Government is to buy a piece of prime oceanfront real estate to kick-start a hotel and low-cost housing project.

The Grand Atlantic Hotel and 125 affordable homes will be constructed on the South Shore in what Premier Dr. Ewart Brown described as a "win-win" for Bermuda yesterday.

The Premier announced what is thought to be the first public-private partnership for tourism, with a 100-room hotel, ten fractional units and low-cost condos to be built on the former Golden Hind site in Warwick. Government will buy approximately half of the 13-acre site, owned by Atlantic Development Bermuda, with the capital helping to fund its Grand Atlantic Hotel and Spa.

Dr. Brown, Tourism Minister, said the capital paid for land and housing would "come from money designated for affordable housing, through the Minister of Finance."

He could not yet disclose how much Government is to pay out however, as the costings are "still in the negotiation stage", with only an 'agreement in principle' established.

However, Steve Bowie, manager of professional services at Rego Realtors, estimated the open market value of eight acres of brownfield South Shore property in Warwick, at up to $24 million yesterday, "subject to entitlements".

In his announcement yesterday, Dr. Brown said the development would be submitted through the Planning process, but Government would facilitate an SDO if deemed necessary.

Officially announcing the Grand Atlantic project, the Premier said: "Earlier this month Cabinet agreed to amend a Special Development Order granted for this 13-acre site. The initial SDO permitted the development of a hotel here a nationally important endeavour.

"The amended SDO still calls for a tourism development, but now also includes a plan for affordable homes another nationally important endeavour."

He said: "As all projects have done, these gentlemen (Atlantic Development) will cooperate with the existing Planning process. When and if they need special assistance they will get it, because this is a matter of national importance.

"That's the one thing I want to commend the former Government for, the possibility of putting in place an SDO."

However, the Premier claimed the developers would give the project a thorough environmental assessment.

Government is also to make available the post-Hurricane Fabian coastal survey, to assist in assessment of coastal erosion and bird habitats.

Asked about possible concern from environmental groups, Dr. Brown said: "The developers are very sensitive to the environment and will take the necessary steps to protect the environment.

"We (Government) will acknowledge and listen to and consider any objections people may have but we will not throw good projects in the ocean simply because people have a fixed agenda."

The architect for the project is Peter Terceira of Terceira Quarterly, and Gilbert Lopes of GL Construction builder of Loughlands, is the contractor.

The 125 two and three-bedroom condos will be modelled on the Loughlands project and will be built in four-phases while the hotel is constructed on a neighbouring site, with a projected completion date by 2013.

Dr. Brown said Bermudian landowner, Atlantic's president and CEO Larry Swenson, broached the idea of a public-private partnership after his plans for a hotel were thwarted by the global credit crunch.

"Mr. Swenson came to see me after learning about (Housing) Minister (David) Burch's creative plan at Loughlands a public-private partnership that is providing high-quality homes to hard-working Bermudians," said the Premier.

"When I talked with the Minister he said he saw no reason why we could not bring the same creativity here."

Dr. Brown said: "The developer needs capital to build his hotel; we need land to build affordable homes. Today we have both."

He said Government was not "investing" in a hotel but "simply buying land" for housing.

"The Government has had on its books for a long time the money to buy property for affordable housing. In this case we found a developer who, rather than bear the pain of the economic downturn, got creative."

Senator Burch said: "Even in this economic climate, your Government can deliver affordable housing to Bermudians in partnership with the private sector."

He said the housing development, to be named Grand Atlantic Residences, would be modelled on Loughlands. Government will enter into a Memorandum of Understanding followed by a Purchase and Sales Agreement.

"Like Loughlands, the (Bermuda Housing) Corporation will facilitate the purchase through individual homeowners," he said.

The condos will cost first-time buyers between $500,000 and $625,000. They will also qualify for stamp duty relief and interest-free down payments.

"I am pleased to confirm we have regularly monitored those persons who have registered with the Bermuda Housing Corporation. We have maintained a list of potential buyers," said Sen. Burch.

"I am pleased to confirm there is no shortage of people with pre-approved savings."

Mr. Swenson also described the project as a "big win for Bermuda".

"It gives me great pride to offer affordable oceanfront homes to hard-working Bermudians, and the first new hotel on the South Shore for decades," he said.

Atlantic Development managing director Chris Puchalla said: "The public-private partnership enables us to secure the finance and further build the hotel."

He said once Government bought the land for housing, it would "completely own it".

Asked about the appeal to tourists of having a hotel next to a housing development, Mr. Puchalla said: "If you take a look at Loughlands, this is going to be beautiful."

It has not yet been decided whether the hotel will be managed by an international brand or run locally.

"We are looking to see where the market goes," said Mr. Puchalla. "But Bermuda has a great tradition of operating its own hotels. The Reefs and Cambridge Beaches are examples of hotels which have really flourished."

Fresco's Group Bermuda meanwhile, will supply all the catering.

Claudio Vigilante, managing director, said: "We will be doing all the food and beverages for the whole site and all the operations. We still have to finalise the plans, but a 100-room hotel can support two restaurants, so we may have a larger and a smaller one."

Fresco's Group also plans to run a café and restaurant in two commercial buildings at the resort entrance, just off South Road.

The 178,000 sq ft Grand Atlantic Hotel and Spa will house 100 rooms over six-storeys, with a swimming pool and children's pool. It will be serviced by an access road off South Road, running adjacent to Astwood Walk.

The ten 1,275 sq ft two-bedroom fractional units will be built in a neighbouring five-storey building, while the affordable housing estate will consist of eight three and four storey buildings.

The 'master plan' features 74 1,287 sq ft three-bedroom condos, and 51 1,068 sq ft two-bedroom units.

Up to 116 car parking spaces will also be provided. The beach, which lies adjacent to Government-owned Southlands, will be open to public access, Mr. Puchalla said yesterday.