Wednesday, January 26, 2005

Eastside Development first step taken for £1 Billion project

by Alice Mascarenhas

Wheels have been put in motion for Gibraltar’s most ambitious investment and development project in its history that will be built on the eastside of the Rock between Eastern Beach and Catalan Bay representing an inward investment in excess of £1 billion.

Chief Minister Peter Caruana declared the Eastside Development Project would ensure the Rock’s economic and architectural development in the second 300 years of its history. Both he and Trade and Industry Minister Joe Holliday, yesterday signed the Commercial Master Agreement, on behalf of the Government, together with Andrew Roberts representing the shareholders of MCB (Gibraltar) Limited and Chief Executive of Multiplex Construction (Pty) Limited with 51%, and Simon Reuben from Aldersgate Investments Limited with 49%.

The signing comes after a protracted and complex negotiation. The move confirmed MCB (Gibraltar) Ltd as project developer. Multiplex is a Company quoted on the Australian Stock Exchange and is Australia’s largest construction Company and a leading property developer in the UK.

Aldersgate is an investment vehicle of brothers David and Simon Reuben

Also involved in the project is one of the world’s most eminent Architects, Lord Foster, who has embraced the project with personal zeal and enthusiasm.

The project remains subject to environmental impact assessment, public consultation process and the grant of outline planning permission. It is envisaged that all these will take up to 14 months. Thereafter, the development will be built in phases over a ten year period.

The Chief Minister described the project as a destination and not just a development project.

"150 years from now it will be regarded as an important phase in Gibraltar’s evolution and development. This is not just a building but creating in Gibraltar a destination in the context of the Mediterranean" he told the Chronicle, pointing out, that the benefits were not just economic, and that the project would also create hundreds of jobs and secure huge infrastructure works which would include a generating station with twice the capacity of Waterport Power Station – six five megawatt generators. The transaction, he said, was worth around £100 million to the taxpayer.

The Developer will additionally build the required electrical distribution network. The Government said an additional benefit was the possibility of removing the generating station from a residential area, with consequential environmental quality of life gains. New sewers pumping station and sewer main, and water distribution system, will be built on the Eastside, serving the whole area of Devil’s Tower Road and Catalan Bay area.

The Government’s contribution to these infrastructure works will be limited to a maximum of £6 million. It is envisaged that the works will cost around £35 million.

The development will consist of up to 2,200 apartments; underground car parks; a 300 boat marina with a boutique cruise liner berth and terminal; a 300 bedroom 4 star hotel; and retail, commercial and office accommodation.

Affordable Homes

The Developer commitment will see the building of up to 200 affordable homes offsite to specifications decided by the Government for sale at cost (and free of land cost) to buyers designated by the Government. Construction of these houses will begin when the main project has received outline planning permission and the leases and other documents are executed.

Eastern Beach and Catalan Bay

The Developer, acting as a contractor for the Government will build the Government Beaches Project set out in the 2003 Manifesto. This project will double the width of both Eastern Beach and Catalan Bay Beach and protect them with offshore, underwater breakwaters. Government will pay the fixed price of £9m for these works, and the Developer will pay any excess.

Public Car Parks

The Developer will build and provide to the Government two car parks of 250 car parking spaces each at Eastern Beach and Catalan Bay for use by beach goers and public parking.


Andrew Roberts, Chief Executive of Multiplex, described the project as very significant.

It gives us the opportunity to take something forward on a level which is not ordinarily possible, so we are not looking at simply another apartment block or hotel, but the integration of the whole project.

Multiplex tackles large development and re-development schemes of this type and Gibraltar occupies a wonderful position at the head of the Mediterranean, its climate, unique geographic position, financial and regulatory arrangements all offer some unique advantages, and it is increasingly becoming with other parts of the Mediterranean a very desirable location,” he added.


For his part Simon Reuben said the project was very exciting.

Gibraltar is part of British culture, and linking up with Multiplex and other large projects similar in size it is also exciting to be linked to Lord Foster. One feels one can actually make a mark in a place that needs it and Gibraltar needs it very much. We do not do anything in Spain because it is over developed and we like it here because it is still virgin here,” he stated.


Lord Foster commented there was tremendous synergy between Gibraltar and the project.

In this sense it is an expansion of Gibraltar and it also has the power to inject a tremendous additional energy – a catalyst – and it is a very exciting project architecturally, touristically, its mixture of uses, the way it trades on the Mediterranean with the potential for marinas, and a very rich and exciting mix of uses – hotels, apartments, shopping, leisure and culture which is also a very important dimension to the project which can be conceived in very sustainable terms.


The master plan and design of the project, he said, had been built on the best of tradition – and had been based on the most friendly welcoming destinations in the Med which had certain traditional qualities.

The Chief Minister said he greatly welcomed the confidence being shown in Gibraltar and its prospects for the future by Multiplex and the Reuben Brothers and the financial institutions providing funding for this project.

I believe that this confidence is well placed. Various Government departments will now be faced with a big challenge in processing this project through the planning phase. I have no doubt that the administration will successfully rise to that challenge,” he further added.

Meanwhile Minister for Trade and Industry Joe Holliday commented:

this project is massive by Gibraltar standards and large by any standards. It will deliver very significant opportunities to many Gibraltar businesses in many sectors both during and after the construction phase. When ready it will greatly enhance our tourism and commercial infrastructure including leisure facilities for the local community. I look forward to leading the co-ordination of the considerable challenge that Government now faces in processing and executing this very large, multifaceted project.

Benefits

*Cash Premium: The Government will be entitled to receive up to £60 million cash premium. This will be paid as follows:- £2,500,000 from the outset (non-refundable); £2,242,500 from the outset (refundable if DPC refuses outline planning permission); £28,242,500 upon execution of the head lease and other commercial agreements which follows grant of outline planning permission. This is envisaged to be in 14 month’s time.

*Up to a further £26,000,000 if the developer decides to build more than 1,200 flats (up to the permitted maximum of 2,200).

*If the Developer withdraws from the project before outline planning permission is given, the Government retains the £4,742,500 paid yesterday.

Timescale

This Eastside Development project will be executed over a 10 year period. The trigger event for all the Developer’s commitments is the grant of outline planning permission for the main development. This is in a period of up to 14 months from now. Thereafter the period to completion of the Project is as follows: - Affordable housing – 30 months, Electricity Generating Station, water and sewage works – 30 months, Beaches Project – 24 months, Hotel, Marina and at least 500 flats, within a maximum of 6 years. Remainder within a maximum of 10 years.

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