I have no problem with "high end" apartments coming from a remodeled warehouse. I also understand the purpose of "pilots". I do have a problem with "pilots" being handed out like candy to developers. If the overall picture screams that the development needs help to make it a worthwhile investment than its a good thing.
If the bottom line is they will make money on their investment after 15-20 years then the government grant should suffice. They shouldn't be getting an instant or short trerm profit from the project. Real estate is suppose to be a long term investment.