Smart City inked promise-of-sale on Shoreline land before MPs vote on masterplan changes

A promise-of-sale agreement between SmartCity Malta and the company Ricasoli Properties has already been signed for the sale of land to be developed into the luxury Shoreline apartments, despite changes to the Smart City masterplan not yet having been voted upon by Maltese MPs.

In a controversial move, the owners of Smart City – once billed as a futuristic ‘internet city’ that would revive the south of Malta – have already signed off on a promise-of-sale to South African businessman Ryan Edward Otto’s Ricasoli Properties.

A company representative who spoke to MaltaToday would not disclose the amount of the sale of the land, and that the agreement did not involve any government representatives.

Ricasoli Properties is owned by Otto’s Jade Property Investments (50%), Roderick Psaila’s Ramm Assets (40%) and Middletown Properties (10%), whose owners are lawyers Jean Carl Farrugia and Kevin Deguara – the latter having already made a public appearance on behalf of Sadeen, the Jordanian company aiming to develop Zonqor Point in Marsaskala into the American University of Malta.

The Maltese government holds a 10% stake in SmartCity Malta, represented by the Prime Minister’s chief of staff Keith Schembri on the board of directors.

But Schembri took no questions from MaltaToday on the conditions of sale or the government’s stance on the sale, instead directing this newspaper to the Smart City management.

Ricasoli Properties are already accepting 10% down-payments on the apartment, and expect another 10% payment when full development permits come through in November 2017, another 30% on completion of the shell unit, and the final 50% on finishing.

They have already sold 68 apartments from their Block B and 13 apartments on Block C, where prices range from €225,000 for a 74 sq.m studio apartment (€3,000 per sq.m, to €750,000, for a 199 sq.m duplex apartment (3,768/sq.m).

Additionally, MaltaToday is in a position to reveal that the floor area allocated for villas and apartments in the new masterplan will increase by 111,428 square metres, roughly the size of 16 football grounds.

That means that developers Ricasoli Properties are hoping the Maltese parliament will approve changes in the masterplan that will hive off 35% of the total floor area at Smart City for residential development – compared to just 20% in the original plans in 2008.

Redolent of the warnings by then Labour leader Alfred Sant, now just 41% if the floor area will be allocated to offices for ICT and media, down from 51% in the original 2008 masterplan.

In the meantime however, real estate agents are already busy selling off Ricasoli Properties’ 10-storey Shoreline apartments on plan, raising concerns by the Malta Developers Association of unfair competition. The project includes a two-storey commercial complex with retail shops and supermarket partially located below ground, fronting a landscaped plaza and laguna walk, and three-storey underground car park.

Controversy will certainly ensue over the fact that under the 2008 contract, tenants could redeem their lease on the land earmarked for apartments and villas at just Lm1.75 (€4) per square metre.

Changes in floor area

Changes proposed to the Smart City masterplan foresee a dramatic increase of 185,864m2 in the developable floor space of the whole project, over and above what was originally approved in 2008.

This represents a 59% increase in floor area over what was allowed 10 years ago.

The increase corresponds to changes in building heights and the site coverage allowed in various zones of the project, mainly those for residential and commercial development (the floor area includes area of development set on different floors – the footprint will not change)

While the area for ICT and media offices – the original aim of the project – will increase by over 46,000 sq.m, or 29% over what was allowed in 2008, the area for commercial and residential development will together now increase by 139,624 sq.m.

This would represent a 90% increase in the floor area dedicated to the two secondary components of the original project, which originally demanded that the office component be delivered before any residential development.

The residential component itself will increase by a staggering 111,000 sq.m, 177% over and above what was allowed in 2008.

The floor area for residential villas on Plot 19, abutting on St Peter’s Battery and Fort St Rocco, will now increase from 18,000 sq.m to 51,000 sq.m, a site coverage rising from 30% to 50%.

The villas on Plot 18, facing the coast in the direction of Fort Rinella, will increase from 19,000 sq.m to 33,750 sq.m, also an increase in site coverage from 30% to 50%.

Another sharp increase in floor space is being proposed on Plot 3 and Plot 4, 8,340 sq.m approved in 2008 to 52,000 sq.m, thanks to an increase of heights from the 10-20m approved in 2008, to 30-38m in the latest plans.

How original 2008 residential floor area at Smart City will grow

                                   2008               2017              Change

                                  GFA sq.m       GFA sq.m    

Commercial              92,200            120,396         +28,196

Residential                62,800            174,228       +111,428

Total Res+Com        155,000           294,624       +139,624

ICT and Media          158,550           204,790       +46,240

Total                          313,550            499,414     +185,864

Gross Floor Area (GFA) figures refer to the total area on different floors allocated for each of the three main components of project. Data for development approved in 2008 is derived from document entitled “approved dominant land use and zoning.” Figures for 2017 are derived from the ‘Land use and Use and floor area schedule’. Both documents have been presented with a planning application presented in February to change the Smart City masterplan.

The Smart City story

Smart City is still a work-in-progress despite the attraction of big names to its office complex. In 2006, the project – a deal with  Dubai’s Tecom Investments, a subsidiary of the Dubai ruler Mohammed bin Rashid Al Maktoum’s giant holding company -  was set to create 5,600 new jobs, two-thirds of which would be knowledge-based.

From that point on, the word “smart” became an integral part of the Nationalist Party’s narrative: during its Independence Day festivities in September 2006, the PN unveiled the slogan ‘Int@SmartMalta’ – even while negotiations with Tecom were still ongoing.

Months before the 2008 elections, the government launched a media blitz with posters of prominent personalities endorsing the government’s ‘Smart Island’ strategy. 

The campaign included personalities such as then Malta Independent editor Noel Grima, PBS journalist Daphne Cassar, presenters Peppi Azzopardi, John Bundy, Claudette Pace (still working at NET at the time), Claire Agius Ordway and Gianni Zammit, GRTU director-general Vince Farrugia, actor George Micallef, author Trevor Zahra, footballer Carmel Busuttil, GO CEO Sonny Portelli, Children’s Commissioner Carmen Zammit, businessmen Jonathan Shaw, Ivan Bartolo and the late Desmond Vella, KNPD chairperson Joe Camilleri, singer and later Transport Malta executive Konrad Pule, and actor Owen Bonnici.

Opposition leader Alfred Sant was repeatedly accused of attempting to derail the project when he questioned the real estate component of the project. Sant had warned that Smart City would “serve to screen the transactions of luxury apartment entrepreneurs from abroad”, and that the government had camouflaged this intention by “boasting about the thousands of jobs in IT” Smart City would create. 

“But we have been here before. At Chambray, at White Rocks, at Cottonera and elsewhere, the same generous job promises were made and then buried,” Sant said.

• Terms of concession

The land at Smart City was originally the Ricasoli industrial estate, which could only be leased or sold off in the first place by a vote in the House of Representatives for inclusion in the new development schemes.

MEPA changed its local plan to accommodate the development, earmarking Ricasoli for “information and communication technology industries” while permitting residential, hotel and commercial development. It also paved the way for a new arterial road, linking Tal-Barrani road with Kalkara, which has so far not materialised; and for the relocation of a proposed Sewage Treatment Plant from the Wied Ghammieq sewage outfall, to a pristine site in Xghajra.

The Ricasoli land – a vast industrial wasteland the size of 40 football grounds – was offered to Tecom Investments for a ground rent of Lm65,000 (€150,000) a year, increasing by 5% every five years.

Tecom was obliged to keep 33% of their investment development free, and invest a further €24 million in landscaping. Another 119,000 square metres of floor-space (the size of 20 football grounds) were earmarked for real estate and commercial development.

Tenants could redeem their lease on the land earmarked for apartments and villas at just Lm1.75 (€4) per square metre.

Additionally, Tecom Investments and the Dubai Investment Group had also furthered their interests in Malta, with the acquisition of 60% of Maltacom – now renamed GO plc.

What made Smart City different to other projects, where public land was sold at a pittance to make way for speculation, is that the agreement signed between Tecom and the government set a €920,000 fine for each year in which the developers fail to create the promised jobs.

Failing to complete the job in time had to be met by a daily €1,150 penalty until works are finalised.

After abandoning a similar venture in India during the 2009 financial crisis, Tecom reiterated its commitment to invest €208 million in the Malta project, but problems plagued the stalled project and the 5,600 job promise never materialised.

• Change in government

Despite the Labour Party’s reservations about the project when it was presented in 2008, the election of Joseph Muscat in 2013 saw an increased interest in changing the zoning of the project, with a €74 million 12-storey hotel being proposed on site so that the Institute for Tourism Studies could relocate its campus to Smart City, from St George’s Bay, where the ITS land was granted in a concession to the db Group.

A new 200-bed state-of-the-art private hospital will be built at Smart City, while a number of government entities including the Gaming Authority and the Malta Tourism Authority were relocated there.