VBL Group plans luxury shopping hub in Zachary Street

A luxury shopping hub is being planned for Zachary Street, Valletta, by property company VBL, whose investment portfolio is exclusively focussed in Malta’s capital.

The VBL Group has secured the Coliseum building in Zachary Street with company chiefs saying the acquisition will be completed by the end of 2022.

The building covers 3,000sq.m and will be developed into a hub concept similar to The Gut in Strait Street, which the company is developing into an entertainment and office complex.

“The concept will be the same but while The Gut is a mixed development that incorporates entertainment establishments focussed on food and beverage, the Coliseum in Zachary Street will be focussed on retail, specifically, luxury shopping,” Geza Szephalmi, CEO at VBL said during a media briefing on the company’s performance.

The property will join VBL Group’s sprawling portfolio of buildings it owns in Valletta, making it arguably the largest property owner in the capital.

Company chairperson Andrei Imbroll said the transformation of the Coliseum into a high-end retail complex will help reverse the trend that has seen many retail outlets in Valletta close down, move elsewhere or transform into food and beverage outlets.

The Coliseum project is targeted for completion in 2025 and while it is still in its infancy, VBL will be moving ahead with the second phase of Silver Horse, the sprawling block of buildings in Strait Street.

The bottom floor of Silver Horse, known as The Gut, was transformed into bars and eateries, rekindling the past spirit of Strait Street as an entertainment zone for British sailors.

The second phase will now see the upper floors being transformed into residential units, office space and retail units. A roof garden and club with a footprint of around 1,000sq.m will cap the building. This phase is slated for completion in 2024.

“The second phase of Silver Horse will provide the largest single mixed-use development in Valletta spread over 6,000sq.m of gross development area,” Imbroll said.

VBL will be completing other projects over the next two years, putting on the market properties for rental purposes. The company projects revenue growth to go from €2.6 million in 2022 to €9.7 million in 2025, assuming completion of the several projects.

Imbroll emphasised that renovation is done in such a way as to respect the historical context and a characteristic of VBL properties is to retain, as much as possible, Maltese tiles and stone walls.

VBL started operating in 2012 and in October last year the company went public by issuing shares and listing on the Malta Stock Exchange.

The company specialises in buying “problematic properties” in Valletta and renovating them into retail, residential and office units. VBL’s property portfolio in the capital is valued at €60 million, excluding the Coliseum.

Imbroll said that only 20% of the portfolio has been developed so far, giving the company ample space to grow in the years to come.

“The first 10 years of the company were used to secure a property bank in Valletta and the next phase is turning this property into a yield generator. In the next 10 years, we want to see 80% of the portfolio that is developed and yielding an income,” Imbroll said.

The company’s renovation strategy ensures a return on costs of between three and four times the cash invested in the property.

Imbroll said VBL has been paying cash dividends to its shareholders, each year since 2015. “The company has a declared dividend policy to distribute 30-50% of the annual free cash flows in dividends to shareholders,” he added.

Company CEO Geza Szephalmi said VBL’s fully renovated properties go at an average of €6,900 per sq.m, which is significantly undervalued when compared to other historic cities in European countries bordering the Mediterranean, where city centre prices range between €12,000 per sq.m to over €30,000 per sq.m.

“Valletta real estate prices are growing, but are still undervalued when compared to European Mediterranean peers and the likeliness is that Valletta property will continue to appreciate in value,” Szephalmi said, adding that Valletta is the most recognised Maltese brand globally.

He speaks passionately about Valletta and its investment potential. “Valletta is spread over 0.8sq.km and building supply is limited because there is no room for expansion because of the geography. It is also the locality in Malta that sees tourists all year round,” he said.