Curia property to become court house extension through multi-million-euro lease

A Church-owned historic palazzo in the heart of Valletta, originally leased to private developers to be transformed into a boutique hotel, is instead set to become an extension of Malta’s law courts after the government awarded thedevelopers a lease worth almost €6 million.

The Shift can reveal that Palazzo Carafa Ltd, the company leasing the Grade 1 scheduled property from the Archdiocese of Malta, won a Justice Ministry tender to provide additional office space as part of an expansion of the Courts of Justice.

The move forms part of the government’s efforts to tackle the chronic lack of space at Malta’s historic law courts, which have long struggled to cope with an increasing caseload and growing judicial administration.

The existing court building on Republic Street has become inadequate for the demands being placed upon it, prompting the Justice Ministry to seek additional premises in Valletta to house part of its operations.

The public procurement process for the extension, launched earlier this year, surprisingly attracted only one bid.

According to the tender, the 15-year lease, which can be extended by a further ten years, carries an estimated procurement value of almost €5.9 million, excluding VAT, for the initial term. The property is expected to be adapted for government use within a year of the contract being signed.

The award marks a dramatic change of direction for Palazzo Carafa, which the Archdiocese had leased through a public call more than seven years ago for redevelopment as a boutique hotel after decades of abandonment.

Instead, the historic building is now destined to accommodate a court extension in Old Bakery Street.

The restoration project itself attracted considerable controversy during the works after heritage experts and the Church’s own Environment Commission called for an investigation into the removal of a historic theatre stage from the building, warning that important elements of its cultural heritage may have been lost.

Palazzo Carafa Ltd is owned by developers Neville Agius, Ruben Magro and ZIS Holdings Ltd.

Agius, married to Sabine Agius Cabourdin, the CEO of the Nationalist Party, has been involved in several high-profile Church property transactions in recent years, including the controversial redevelopment of parts of an Mdina Monastery into a museum and tourist attraction.

The Shift asked the Curia whether it had authorised Palazzo Carafa Ltd to enter into a long-term lease agreement with the government over Church-owned property and whether it had approved the change in the building’s intended use from a boutique hotel to government offices.

In its reply, the Archdiocese said Palazzo Carafa had been leased following a public call, with the contract awarded to the highest compliant bidder that had committed to investing millions of euro in restoring the building.

The Curia added that although the lessee had been unable to make commercial use of the property because of its condition, it had continued to honour all lease payments.

“Provided the lessee complies with its terms, the Archdiocese has no role in the property’s management or use,” the Curia said.

The Archdiocese did not clarify whether the lease agreement specifically permits the lessee to sublet the property to the government for use as an extension of the law courts, and whether it had been informed before Palazzo Carafa Ltd submitted its bid for the Justice Ministry tender.

The tender required bidders to specifically provide premises in Valletta capable of accommodating between 450 and 600 square metres of office space, with the successful bidder responsible for delivering the offices ready for occupation within one year. The premises were also required to have the necessary planning permits and authorisations for office use.