Nationalist MPs expected to oppose Corinthia land deal

The Nationalist Party is expected to oppose a land deal to allow the Corinthia hotel group to demolish two of its hotels at St George’s Bay to build seafront towers for luxury residences and offices. 

MPs faced IHI plc’s chairman Alfred Pisani with tough questions during a meeting with the PN parliamentary group on Thursday. 

IHI has been given a hefty 57% cut on the total €121 million land value of the St George’s Bay peninsula, for having acquired the neighbouring Radisson hotel after their acquisition of the Island Hotels Group.  

In their valuation for the land in question, auditors Deloitte adopted land values it used for the site at the former ITS college where the DB group will develop its own high-rise hotel, but then factored in a series of credits to the total €121.7 million valuation of the land. 

The total value was calculated at €1,250 per net internal square metre for all residential and office areas – roughly the price for parliament’s waiver on the development restrictions and for a 99-year concession on the land. 

But Nationalist MPs were critical of the deal, telling Pisani that IHI is only paying a €17 million premium up-front, while the rest of the €52 million will be paid by buyers of the residential tower to convert the temporary emphyteuses to permanent ones, and to redeem them fully. 

A PN source told MaltaToday they are expected to hold a final discussion on the land deal, but said that the “general drift is to oppose the deal”.

Nationalist Party leader Adrian Delia reportedly “slammed the deal”, sources quoted by The Times said, refusing to accept that this was a simple change of use of land subject to tourism investment, insisting it was an outright sale of public land. 

Of the total €121 million valuation, Deloitte deducted €16.1 million for the infrastructure costs that IHI will fork out for the public areas around the project. But it also got a further €9 million as compensation for the existing Marina Hotel which will be demolished, as well as €33.4 million for the Radisson, and another €12.9 million for “additional tourist-related development” that takes place on the site. 

IHI said this was a €600 million redevelopment that will include a six-star and five-star hotel, as well as residential and office development, and possibly a land reclamation project. But the hotel giant will require approval from Malta’s parliament so that the lease it was given in 1992 for strictly touristic development only, be amended to allow the mixed-use development. 

DB Group, granted a neighbouring site for a 38-storey high tower, is slated to pay €60 million with similar terms – part-premium, and part conversion of emphyteutic grants. 

But IHI plc made it a point to state that it already enjoys long-term exclusive rights to the land. 

IHI chairman Alfred Pisani – who was present at the parliamentary committee hearing on the proposed project – backed up justifications by tourism minister Konrad Mizzi that such a six-star development was conditional on “compensation” for forgone hotel assets that will be demolished in the process. “This investment comes with some considerable sacrifice… the revenue that will come in for the country will be three times what it is today. One has to respect the risk, and vision for the country… to introduce to this country a standard it has never seen before.” 

In comments to MaltaToday, Konrad Mizzi said IHI had to buy the Radisson to deliver a “holistic project [entailing] the upgrading of the entire peninsula into a six-star destination”. 

“Given that a significant portion of the proposed development will be undertaken on the land occupied by the Radisson, it is only logical that one deducts the cost of acquisition in order to determine the difference in value between current and proposed use, once the restrictive use clauses are lifted,” Mizzi said, adding that the €33.4m value is an estimate for what IHI paid for the Radisson. 

Apart from that, IHI’s credit for additional tourism development of €12.9 million was explained as the forgone value from the additional tourism development IHI could have reaped on its three hotels had it carried on business as usual – at the rate of €50 per sq.m. 

But even the Malta Developers Association said it disagreed with Deloitte’s estimate of the land prices, saying it was “far below market prices”, and that since the ITS valuation, prices had risen. “When government sells public land to be used for residential purposes at below current market prices, it distorts the property market and abandons the concept of a level playing field for all the players in this market,” the MDA said.