Article updated to include Right of Reply by Corinthia.
A new scandal involving the abuse of public land is unfolding as The Shift can reveal that Corinthia will be paying just €1.3 million, and not €10.3 million stated by the government, to build and sell 25 residential luxury villas in Hal Ferh, a site that commands exclusive views of Golden Bay.
According to the deed negotiated by Economy Minister Silvio Schembri and the Lands Authority, as yet unsigned, the group of private hotels controlled by the Pisani family will have to fork out only around 10% of the €10.3 million valuation by the Land Authority, already considered cheap by observers.
The deal involves some 30,600 square metres of public land, which was only to be used for touristic purposes, that will now be converted by Corinthia into 25 luxury villas to be sold to millionaires adjacent to its hotel complex.
In addition, the government is also conceding that the rest of the agreed payment, €9 million, will be paid only over 10 years and in small instalments, each and every time Corinthia manages to sell one of its new villas.
According to the deed, Corinthia is not to fork out any further money to public coffers over and above the €1.3 million to be paid upon signing, as this will come directly from those purchasing exclusive luxury villas.
This concession in favour of Corinthia is only tied to a minor condition that the Pisanis manage to sell all their villas in 10 years from the signing of the deed. Even if Corinthia fails to sell the villas within five years, the group is only bound to pay the government €3.6 million.
The government even conceded to give Corinthia a risk-free investment, inserting a clause in the deed that if the Planning Authority does not issue a valid permit for the development, Corinthia will be given a refund of the payments made for this concession.
This is a similar arrangement to the controversial deal the Labour government had reached with Silvio Debono of DB Group for the land at St George’s Bay on the former ITS site to accommodate his controversial development.
Like it has done with the ITS deal for Debono, the government is not only giving prime public land away for peanuts but doing so on scandalous payment terms.
What you see is not what you get
The Shift had reported how the National Audit Office Accounts Committee met during the summer recess and approved in just 12 minutes a deal so that the land at Hal Ferh – the size of four football pitches – could be used by Corinthia to build 25 luxury residential villas.
In order for this deal to go through, the government said that it had asked Corinthia for compensation of €10.3 million.
While three government MPs led by Minister Silvio Schembri approved the deal, PN MPs boycotted the meeting as they had said they failed to see the need for urgency.
It is clear now that the terms of the deal are very different from those approved in the motion presented to parliament.
Instead of forcing Corinthia to pay the €10.3 million deal, as is usually done in private business, the government accepted the terms negotiated with the hotel chain, accepting that the company will only pay €1.3 million upon signing, reducing the price to a ridiculous €42 per square metre for land with unique views to be turned into villas.
While it was always obvious that Corinthia would be recouping the payment made from the selling price of the eventual villas, the deed even concedes that Corinthia will not have to fork out a single euro as this will be made only when the sale of each villa is concluded.
Real estate insiders estimate that Corinthia may be able to sell each villa at some €3.5 million, making a massive killing from this deal.
Alfred Pisani gets similar deal to Silvio Debono
The Corinthia deal has significant parallels to the scandalous and highly-contested ITS deal with Silvio Debono under disgraced former prime minister Joseph Muscat.
In 2015, upon the signing of the deal with Silvio Debono of the DB Group, the government had said that it had sold the unique St Julian’s public land for €60 million. This turned out to be false as the deed signed stated that the DB Group was only to pay a €15 million premium, staggered over seven years.
The rest was ground rent to be paid by individual buyers over many years and once they bought their residential apartments.
The deal was slammed by the NAO while the Malta Developers Association condemned the way public property was sold for peanuts.
Alfred Pisani’s Corinthia had already tried to do the same kind of deal with the property on the group’s three hotels in St George’s Bay.
Right of Reply from Corinthia Group:
“For the avoidance of doubt, the €10.3 million referred to in the article is not the amount payable for the transfer of the land in question as the site is already owned by Corinthia on a freehold basis.
Government sold this land (to the Island Hotels Group – IHG) back in 2009 and Corinthia subsequently acquired it, at market value, when it purchased IHG in 2015.
The €10.3 million in question represents the additional amount requested by government, in terms of the relative clause in its original agreement with IHG, in order to convert the use of a section of buildable area, which currently holds valid permits for multiple timeshare units, from hospitality use to residential use, and this within a limit of 25 residences.”
Editorial note: That’s exactly what we said in our article – the amount requested is to convert the area to residential units. Yet we have shown that the amount of €10.3 million is misleading.