I refer to valuations of public land being transferred or sold to private developers. These are often arbitrary and do not relate to reality.
Recently there has been the issue of the land of the ex-Institute for Tourism Studies in St George’s Bay, St Julian’s. It has been reported that the offer made for it by the prospective buyer was €6.5 million.
The Sunday Times of Malta of the 20th estimated a value of €212 million based on the area of land in question multiplied by a figure of €8,500 per square metre quoted in the draft Paceville master plan as the price at which the government would expropriate land in the same area.
Development land is solely determined by what can be built on it. If there is no specified limit on what can be built on the land pre-bid, the successful bidder will always be the one who will squeeze the maximum amount of profit-making buildings on the site irrespective of design.
He wants to build as high as possible because he knows that the apartments at the higher floors will sell for more and he wants to build over all the land because he cannot sell gardens and trees.
It is essential, in a civilised world, that prior to any bid, the Planning Authority dictates what would be the maximum number of floors to be allowed in the specific location, the minimum area or percentage of the land which should be left green with trees – not with pots! – and the maximum number of square metres of buildings, giving a guideline percentage as to commercial or residential consistent with local plans.
The market readily and reliably provides retail selling prices for comparable apartments or commercial premises as well as values for land used for outdoor catering, etc. Thus, prior to bidding, developers can estimate the potential retail selling prices of the different sections of the project.
From the total potential final sales, each bidder would deduct their estimate of the total construction and development costs, allow for a percentage to cover for errors and risks, allow for what they deem to be a fair profit and hence come up with a net value for the land being offered.
In this way, bidders compete on a level platform They maximise their profits, getting higher selling prices because they offer a better design and/or better finishes and because they are clever enough to construct the whole project in a more efficient manner and at lower costs than their competitors.
The people pay the final costs and profits of everyone involved when they buy an apartment; let the same people, the taxpayers, get a fair price when their land, public land, gets sold to private developers.