Have the floodgates been opened?

The Gozo Chamber's proposal may well open the floodgates to speculative abuse that will almost certainly destroy Gozo’s inimitable character

23 August 2016, 9:27am
Cartoon by Mikiel Galea
Cartoon by Mikiel Galea
Much has been written and said about the recent Planning Authority approval of two mega-development projects, both involving high-rise, in Mriehel and Sliema. It is clear that the policy direction inherent in these decisions has provoked alarm and concern among a population that is already exasperated by congestion and over-development.

But while most objections have so far centred on the social economic, infrastructural impacts of the individual projects themselves, there is more to be said about the sinister implications for the future. History has time and again proven that whenever government relaxes planning and environmental restrictions, Malta’s business community is always eager to rush in and exploit the new loopholes. 

When the local plans were tweaked to allow for the redevelopment of ‘stables’, ODZ properties of all types were suddenly entered for consideration (often successfully) as ‘stables’ for the purpose of redevelopment. We are now witnessing a similar development with regard to ‘abandoned dwellings’ in the countryside… resulting in ruins that have been derelict for a century being transformed into villas.

As the head of the Malta Developers Association himself put it, property speculators in Malta tend to ‘make hay while the sun shines’.

It is hardly surprising, then, that the PA’s decision to approve two gargantuan projects in spite of all objections (including legal doubts), would open the floodgates to a new wave of hyper-construction. The sun is shining in all its splendour… and the Gozo Business Chamber has just seized the moment to propose further relaxing restrictions on construction and development on the sister island.

The Gozo Chamber proposes the suspension of stamp duty, on immoveable property of any kind, for the period of one year. This, it said, would help boost both the Gozo economy and Malta’s economic growth as a whole. The chamber called on the government to introduce a 10-year tax holiday for new hotels in Gozo of over 100 rooms in the 4-star category or higher, and that could be operational within five years. The government should also back long-term low-interest loans capitalising on the current low-interest scenario and possibly utilising ECB or similar funds.

If all that was not enough, the chamber also suggests that a suitable area be identified in Gozo for a theme park, noting that the derelict land in the Xwejni area could be ideal for such development.

Effectively, what the Gozo Chamber seems to be really suggesting is that all policies and restrictions aimed at limiting development are suspended wholesale, and new incentives are introduced for large-scale construction projects of the kind the PA has just contentiously approved.

This is extremely worrying for two reasons. One, Gozo has to date (and to an extent) been spared the rampant overdevelopment drive that has ruined the charm and character of so many Maltese localities. And Gozo, more than Malta, relies on its idyllic charm and tranquillity to sustain its tourism product (which, ironically, the Gozo Chamber claims it is defending). 

One does not have to look very far to see what would happen if the government took heed of this advice. One need only look at Qawra, Bugibba, Paceville, St Julian’s and Sliema – possibly also Marsascala and elsewhere – to imagine a similar fate befalling Gozo: which, being much smaller than Malta, can ill afford the loss of its natural or cultural heritage.

The second reason is of even greater concern. Underpinning the Gozo Chamber’s entire reasoning is the logic that views construction, in and of itself, to be necessary to boost the economy. This fails to take in the realities of the balance of the economy. For instance, a recent Central Bank report revealed that bad loans are already being called in by local banks. Projects such as Metropolis in Gzira have failed to even get off the ground. The Gozo Chamber is banking on a market for its new hotels that may not even exist, or may not meet the demand it intends to create.

Proposing construction projects – be they of hotels or anything else – as an economic policy in its own right, is a hopelessly flawed approach to Gozo’s economic situation. What is needed is a long-term master plan for the sister island… and if a need for new hotels is identified, these could be incorporated judiciously into a proper infrastructural framework.

In defence of its proposal, the chamber refers to the tax incentives introduced for first-time buyers, which had a demonstrable ripple effect on the economy. But the two scenarios are not interchangeable. The first-time buyer incentive was aimed at encouraging private home ownership, not the construction of new residential units in an already saturated market. It was applicable to any property on the market, old or new.

What the chamber is proposing, on the other hand, is clearly not aimed at ordinary property buyers – who do not, as a rule, invest heavily in large tracts of land to be developed into hotels. It will benefit only the large construction firms or consortia which regularly tender for such projects.

Far from bolstering the economy, this proposal may well open the floodgates to speculative abuse that will almost certainly destroy Gozo’s inimitable character… and with it, the long-term prospects of Gozo’s economic survival.