The deal the government reached for the ITS site was the highest price ever paid for public land concessions, Minister Konrad Mizzi told parliament this evening.
Replying to questions after his ministerial statement on the deal, the minister described the contract entered into between the government and db San Ġorġ Property Limited as “very robust”.
Most of the questions were from Nationalist MPs who asked how had the government arrived at the figure of €56 million. Marlene Farrugia (Partit Demokratiku) went as far as calling the deal a “rip-off”.
Dr Mizzi said the contract was very different from that entered by the previous administration for Smart City, where the amount paid was 40c per square metre and where the developer had the freedom to sell the property, sublease it and give land to a contractor.
The contract was based on the valuation made by one of the big four companies, Deloitte, at arm’s length.
The valuation of €56 million was attributable: premium payable at €15 million, conversion from temporary to perpetual emphyteusis at €5.9 million, car park conversion: €0.5 million, redemption of ground rent: €23 million, hospitality ground rent: €2.49 million and retail ground rent: €8.7 million.
The government was ensuring that the money would be recouped and not as happened in the case of Manoel Island where MIDI paid €12 million over six years and the rest was still being negotiated because of lack of enforcement in the early years.
Dr Mizzi said that there was no need for a parliamentary resolution for the transfer of land since this was to be acquired after a competitive process.
He denied comparisons with valuations in the Paceville master plan of €200 million. The master plan, he said, spoke of expropriated houses which had to be paid at the market rate and not land which was still not built. Only a fraction of the land would be used for residential purposes.
The hotel area would be of 49,000 square metres, the residential area 35,000 and the retail site 27,000.
The developer would have to observe all laws following the issue of Planning Authority permits. If more square metres were used, the valuation would be increased. The developer had also committed himself to engage with the residents of the area.
Turning to the re-location of the ITS to Smart City at a price of €75 million, Dr Mizzi said that the government did not want a school but a teaching campus which would also attract foreign students. A four-star hotel would be built for teaching purposes. The government also felt there was a need for a hotel in the south of Malta.
In his statement, Dr Mizzi said that in the first 10 years of the life of the St George’s project, the Maltese economy would benefit some €800 million. The government would reap €490 million.