Editorial | It’s policies… stupid!

There is a growing realisation within the construction and real estate sector that the trajectory of development has to change.

Too much, too ugly, too suffocating; these are the words often heard to describe the building boom of the past decade.

But an eye-opener was afforded by a recent study commissioned by the Malta Hotels and Restaurants Association on Malta’s tourism capacity. The study looked at all approved hotel permits and those that are pending and found that to make all existing and planned bed stock financially viable, Malta would have to attract five million tourists every year.

The study, however, also warned of overcrowding in key tourist sites, which will only get worse if the country attracts five million tourists.

The upshot is that too many new hotels are being built and the only way to keep them financially viable will mean added pressure on the country’s infrastructure and resources.

This is just one sector, which also happens to be one of the key economic drivers. The findings of the study beg the question: what financial and market due diligence are hotel investors doing when embarking on such investments?

But that same question can be applied to investors who have, or are, pouring money into office blocks and high-end residential complexes.

One may presume that the demand is still there and going strong once investors keep putting money into these building projects. But is it their money they are risking, or is it the banks’?

This raises another serious question. With interest rates rising and banks tightening their belts, what will happen to some of these projects when the money tap runs dry or repayments become more expensive?

The truth is that market forces and the accompanying realities will determine how fast and wide the existing development boom will continue.

This leader will not advocate for market intervention but there is a lot to be done at policy level to give the industry direction and minimise its impact on communities and the economy.

For starters, the local plans set in 2006 need to be revised to adapt them to modern-day exigencies. Legal counsel must be sought to reverse some of the changes introduced back then, most notably the delineation of development zones.

But there is also the need to revisit planning policies. The policy currently identifies a number of localities where high-rise development is possible. Yet, we still get high-rise buildings in localities other than these because of exceptions to the policy. A rural policy that allows rubble heaps to be turned into villas if someone lived there many years ago had to be reviewed because it allowed buildings to go up in otherwise pristine fields. And yet, the review remains elusive.

Another policy introduced over the past decade was the one allowing hotels and old people’s homes to build two extra storeys above the allotted height limit for an area without distinction.

These are just three glaring examples of policies that require revisiting. But not just.

A thorough review of planning policies is required but to do this requires a clear direction of what type of development is desirable in the coming decade.

Changing the trajectory of development to make it more sustainable, pleasing to the eye and surroundings, and in synch with today’s exigencies requires bold action that should start from the policies.