Corinthia residential blocks could lead to market distortion, Chamber warns

Malta’s Chamber of Commerce has insisted that the transfer of public land to the Corinthia hotel chain must be transparent and above board, reiterating its views of the DB land transfer in 2017.

In 2017, the Chamber said that while the sale of the former ITS college land to Silvio Debono’s DB Group would be positive in terms of investment, “the actual mechanics of the deal are the cause for serious concern.”

The Chamber said that the principles it had spelt out in 2017 still applied today in the case of the Corinthia deal.

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“The transfer of public land to private interest is often the subject of serious controversy and going forward, we believe that agreements and procedures must be – and be seen to be – above board and transparent. People dealing in public land must act as if they were dealing with their own property. They must be made accountable for earning the full market value expected from the asset.

“Our main concern with ensuring that transactions involving public property are open, transparent and properly valued is to ensure a level playing field in business. We believe that this is not difficult to achieve if the existing laws and procedures are properly implemented.”

The Chamber also said there were notable differences between the two cases, ostensibly a reference to the ground lease that IHI plc, the owners of the Corinthia hotels, was granted in 1992 by the Maltese government. While the DB project sale is remains under investigation by the National Audit Office, the government is basing its negotiations with Corinthia on similar parameters.

“In the interest of ensuring a level playing field, the Chamber is expecting explanations which it has already requested, away from the media. For instance, the Chamber seeks to ensure that the amount paid for the extension of the concession is reasonable and transparent.”

IHI is being requested to pay a €17 million premium and a further €34 million in emphyteutical payments for a 99-year lease and to have restrictions on touristic development be removed so that it can develop office and residential blocks.

“More importantly, the Chamber wants to ensure that the value incorporates fair compensation for allowing a change of use for the concession. Given Corinthia’s undisputed track record in the hospitality industry brought about by continuous investment even on the site in question, the Chamber feels that there would have been fewer questions asked had the project continued to be exclusively tied to tourism.”

The Chamber said there was little doubt that the Corinthia investment will contribute towards raising standards to unprecedented levels and allow Malta to enter into new lucrative industry niches. “However, it seems that part of the proposed project will involve the further construction of residential blocks. The placing of these new units on the market may potentially lead to distortions if, as reported, it eventually emerges that the investor has been granted favourable conditions in the process of renewing the concession of the land as well as in enabling the transfer of lease to third parties.

“Besides, in the interest of sustainability, the Chamber is assuming that the relevant authorities are giving due consideration to all environmental concerns that this proposed project has raised.”