this year. This indicates that environmen- tal impact studies will be complet- ed in six months. If approved the project will be completed by July 2023. In May a spokesperson for the Ministry for Tourism told Malta- Today that the ITS will only move out from its present premises at St George's Bay once work on a campus and a hotel at SmartCity is completed. The ITS project in SmartCity, which includes a 12 storey hotel and which is set to cost €74 million, has yet to be approved by the Planning Authority.