Up, up and away: the tower economics of high-rise buildings

Kurt Sansone - Times of Malta 31 May 2016 

Standing at 23 floors, the Portomaso tower in St Julian’s is Malta’s tallest building, but it could be dwarfed easily over the next decade or so.

There are several plans, some more advanced than others, by private investors for tower blocks to rise in the Paceville area and Tigné Point in Sliema.

At least two of the projects that have been mooted would rise up to 40 floors, reaching skyscraper status, with others following close behind.

But it will not just be towers that will transform the landscape along the stretch of coastline between Pembroke and Sliema.

There are at least two other high-end projects, like the Corinthia’s six-star hotel proposal for St George’s Bay and the government’s White Rocks concession, that do not envisage towers.

While the flurry of plans and proposals has so far stopped at that, the lack of a holistic plan to deal with the overall impact has left many flabbergasted.

Sliema is already facing traffic gridlock as things stand, let alone with two massive towers

Concerns range from the visual impact the towers will have on the landscape, to the strain they will put on existing infrastructure, to the long-term sustainability of these projects.

Sliema mayor Anthony Chircop says that his council has put forward several concerns over the transformation of the Tigné peninsula into a high-rise district.

The proposed towers for Town Square and Fort Cambridge would dwarf Portomaso, which already looms large across the bay.

“We were given a presentation by the proponents of the Town Square project and some of our concerns have been addressed but Tigné’s streets are what they are and cannot be changed,” he says, fearing the impact the two towers would have on the town’s infrastructure.

Sliema is already facing traffic gridlock as things stand, let alone with two massive towers, he adds.

These concerns and others have prompted independent MP Marlene Farrugia to table a motion in Parliament seeking a moratorium on big projects and tower blocks. She wants these projects to be handled through a master plan, rather than in a piecemeal fashion.

The master plan should take into consideration the country’s economic, social and environmental needs, she says.

Her words echo the cautionary tone adopted by Finance Minister Edward Scicluna last week, when he commented on the “supermarket” of large-scale projects developers were trying to compete with “irrespective of demand”.

From an economic perspective, there is fear the development boom prospected by these projects could lead to a bubble that can easily burst if demand falters.

Chris Grech, chairman of Dhalia, a real estate company, told The Business Observer on May 19 that an influx of investors from overseas was fuelling demand and driving prices up. “The market is growing too fast,” he admitted.

Economist Gordon Cordina says international demand is probably likely to be sufficient to cater for the proposed developments. But he also insists the risks have to be managed, not least by ensuring the developments are adequately timed and seek to attract global clients.

“Demand from growth of existing business and relocation, while potentially important, is likely to occupy a minor share of the new developments and indeed would not be the main driver of economic growth,” Dr Cordina says.

Apart from those in the Sliema and St Julian’s area, other high-rise developments are being proposed for the Mrieħel industrial zone. Top-end office space is also expected to come on stream with the Farsons business centre in Mrieħel and the Skyparks 2 development at Malta International Airport.

In a cautionary note, Dr Cordina says feasibility studies for each project should consider the fact that other projects will also be coming up. Developers must also ensure the quality-to-price ratio is right to attract target clients and avoiding price wars.

But he also calls for better holistic management of the actual construction phases, so as to reduce the strain on resources.

“There should be an orderly development, taking into account… the timing when the projects would come on the market, so as to avoid gluts and bottlenecks,” Dr Cordina says.

Another aspect of concern is the development of public infrastructure to cater for the additional burden the projects will bring to their respective localities.

Infrastructure, including road access, traffic management, water works and electricity provision, should ideally precede the projects, he adds, noting that the private sector should take at least part of the responsibility for it.

Dr Cordina says developments should be prioritised according to “market readiness and their ability to best meet the needs of the economy”.

These criteria, he says, should be met on a project-by-project basis, as well as at regional and national levels.

The government announced the creation of a State agency to coordinate the construction works in the St George’s Bay area last October. A similar initiative was undertaken for the management of the Mrieħel industrial estate.

Whether these public-private partnerships will be enough to provide holistic plans for their respective areas has yet to be seen, but it is unlikely they will have the clout to set priorities for the country.

In the absence of a overarching national vision, a group of engaged citizens have taken it upon themselves to get the ball rolling. A Change.org petition signed by 1,000 people and counting calls on the government to develop such a holistic plan, as well as echoing calls made by independent MP Marlene Farrugia for a moratorium on large-scale developments until such a master plan is in place.

Sign the petition calling for a moratorium on large scale development - Click here