Stark warning about greylist-driven risk issued around sale of €16.5m Savoy Shopping Arcade

Experts commissioned to write a bond issue prospectus published by Central Business Centres have issued a stark warning about the likelihood of a downturn in economic activity across the country, citing Malta’s grey isting by the FATF as a risk to potential future foreign investment as well as local business.

Central Business Centres, an offshoot of SMW Cortis of Zebbug, is trying to raise some €21 million in new bonds to finance the purchase of the Savoy Shopping Arcade – an iconic building in Valletta’s Republic Street – to be used for offices and retail outlets.

The warning comes as real estate companies, particularly those in the commercial sector, are bracing themselves for a downturn in business in the near future, as a direct result of the international money laundering watchdog’s demotion of Malta’s financial jurisdiction.

The company, which already owns and manages office complexes for lease in Zebbug, St Julian’s and Gudja, said that although the full impact of the FATF’s decision is still unknown, it’s likely to weigh heavily on the commercial space leasing industry in the coming years because greylisting means the jurisdiction is no longer attractive to foreign investors.

“The exact impact of the greylisting is unknown; however, it is anticipated that this will impact Malta’s attractiveness as a jurisdiction with the knock-on effect that (fewer) companies will seek to establish themselves in Malta,” the prospectus for potential buyers into the company’s bonds states.

“These risks, both individually or collectively, could result in an oversupply of commercial property for leasing resulting in the company offering reduced rental rates and/or less favourable conditions.”

Economists who spoke to The ShifT described the declaration in the CBC prospectus as “realistic” and said it reflects what’s being experienced across a number of economic areas that depend on foreign investors.

“The greylisting is already having an effect even though it has not resulted in some severe economic downturn so far,” a senior economist told The Shift.

“While in the gaming and financial services industry, companies operating in Malta have so far decided to stay here, with a few exceptions, Malta is not attracting new companies. There is a general feeling that no one wants to touch Malta any longer until we remain on the grey list. This is also due to the fact that banks have become impossible to work with in this scenario.”

This will have an impact on the leasing of property, both for commercial and residential use, while massive construction projects continue to mushroom, creating increasing available space despite shrinking demand.

Savoy to change hands for €16.5 million

An offshoot of one of Malta’s oldest manufacturers of furniture (SMW Cortis), the company entered the property development business some years ago and now controls several multi-million properties which it leases as office space, generating hundreds of thousands of euros in rent every year.

The latest bond issue seeks to raise €21 million, mostly for the purchase of one of the most iconic shopping arcades in Valletta – the Savoy – which for many years also operated the Savoy cinemas.

Through a promise of sale already entered into with Calthon Limited, the company will be acquiring the whole complex for €16.5 million with the aim of commercialising it further.

In a valuation report on the building, built some 67 years ago after being heavily damaged in World War II, architect Joe Cassar suggests the possibility of building two additional floors on top of the seven-storey building to enhance its commercial potential, including a possible boutique hotel on the top floor.


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Ġwanni Fenek
Ġwanni Fenek
10 months ago

Ah, it wouldn’t be Malta if someone didn’t try to squeeze every last drop out of something through aggressive commercialisation.

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