Ivan Camilleri speaks to the man who has been credited for helping kick-start the construction boom – Malta Developers Association president Sandro Chetcuti

How would you describe the current state of the construction industry?

The construction industry is currently at full throttle. Our industry is on a high. We are seeing a good emphasis on regeneration, particularly in dilapidated areas. Unfortunately, we cannot re-start the planning process and we have to work within the parameters inherited from bad planning practices. I think in general we are looking more at quality. Our industry is trying to make it to a higher grade.

We have a building frenzy. Some is of good quality but there are also a lot of low quality and mediocre buildings coming up. What is stimulating all this growth?

Demand is very strong. First-time buyers are still opting to buy as the cost of money (interest rates) is very low. There is almost nowhere else where one can invest with a good return and we are managing to attract a lot of foreigners who want to rent good properties. There is a good mix. Another reason is a growth in the numbers of single parents and separations/divorces, which is also boosting demand.

Are we depending too much on foreigners coming to stay in Malta?

The foreign element is there but it’s not the only sector stimulating demand. Workers are coming here specifically to help out in the construction industry. Without these the industry cannot cope. This has now also increased the rental value of Maltese properties.

Is this the golden era of Malta’s construction industry. Since we tend to forget, has this construction boom happened in the past?

Yes, we had similar experiences at the beginning of the 1990s. Santa Marija Estate and Madliena are a case in point. They were developed in that era. These are not exceptional times. What is happening now is that it is more in evidence, as instead of building on the outskirts we are pulling down houses inside towns and villages and building afresh. This is positive in my opinion.

But this is creating problems as not everyone is a developer.

That is a problem. Many who are not professional developers have suddenly become so and this is creating a bad name for our industry. Profit, which is legitimate, should not be at the expense of unprofessional development practices. This is why we insist that all those developing properties should be registered.

It is a fact that all this development is making people very uneasy. Inconvenience is the order of the day.

I understand these people but it is a fact that progress also has its inconveniences. It’s like when you are whitewashing your house. It’s very inconvenient but it needs to be done and at the end you will be living in a better environment.

But you assume that everyone is observing the law. You know that what is happening is quite the contrary.

That is wrong.

I know, but that’s not a solution. Where are the enforcers in this country?

Everyone should observe the law and we must be more professional. Enforcers are important but you can’t police every single development. It must come from those developing properties themselves.

But you have to admit that enforcement in this sector is nearly non-existent.

There is a limit to how much you can enforce. With all this current work it’s almost impossible to enforce as one should. The key is education, but it’s true it may take time.

Is it still time to make hay while the sun shines or could we be close to sun stroke?

You have to see what I said then in the context that between 2008 and 2012 our industry was dying. When the developers’ association was organised and the government opted to recognise our suggestions it was time to seize the opportunity. That’s the context.

The sun will be shining for a long time.- Sandro Chetcuti

Is the situation the same now?

Yes, I think that we can really keep growing. The sun will be shining for a long time.

Are you sure? Aren’t we close to saturation point?

No I don’t think so. We still have a long way to go. Malta has to be regenerated. So we can never really stop. There might eventually be some slowdown but the demand is there.

But supply is much bigger than the demand. How long can this situation continue? We are limited in space and in population. There is a limit to how much we can grow.

I can assure you that the demand is there. We have to keep our feet to the ground but we have a very healthy demand and supply situation.

So far there are absolutely no indications of a bubble

Aren’t we creating a big bubble which will eventually burst, with massive consequences?

So far there are absolutely no indications of a bubble. I’m not saying that there cannot be mistakes in the future which will then create an oversupply. But from our current data and forecasts there is no bubble. We are very careful about this.

Aren’t some developers taking too many uncalculated risks?

I can’t comment on individuals as we do not monitor this data. However, on a macro level we are not seeing any indication of a bubble. At least it doesn’t appear to be the case. Developers report strong sales and many are selling on plan. This is not a signal of a bubble!

So are you convinced that the industry can sustain this rhythm in the long run?

Yes. If we are careful we can even expand further. Our country is in demand and this is also a direct result of our EU membership. Our country now is not just for the Maltese. It’s a country for all Europeans. We must sustain this. And it’s not only about residences – we have a big challenge to upgrade our infrastructure which is still very lacking. This is part of Malta’s development.

But how much more land can we develop? We are tiny.

You are right. Let me make this clear. We are against any extension of development zones. I think we have more than enough in the existing plans and we are totally against any extension of developable land. If zones are extended we will be harming the economy not helping it.

All this success seems to be creating another problem, namely high rents for the Maltese. Where are we in this area?

I recognise we have a problem in this area but intervening directly in the market is not a solution.

So how should we help those people renting, whose landlords are demanding much higher monthly rents?

Since we are creating wealth we can solve this growing problem more easily. The time has arrived to sit down together to see how to incentivise these families. To be fair, we have already started discussions.

Can you give me a proposal?

We can use the proceeds from planning gain (used in large projects) to contribute for social housing gain. Large projects can include decent amounts of social housing at subsidised prices for a number of years.

Despite all this development we already have many other large projects in the pipeline – ITS, White Rocks and many skyscrapers. Aren’t we risking an oversupply?

In my opinion, the government should not push any more large developments, particularly those involving public land. We have enough private initiative on private land. There is really no need for more. There is no need to stimulate development particularly through public land.

This is interesting. The PN has already suggested that the White Rocks development should not go ahead. Are you saying the same thing?

Without entering into political controversy, if it was up to me, wherever the government has not yet committed itself there should be a rethink of the whole project.

So are you suggesting that since the White Rocks project has not been committed it should be shelved?

For me, the White Rocks area would be more interesting as a tourist project rather than a residential one. I wish to see more innovative projects and less speculative ones, particularly with public land.

What about the ITS? The MDA was very critical on the sale of public land for a very low price.

We’ve said what we had to say on this. We were never against this project but against the methodology used for the valuation of the land involved. Now there is a verification process in place. We stick to what we’ve already said.

Let’s talk politics now. What’s your opinion of the electoral result?

I think that the electorate did not have a real choice as it chose to continue on the right economic track. Although the PN could have been an alternative, I think that it still lacked the right proposals and based itself solely on corruption. People also wanted solutions.

Are you saying that the public turned a blind eye to corruption as long as the economy is doing well?

I think people don’t like corruption but they also like prosperity. It’s also a fact that the Prime Minister acknowledged mistakes, some of them big mistakes, and promised they won’t be repeated. In my opinion, the Opposition was not geared up enough to maintain the same economic rhythm.

Were developers again in Labour’s fold? Do they still fear a PN government?

Our members are very happy with the current situation. That’s a fact. They didn’t have a reason to change. Unlike the situation of 2013, when under the Lawrence Gonzi government our industry was dying, now the situation is different. I believe that we would have still worked with Simon Busuttil but there was no real case for change – at least from our end. Also, I believe that Dr Busuttil was not surrounded by the right people.

What’s the future of the MDA?

We have a bright future ahead of us if we are careful.

And what about your future?

I think the time for me has arrived to start preparing my departure. At the MDA it’s mission accomplished and I would now like to move on. My ideas of having a united front has been delivered. My idea is not to contest again to run the MDA.

Move on where?

That is what I am trying to figure out at the moment.

Are you contemplating stepping into politics?

I have to confess that it does attract me. But it’s too much of a divisive area which I won’t like to submit my family to. However, I will continue to give my contribution to society. Opportunities will come.

ivan.camilleri@timesofmalta.com