Work on the Valletta entrance project will start on April 1 when Freedom Square will be closed for demolition works on the shops under the arcades, according to Lands Parliamentary Secretary Jason Azzopardi.
Although discussions were still going on between the shop owners and the government, the 17 shops at City Gate and Freedom Square would be relocated to main streets in Valletta, Dr Azzopardi said.
But nothing had been yet finalised, he added.
Discussing his second year in office, Dr Azzopardi said the shops might be relocated to government properties in Melita, Old Bakery and Merchant Streets.
Architect Renzo Piano's plans for Valletta's new entrance do away with the arcades built after WWII and the shops on one side of Freedom Square.
The tenants have to vacate the premises by March 27, which means the government and the owners have less than two weeks to reach an agreement.
Dr Azzopardi said talks, which have been going on since June, were very positive and with goodwill from both sides, "I'm confident we will reach an agreement that will satisfy both parties."
But there were a small number of tenants who were not interested in alternative accommodation and instead were considering accepting the government's offer of financial compensation, he said.
Speaking about compensation for government expropriated land, Dr Azzopardi said the Lands Department had already paid out at least €100 million in the past 10 years but still owed around €50 million.
Last year was a record year for enforcement action taken by the department which included the eviction of squatters from St Andrew's bastions in Valletta and the removal of restaurant tables and chairs from public spaces.
In fact, there were 424 enforcement actions by five officers who had a "thankless job", Dr Azzopardi said.
In 2008, over 1,400 reports were filed through the department's Freephone 1577 which was set up for people to report abuse of government property.
The department was also working on giving a title deed to thousands of people who, for years, have been living in properties without actually owning them.
"They moved in under home ownership schemes after the government expropriated the property from the owners, without ever becoming the owners," he explained.
By summer, the department should have the exact number of these cases and these will eventually be given title over their property.
In fact, Dr Azzopardi has just signed the papers for 148 families in Rabat who have been living in this situation for the past 20 years. "The property is finally their own and cost the government €700,000."