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[WATCH] Government inks €60 million deal for Silvio Debono’s Hard Rock hotel on ITS site

315-room hotel and 209 residences on former Institute of Tourism Studies site at St George’s Bay against an investment of €300 million

matthew_vella
Matthew Vella
2 February 2017, 11:29am
Former ITS land granted to DB group for €60 million – additional fees will need to be paid if masterplan allows group to develop further
Former ITS land granted to DB group for €60 million – additional fees will need to be paid if masterplan allows group to develop further
Hotelier Silvio Debono presents his project at the announcement of the land transfer
Hotelier Silvio Debono presents his project at the announcement of the land transfer
Government inks €60 million deal for Silvio Debono’s Hard Rock hotel on ITS site
The government of Malta has formally sealed a €60 million deal for the transfer of land at St George’s Bay occupied by the Institute of Tourism Studies, to Seaport Franchising, the company owned by hotelier Silvio Debono of DB Hotels.

The plans include a €300 million project for a 315-room hotel under the Hard Rock franchise, as well as 209 residences.

The value of the land was carried out by Deloitte Malta, with partner Raphael Aloisio saying the firm had evaluated economic impact assessments, met stakeholders that included the Malta Development Association, and applied international valuation methodologies.

The interest of hotelier Silvio Debono in the St George’s Bay land where the Institute for Tourism Studies stands was a known secret in business circles and one which Debono himself, the owner of the Seabank, made a subtle reference to back in 2013. But Debono had denied the rumours when MaltaToday asked him whether he was interested in developing a hotel on the site of the ITS.

The Hard Rock hotel that Seaport Franchising plan to develop on the site of the ITS college at St George’s Bay. Towering behind it will be the new Corinthia towers
The Hard Rock hotel that Seaport Franchising plan to develop on the site of the ITS college at St George’s Bay. Towering behind it will be the new Corinthia towers
The prime site held by the ITS covers an area of 25,000 square metres, with only 20% being earmarked for residential units. Gross floor area, as designed, is calculated to reach 140,000 sqm.

"The relatively small percentage of residential units is what kept the appraisal low when compared to other projects, like Fort Cambridge, which were solely or primarily focused on residential use," Aloisio told MaltaToday.

In fact, according to the new methodology developed by Deloitte, areas earmarked for residential use in this project were appraised at €1,250 per square metre, with retail use valued at €325/sqm and hotel accommodation at €50/sqm.

The retail and hotel areas would cost the developer €393,000 per year unless the emphyteusis is redeemed; the residential area would cost €1.17 million.

Debono had denied having discussed the land occupied by the ITS with the government. “I will be interested in any site identified by the government which is issued in a call for expressions of interest. I am interested in opening a five-star hotel and I am waiting for calls of expressions of interest issued by the government on various sites, to find a site for this new hotel,” Debono had told MaltaToday.

The sole bid for the new upmarket tourism development at the ITS site, issued by Projects Malta, was issued by the City Centre consortium, which includes SD Holdings, Seaport Franchising, and the Seabank Hotel. Seaport Franchising is the operator of the Hard Rock Café franchise in Malta, and has also been entrusted by Hard Rock International to establish the brand in Gibraltar, Slovenia and Tunisia – a €3.5 million investment under the guidance of CEO Arthur Gauci.

It will be the last piece of a massive construction jigsaw puzzle that will transform St George’s Bay into a six-star hotel and tourism area, will fall into place very soon as tenders for the development of the former Institute of Tourism Studies are opened today.

As the Maltese franchisee of Hard Rock Café, Debono was seeking land to develop a Hard Rock Hotel, having stated in June 2014 that the Seabank Group was “looking with the government to see where the available land is.”

The land was given to DB Group on a 99-year emphyteusis, with the condition that the project be completed within five years of the planning permits being issued, although a Group spokesman said they were planning to have the project up and running within three years.

Prime Minister Joseph Muscat said that, for the first time ever, if the masterplan grants DB Group possibility to develop further, the group would have to pay additional fees to the government, based on the value of the day.

He said this project was a first for many reasons, including the methodology used to arrive at a land appraisal that maximised the value for the government. This same methodology would be used in the future for all projects involving government land.

The parliamentary secretary for planning Deborah Schembri said the contract was signed, before the Paceville masterplan has been concluded, because the development would still be guided by the parameters of the masterplan.

"This project still has to go through the planning permit application process," she said. "And the contract includes provisions that include the developer paying additional fees to the government if the masterplan allows it to develop beyond the current site."

Such new land appraisals would be calculates using the new methodology and calculated according to market values on the day. This condition applies throughout the 99-year term of the emphyteusis, Schembri said.

St George’s prime land grab

The scale of reconstruction at St George’s Bay is so unprecedented, the government is to set up a St George’s Bay Regeneration Corporation to facilitate at least three major projects and coordinate traffic flows and major diversions. Intercontinental Malta is currently undergoing a €30 million construction of six-star suites with two additional storeys, a new casino and restored exhibition hall; the Hilton at Portomaso will undergo a €15 million refurbishment in February; the Corinthia Group will drop down its Marina hotel to start work on a €400 million six-star luxury hotel and resort. Additionally, the Villa Rosa complex is planning a redevelopment of the St George’s Bay Hotel site which will be excavated in order to construct an underground car park for 1,195 cars, together with luxury apartments, a boutique hotel, 15 villas, offices, and commercial outlets of different types.

All this was however tempered by the Planning Authority's plan for a masterplan, which has since its announcement been shelved by the PA due to the controversy that ensued

matthew_vella
Matthew Vella is executive editor at MaltaToday.