The government has engaged a new international firm to make a fresh valuation of the St George’s Bay peninsula in St Julian’s, currently occupied by three Corinthia hotels.

This would be intended to pave the way for a second consideration of the hotel chain’s request to turn a large part of the prime site into a real estate concession for speculation, The Sunday Times of Malta was informed.

However, industry sources said that Tourism Minister Konrad Mizzi, who is piloting the negotiations with Corinthia, has awarded the valuation assignment to Colliers International – a global real estate services company which counts Corinthia as one of its clients. 

In light of this potential conflict of interest, Dr Mizzi was asked who selected Colliers and whether the previous Deloitte valuation, on which the government had based its negotiations, has been scrapped. He failed to reply.

When asked for comment, the Corinthia group distanced itself from the government’s decision, saying it had nothing to do with the selection of Colliers International and adding that such a serious firm would have checked for conflicts of interest prior to taking the job.

Admitting that the international firm had done similar work for the group on its property in Russia, a spokesman made it clear that Corinthia had not been consulted by the government on the use of Colliers and that it had nothing to do with the ongoing exercise.

The group said that although it was still interested in striking a deal with the government, it still considered the valuation made by auditing firm Deloitte as “fair value”.

A matter of urgency

Industry sources said Dr Mizzi had given instructions for the valuation to be handled with urgency so that a deal with the Corinthia could be concluded before Parliament’s summer recess.

“The plan is that nothing should be mentioned until the MEP elections so that no votes are lost,” one source said.

“Soon after the elections, which Labour is expecting to win by a big margin, a new resolution will be presented to Parliament with the intention of getting it approved quickly.”

The plan is that nothing should be mentioned until the MEP elections

The deal with Corinthia requires Parliament’s green light – by a simple majority – since it involves the transfer of public land.

The original deal

Dr Mizzi’s first attempt at giving new rights over the land to the Corinthia group was made last December. He has so far refused requests to publish a 2014 Memorandum of Understanding on which he said the deal was based.

Just a day before Parliament rose for the Christmas holidays, the minister presented it with a draft deal that had already been negotiated with Corinthia, giving the hotel chain the whole of the St George’s Bay peninsula – probably one of Malta’s most prized pieces of real estate – for speculation purposes.

The PN Opposition immediately objected to the proposed deal, which was then sent back to the drawing board.

The land is already in Corinthia’s possession for use by its hotels exclusively. However, under the agreement that Dr Mizzi had wanted Parliament to approve in a single session, the hotel chain was to be allowed to build up to 100,000 square metres of luxury apartments and offices, which it would then put up for sale, while keeping their hotels and upgrading them.

Among the advantageous terms given to Corinthia, the government had agreed to take a settlement of just €17 million for the changes requested to the original 1990s agreement between the government and hotel chain – with the latter set to rake in many more millions more from its property dealings at the site.

Sectoral opposition

The proposed deal had created controversy and was greeted with anger by various sections of society, particularly pro-environment NGOs and the Malta Developers Association, which condemned the negotiations.

A consortium of businessmen interested in the site warned the government it could take legal action because the sale had not been made through a public call for tenders, and because the deed, they argued, amounted to state aid in breach of EU rules.

Real estate agents estimated the site as having a current market value of a least €700 million, way above Deloitte’s valuation.

On the other hand, constituted bodies such as the Chamber of Commerce and Enterprise, the GRTU, Malta Employers Association and Malta Hotels and Restaurants Association had not issued a reaction, despite having harshly criticised a similar deal struck with the Seabank db Group for the former ITS site nearby. 

Dr Mizzi was also asked whether Colliers would also be asked to make a new valuation of the former ITS site, passed on to the db Group for just €15 million after a similar Deloitte valuation, but he did not reply.

Questions which Konrad Mizzi did not answer:

• In his presentation to Parliament last December, the minister defended the first valuation made by Deloitte and wanted Parliament to rubber stamp his negotiations in a session. What changed his opinion?

• Was the first valuation wrong? Can we have a copy of the Deloitte valuation?

• How did Minister Mizzi go to Parliament with a wrong valuation on which the whole negotiations were based? Isn’t this amateurish and unprofessional?

• How was Colliers International selected and by whom? Aren’t there proper valuers in Malta who know the local current market value much better?

• Will the government publish Collier’s report when ready?

• Will Corinthia be asked to pay market value on this deal?

• Will Colliers also be drawing up a report on the former ITS site for a re-evaluation of the deal signed with the DB group?

Corinthia on Colliers International:

“Corinthia works globally in real estate and has over the years been involved in projects and business involving all of the major international property consulting firms, either acting for us or advising our counter parties such as property vendors, banks and financial institutions.

“Our understanding is that government has appointed a team from Colliers in London although we cannot confirm that as we were not a party to that appointment, nor do we have knowledge or sight of the brief given to them. Nor do we have any relationship with the Colliers London office.

“As you are aware Colliers is a global commercial real estate services organisation with approximately 12,000 employees in more than 500 offices in some 69 countries. We have in past years engaged their St Petersburg office to independently value our commercial property there as per our annual audit and regulatory requirements. We understand this office is a local business which operates separately and independent to their London office.

“In any case, we are sure that serious firms such as Colliers would have checked for any conflicts of interest and verified there are none prior to taking any engagement of this nature.”