The price being asked for the development of public land at White Rocks is being kept secret, although it is believed to be much lower than the estimated market value of at least €350 million.
Other developers are keeping a close eye on the situation in the wake of the ITS deal, in which public land at St George’s Bay was given over by the government for a private, luxury high-rise at a price considerably below market value.
The government is in negotiations with a private consortium over the transfer of some 450,000 square metres of land in Baħar Ic-Cagħaq – known as White Rocks – to be turned into a mixed-tourism development with an investment of €400 million.
But when asked, both sides refused to divulge details about the price being offered, despite the fact that it is not private property that is at stake but a prime tract of land that belongs to the public.
The Sunday Times of Malta has been advised that the site has a market value of more than €350 million, which is a conservative estimate. It has also learned that the White Rocks Development Consortium, led by entrepreneur and Malta Hotels and Restaurants Association president Tony Zarha, is offering a much lower price that that.
The negotiations are being held under the auspices of the privatisation unit, which falls under the Ministry for the Economy.
Economy Minister Chris Cardona refused to give details, and so did Mr Zahra.
Asked specifically how much the White Rocks Development Consortium was offering for the public land, as well as to provide the government’s valuation of the site, Dr Cardona said he could not provide such information.
He said negotiations were still ongoing and it would be “premature to disclose valuations”, even though the talks had reached an “advanced stage”.
Nor was there any reply to the question of why the government had not yet made any public announcements about the project, despite Mr Zahra’s interviews to the media coinciding with the final stages of negotiations.
Likewise, Mr Zahra, who last week gave an outline of the project to the Times of Malta, refused to say how much his consortium was ready to pay for the land.
“Mr Zahra has already said what he had to say, and there is nothing to add at this stage,” his spokesman told The Sunday Times of Malta in reply to a question about the financial offer.
When it was pointed out to the spokesman that the price was of crucial public interest, the spokesman said that “for the time being this information cannot be divulged”.
In his interview, Mr Zahra said his consortium would pay “top dollar” and called the process “the most transparent ever”.
When contacted, Michael Stivala, general secretary of the Malta Developers Associaton (MDA), said his association was closely following the developments and would only support the project “if the government gets market value for the land”.
“Everyone knows the value of the land in Madliena. The White Rocks area is even better, as it is almost on the sea. We expect that whoever is taking over this land pays the real market price for it. If not, it will be just be a case of speculaton out of public land.
Most beautiful, prestigious site we still own
“The White Rocks site is the most beautiful and prestigious site still owned by the Maltese people and it can be sold at a very good price,” he added.
According to various real estate agents, the current market price of a tumolo of land in Madliena, with no sea views, is a conservative €2 million.
The White Rocks site being offered by the government includes at least 100 tumoli of developable land. That excludes a so-called seven-star hotel – and some 300,000 square metres of surrounding space for gardens, parks and other facilities on the coastline.
The Sunday Times of Malta is informed that originally, Mr Zahra’s consortium, which also includes the Mizzi Group, Mich-ael Bianchi and Tal-Magħtab construction, among others – builders of the Labour Party HQ – offered the government just €22 million for the land transfer.
Further to that, the offer included another €50 million worth of infrastructural upgrading costs, needed for a development worth €200 million overall.
According to local plans, the White Rocks area is reserved for tourism development, but the consortium is proposing to build 70 luxary villas, aside from a hotel and other facilities.
The consortium is now proposing a better offer upon the government’s insistence, although this is still nowhere near the market price for the prime piece of real estate.
It is not excluded that the government will offer a revenue-sharing agreement to reduce the up-front payment and sweeten the deal for the public.
This is only the latest attempt to develop the area, historically used by the British Forces.
Nationalist governments have made several attempts in the past but failed.
In mid-2014, the Labour government issued a call for expressions of interest in a mixed development of the 450,000 square metre site, of which only 38 per cent was to be developed.
Of 11 bids, the White Rocks Development Consortium was selected as the preferred bidder. The negotiations got under way in December 2014.
Recall: the ITS scandal
Projects Malta, headed by Cabinet minister Konrad Mizzi, issued a ‘Request for Tender Proposals’ for a tourism project on 24,000 square metres of prime land overlooking St George’s Bay, known as the golden mile. The only tenderer, the Seabank DB Group, was awarded the site last year.
In a public announcement, Prime Minister Joseph Muscat said the DB Group would be paying €60 million for the land, currently occupied by the Institute for Tourism Studies.
However, when the contract was published, it resulted that the DB Group would only be paying €15 million – €5 million up front and the rest (€10 million) staggered over seven years, interest free.
The government also agreed to slash €150,000 off the annual ground rent, to just €1,000, until the development was complete.
Despite the fact that the original bid called for a tourism project (a hotel), the DB Group were given the right to build two residential towers with 209 luxury apartments. Each tower floor (33 in total) is currently being marketed at between €7 and €9 million.
The current planning polices for the area do not allow the building of towers, and the government, through the Planning Authority, still needs to change the plans to accommodate the DB Group. No permits have been issued yet for the project.
The MDA, MHRA and Chamber of Commerce and Enterprise have criticised the deal. The government’s own estimate of the site’s market price was €200 million.
Following the PN’s objections, led by then leader Simon Busuttil, the National Audit Office is investigating the deal.
ivan.camilleri@timesofmalta.com