The area around St George’s Bay, up to Paceville, is set to witness an unprecedented level of development in the coming years. One can hardly oppose development because it is a motor of the economy, however, it should never be unbridled.

Malta has had several major construction projects but it has never had anything approaching this scale. The projects occupy huge tracts of land and will also go up much higher than anything allowed before. A news item that appeared on this newspaper yesterday, titled ‘Tower economics and changing landscapes’, gives a pretty good idea of what is in store and the graphic accompanying it is a disturbing visual.

The short-term reaction would be to fret over traffic, cranes, dust and noise in a tourist area. But that is not the long-term danger. The real problem is that each of the planned projects may be economically feasible on its own but become nothing short of folly when taken together.

There is clearly demand for upmarket property but will we need 10,000 to 15,000 residential, retail and commercial units?

The amount of retail space proposed would be about equal to that already available in Valletta and Sliema put together. The commercial space will be competing with mega-developments in Mrieħel and Luqa. And the residential space will be catering to a demand (mostly for rentals) that has either already levelled off or is about to.

Let us not forget that the amount of citizenship billionaires looking for property is capped, that growth in the gaming sector is no longer exponential, that the financial sector is being subjected to substantial pressure by other jurisdictions and by international lobbies against low taxation and that other EU member states are also recovering and offering similar projects and incentives.

This means that the projects may collectively not be sustainable. This is not the first time that multiple investors were jumping on the same bandwagon at the same time. There was one overriding factor that stopped the situation from getting to the point where it could implode: banks would act as a brake, looking at the business plans in the context of all the others and throttling the financing available to developers.

Will it be different this time and what are the red flags we should be looking for?

The first is the financing. If the developers finance the project through corporate bonds, it transfers the risk of failure to the public. With so few investment opportunities and such low interest rates, there are more desperate investors out there than ever before, not to mention the resulting impact if GO’s new owners decide to delist the company, forcing €145 million back into the hands of its minority shareholders.

The second is that the planning watchdog can no longer dampen enthusiasm by imposing height limits given the high-rise policy now in force.

The third is that speculators buying units have a risk appetite that is far more shallow than that of seasoned developers. There is therefore a much bigger risk they could panic and cut prices if their units fail to sell.

The fourth is that the government seems utterly unable or unwilling to urge restraint, preferring to go for trumpeting headlines about investment. It is the only entity that can ‘interfere’ in at least some of these projects – those on public land – by insisting they were granted for tourism not rampant development.

This is uncharted territory and it will be no use crying if it all goes horribly wrong.