Luqa social housing project halted as Malita runs out of cash

A massive social housing development has ground to a halt amid a funding crisis at Malita Investments plc, the government-owned company responsible for delivering the project in Ħal Farruġ, Luqa, The Shift can reveal.

Contractors have reportedly suspended work after Malita failed to settle outstanding payments worth hundreds of thousands of euro. Sources familiar with the matter said the company is facing acute liquidity constraints and has run out of cash to finance ongoing works.

The stalled project, described by Housing Minister Roderick Galdes as the country’s “largest ever housing initiative”, underscores the growing financial strain on Malta’s state-backed infrastructure ventures.

Malita, which acts as the financial vehicle for several government social housing developments, is a publicly listed company on the Malta Stock Exchange. The state holds an 80% stake, with the remainder owned by private shareholders.

Because of its listed status, the government cannot directly inject fresh capital without breaching state aid rules, leaving the company in a complex financial and regulatory bind. The predicament has also raised concerns among minority shareholders about the security of their investments.

The €44 million Luqa development, comprising three apartment blocks with 267 housing units and several hundred garages, was partly financed through a €22 million loan from the European Investment Bank (EIB). Sources said the EIB has in recent months sought clarification over the use of its funds and the project’s governance.

The financial turbulence follows a period of internal instability at Malita.

Earlier this year, long-serving chief executive Jennifer Falzon resigned following tensions between the company’s then-chairperson, former Labour MEP Marlene Mizzi, and Minister Galdes. Falzon was swiftly replaced by architect Amanda Desira.

Sources close to the company said the problems stem from a mix of “internal mismanagement” and “political interference” from the Housing Ministry, which they claim has been closely involved in the company’s operational decisions.

Warning signs of Malita’s financial stress first emerged in August, when the company announced it would not distribute its annual dividend for the first time since its establishment. The decision drew anger from shareholders who had been promised a 7% annual return on their investment.

In a statement to the market, Malita cited project delays, cost overruns and higher cash-flow requirements as reasons for its decision, noting that it was reassessing its “funding requirements and strategic approach.”

The company added that it was in talks to secure new financing facilities specifically for the Luqa project, but was “not currently in a position to draw down on these facilities.”

The Shift is informed that Minister Galdes has been pressing for a direct government injection of funds to complete the project, but sources said the Finance Ministry is resisting such a move, arguing that it would amount to a state-funded bailout of a listed entity – a step that could set a risky precedent.

The Housing Minister did not respond to questions about the project’s suspension or its plans to address Malita’s financial shortfall.