Corinthia to get DB’s conditions for six-star luxury hotel resort

MPs in National Audit Office Accounts Committee given presentation by tourism minister Konrad Mizzi on St George’s Bay project for Corinthia hotels redevelopment

2015: Corinthia chairman Alfred Pisani presents his group's six-star hotel luxury development with Prime Minister Joseph Muscat and former tourism minister Edward Zammit Lewis
2015: Corinthia chairman Alfred Pisani presents his group's six-star hotel luxury development with Prime Minister Joseph Muscat and former tourism minister Edward Zammit Lewis

Maltese MPs are to be asked to waive the condition for the Corinthia hotels on the St George’s Bay that any hotel development takes place solely for “touristic” purposes, so as to develop a luxury hotel and mixed-used project.

The Corinthia chain, which is owned by International Hotel Investments (IHI) will be given similar concessions on the price of land as those given to the DB Group for the development of the City Centre project, for the construction of its own luxury development.

“Based on the benchmark there already is in the St George’s Bay area – because we need to ensure there is equity across the whole peninsula – Deloitte used the rate of €1,250 per internal square metre,” tourism minister Konrad Mizzi told parliament’s National Audit Office Accounts Committee last week, adding that the site had been valued at a total of €121 million.  

The minister’s presentation to the committee sets the stage for a crucial vote to be taken in 2019 that will necessitate a parliamentary resolution for International Hotel Investments to forge ahead with the project.  

On the basis of Deloitte’s calculations, Corinthia will pay a compensation of €51.4 million for the wavier of the restriction on mixed-used development - €12.7 million more than had been agreed in an MOU signed between the government and IHI back in 2015. A one-time €12 million premium has also been increased to €17 million, while the length of the concession was reduced from 125 to 99 years.

The group has already met Opposition leader Adrian Delia, and a presentation will be made to the PN parliamentary group on 22 December.

Hotels owned by the Corinthia Group and IHI were granted over 70,000 square metres of government land along the St George’s Bay coastline in 1992 for long-term titles of temporary emphyteusis.

Now MPs will be voting on whether to allow IHI to develop their luxury hotel chain by redeveloping the area by waiving conditions currently restricting the development of the area solely for touristic purposes, and allowing it to create “the necessary mixed-use environment commensurate to the development and operation of a luxury destination”.

The six-star hotel project will be the second major project on the St George’s coast to be given the green light by MPs after the DB Group’s City Centre project was granted land at the former Institute for Tourism Studies.

Mizzi insisted that Corinthia was willing to invest in the country, but said that for it to make the necessary “quantum leap” on the peninsula it needed a change in emphyteusis that will allow for a residential development that is complementary to the hotel.

“Government is amenable to giving this waiver subject to fair compensation paid by IHI, as well as certain safeguards,” he said, adding that it considered the project a qualitative step up for the tourism industry, and one that would be raising the bar in the hospitality sector. 

The development will incorporate over 60,000sq.m of land which includes the Corinthia San Gorg and the Marina hotels, as well as the Radisson SAS Blue Resort which IHI had acquired in the acquisition of the Island Hotels Group.

IHI owns and runs hotels and real estate in several countries, including London, St Petersburg, Budapest, Prague, Lisbon, Tripoli, Brussels, Dubai, Doha, Bucharest, Khartoum, Tunis and Malta.

The final project will result in two hotels, one of which shall be a luxury resort and the other a five-star hotel, having at least 375 bedrooms in total between them; office and residential units for lease and sale; a number of leisure, entertainment and retail outlets; management of the beach; and underground parking.

The land will have an annual and temporary ground rent of €195,120 for a term of 99 years. The land will be given on the payment of a one-time premium of €17 million, to be paid in instalments of €4 million within three years from the date of the deed; and the balance payable on a pro-rata basis according to “each portion of net internal saleable area designated for office and residential use on the effective date”.

IHI will not be entitled to convert the grant of temporary emphyteusis into a perpetual emphyteusis. However, if residential and office properties are sold to third parties, the buyers will be entitled to convert the temporary emphyteusis to a title of perpetual emphyteusis against the payment €250 per “net internal saleable square metre” of the acquired unit and at the rate of €37.50 in respect of garages and garage spaces, external terraces and other external spaces.

Third parties that do not opt to convert the temporary emphyteusis will give IHI the obligation to convert such titles to one perpetual emphyteusis.

IHI will also be entitled to affect such land reclamation adjacent to or bordering the development site, on which it will then be obliged to pay ground rent. The government will bind itself “to use its good offices and use reasonable endeavours to ensure the expeditious processing of the applications for permits, licences or other authorisations” necessary for the development of the project.

Works on the first phase of the project are expected to be completed by not later than five years on an investment of €100 million, while completion is expected not later than five years from the approval of the last development permit by the Planning Authority, following an investment of €300 million in the project.

The company will be paying the Pembroke and St Julian’s local councils the annual sum of €50,000 each for a period of 10 years from date of deed.