Leading real estate agency Dhalia has unveiled an unprecedented sale: 300 properties across Malta and Gozo are being put on the market with up to 10 per cent knocked off the asking price coupled with a generous home loan facility and kick start discounts for first-time buyers.
The company's incoming chairman and chief executive officer, Alan Camilleri, said that the sale was motivated by the need to present properties at real, true and fair prices, which offer a good deal for buyers, especially first-time buyers.
"The properties we are offering at not aimed at institutional investors or developers but at entry-level buyers. We acquired sole agency agreements on all these properties, so they cannot be sold through other agencies," he said.
Dhalia might be able to negotiate commissions as it sees fit but how did it persuade vendors to lower their prices? It seems that Mr Camilleri made it amply clear to them that the writing is on the wall for certain segments of the property market.
"The market is challenging and growth has shifted. In our opinion anyone holding properties in this segment had better sell now. I would say that at the level of villas, houses of character and upmarket properties, prices will maintain their growth momentum. It is a simple case of demand and supply and this kind of property in Malta will remain at a premium.
"On the other hand apartments, maisonettes and small houses need to reflect their true value on the market," he warned, adding that overseas markets were also adjusting prices to more realistic levels.
"Prices in this segment may seem to have reached the plateau yet have resisted going down. This is why we believe we are currently experiencing an excellent buyers' market."
The implication is clear: Prices in some areas of the property market simply cannot keep going up and those who are sitting on their investments in the hope of future capital appreciation should think carefully about timing.
Mr Camilleri would like to see more vacant property come onto the market, believing that this would be a better option than building new units.
"We wish more property to come on the market - not simply to sell - but because there is a need to maximise our country's resources in this sector for economic and social wellbeing. Do we want more high-rise building with all their environmental, social and aesthetic implications? Do we want people to live in smaller apartments? Do we want to breathe life into urban and village cores?
"The trade off between development and demand is sometimes a bit skewed. There is supply which is dormant and there is demand in areas that are not matched by the supply side.
"I sincerely believe that we have a corporate responsibility towards the country and towards the economy. I would not be satisfied if we only focussed on increasing our sales turnover for its own sake. I would be more content if Dhalia were to be a contributor to economic growth," he said.
Indeed, Mr Camilleri has taken over the reins at a time of flux. In the past, investment and speculation was rife for the simple reason that there really was a pot of gold at the end of rainbow. Things have changed and the return on the investment is not as lucrative as it was 10 years ago for a number of reasons: overdevelopment; supply mismatch; less focus on aesthetics; sacrificing design standards for functionality; and exponential capitalisation.
The last point is one where Mr Camilleri believes that Dhalia has a role to play.
"One cannot consider development without considering the credit situation of most families and individuals today. For first-time buyers, prices might be steep and mortgages difficult to manage. We empathise with that. We strive to have one hand embracing the seller and one embracing the buyer. We have to protect the interests of both.
"I passed through it myself not that long ago. Buying a house is probably one of the biggest decisions that a couple will make in their lifetime and one that will condition their lifestyle for 25-35 years. With all the financial pressures of the wedding and so on, can we allow more stress to build up? This is why I keep encouraging my sales consultants to put themselves in their clients' shoes."
Another way that Dhalia can help is by working with the vendors to advise them on the real market value of a property.
"We are pushing prices down ourselves, working in tandem with a number of developers and sellers," he said.
This is quite a bold move in an industry that has long been blamed - not always justifiably - for driving up prices. Mr Camilleri said that one concrete example of the Dhalia/developer approach is Fort Chambray, where the developer realised the importance of achieving a balance between profitability and market value.
"The prices reflect current market prices and are not at all inflated. It's not in our interest to sell properties whose prices are inflated. A quick sale bearing an unfair price does not pay us, as corporate reputation is very important. A substantial part of our business includes repeat sales or references from satisfied customers - both buyers and sellers. At the end of the day, clients come back because we can give them a good service."
Indeed, Mr Camilleri is not limiting his vision to realistic prices but also to increased market share. Although there is no reliable data, the estimates are that only a quarter of property sales go through real estate agencies, which are facing increasing competition from direct sales from owners, free magazines distributed through households, sensara and even auctions.
One solution would be to opt for more self-regulation of the profession, dispelling any notion of shady operators; at present sales consultants do not need a warrant. Mr Camilleri is all in favour of it, noting that Dhalia was the first company to push for regulation.
He also stresses that an agency offers unparalleled experience and professionalism - and a huge database which makes the right match far more likely. Dhalia, for example, has a database of 10,000 properties, one of the largest on the island.
"There is a much better chance of finding the right property if you can spend a day or two showing people around than if you only have a handful of properties to offer them. The same applies to auctions. You might get a good deal and you might be lucky but an auction is an auction. At the end of the day it is a gamble.
"We have worked with developers and sellers for years now, so we have much more muscle to negotiate as we deal with several of their properties simultaneously. We understand what their margins are and what leeway they have. That gives a reputable real estate agency quite an edge and over time we win trust with sellers and buyers alike.
"People might avoid real estate agents to save on the commissions, even though they are not high. But ultimately, one never gets the same level of service and protection that a real estate agency provides.
"We also market the properties quite extensively. A large share of our budget is spent on marketing, at no cost to the seller," he said.
Dhalia already commands a respectable share of the local market so if it wants to expand there are two options: Selling more properties in Malta to foreigners; and selling Maltese properties overseas.
He warned against unrealistic expectations about foreigners buying property here.
"There are some fancy ideas that there are huge amounts of people out there just waiting to pounce on Malta. I think that these are delusions of grandeur. Most sales to our overseas clients tend to be sales of 'emotion', sales to people who like Malta as a destination. For this reason, I do not think that you can market property in Malta without marketing the island itself. Tourism, investment promotion and the property market go hand in hand.
"Malta is so far not perceived as a property hot spot. The reality is that some foreigners believe property here is overpriced compared with our competitors. It might be perceived as an excellent retirement location or holiday home.
"Obviously we are very strong in the UK market. But there are other markets opening up and we intend to tap them through strategic alliances," he said.
The foreign investments pouring into Malta are also having an impact on potential growth in the property market.
"In this area, the demand for letting by expats working into Malta is leading to serious supply shortage. I believe that a smart investment strategy needs to incorporate provisions in this respect as well. It's useless attracting foreign investments to Malta without providing them with the right infrastructure: office spaces; rental apartments; etc. On this level, due to the high demand, our inventories have run low."
With regards to selling overseas property, Dhalia Investments has developed a premier resort in Bulgaria - the Balkan Jewel - as Dhalia's experience is that Maltese buyers prefer to deal with a Maltese organisation and set up.
"We supervised the project ourselves. We visit the project every other week and speak to the contractors, the banks and liaise with our property management company. Colliers, an international property management company of good repute, delivers excellent service and can guarantee a rental return on the investment.
"People are buying both as an investment and as a holiday home. And there is quite a growing market from firms which buy a property for corporate hospitality - for example, to send top managers and executives on holidays or teambuilding trips," he said.
Foreign reviews have regularly poured cold water over forecasts of sustained double digit growth, claiming that the market is slowing down but Mr Camilleri has no doubts about the country's potential.
"I would beg to differ with the growth prospects. Bulgaria has only been a member of the EU for a year and I have seen what happened in the former Central and Eastern European countries in terms of development. Only last week global property professionals Knight Frank estimated capital appreciation in Bulgaria for Q4 2007 to be 33.7 per cent making Bulgaria top the list of global property investment hot spots, followed by Singapore, Poland and Hong Kong," he said.
"If you see what is happening in the Eastern bloc, I would say that it is as yet unchartered terrain. These places have been overlooked for a long time. Look at Croatia, which is now experiencing bumper tourism growth levels. Bulgaria is the same. There is a long way to go but once the infrastructure catches up, imagine the potential. And imagine how much the country would get in EU funds to help it do so. It is an Objective 1 country...
"And Bulgaria is only our first project. There is also potential in other areas like Cyprus. There are many opportunities to tap."
Building on the past
Mr Camilleri has spent the past few years working as the executive head of the National Euro Changeover Committee, which has been heaped with praise by the European Commission.
But Malta only adopted the euro last January. Is he leaving the project too early? He admits that the changeover project is far from over.
"As you know, it is very hard to communicate about the euro. And this is certainly not something that should end with the actual adoption but something which should carry on to encompass the after-effects," he said.
"When I decided to accept the position at Dhalia, I offered my resignation as I wanted to ensure that there was no conflict of interest between the two jobs but government asked me to stay on as an executive consultant and I agreed."
Mr Camilleri stayed on at NECC until mid-March on a full-time basis and will continue to help NECC, whose price monitoring role continues until the end of June. He is also still working on a number of other projects, including consultancy work in Slovakia, which hopes to adopt the euro on January 1, 2009.
Malta's experience is being set up as best practice for other countries. By June, the first draft will be ready of a compendium which will bring together all NECC's communication strategies and campaigns, tools and audio-visual material. The copyright will be given to the European Commission so that it can be used by other euro-adopting countries.
Dhalia was not the only company head-hunting Mr Camilleri. He received a number of unexpected approaches - including one to head the Malta Tourism Authority as its chief executive officer.
"I cannot say that I did not consider it," he said.
"But for some time, I had wanted to move to the private sector. It was the next logical step after 10 years in the public sector. I felt Dhalia presented the best opportunity for my career progression."
Property is virgin territory (excuse the pun) for Mr Camilleri but he thinks that at the end of the day, once over the learning curve, it is not rocket science.
"The euro was much more of a leap into the unknown as I am neither an accountant nor an economist by profession. Thankfully, I was able to put my mind to it, listen and learn, and experience what other countries did. Now I can say with hindsight that it has been relatively successful.
"I hope that, with time, the same thing will happen in the property sector. Of course, one needs to understand the market and the people but at the end of the day, it is about positioning yourself and creating a service culture. It is also about being able to negotiate.
Whether you are negotiating on the euro, dealing with journalists, selling a property, or closing a development deal it is your negotiating and relationship building skills that matter."
The company's incoming chairman and chief executive officer, Alan Camilleri, said that the sale was motivated by the need to present properties at real, true and fair prices, which offer a good deal for buyers, especially first-time buyers.
"The properties we are offering at not aimed at institutional investors or developers but at entry-level buyers. We acquired sole agency agreements on all these properties, so they cannot be sold through other agencies," he said.
Dhalia might be able to negotiate commissions as it sees fit but how did it persuade vendors to lower their prices? It seems that Mr Camilleri made it amply clear to them that the writing is on the wall for certain segments of the property market.
"The market is challenging and growth has shifted. In our opinion anyone holding properties in this segment had better sell now. I would say that at the level of villas, houses of character and upmarket properties, prices will maintain their growth momentum. It is a simple case of demand and supply and this kind of property in Malta will remain at a premium.
"On the other hand apartments, maisonettes and small houses need to reflect their true value on the market," he warned, adding that overseas markets were also adjusting prices to more realistic levels.
"Prices in this segment may seem to have reached the plateau yet have resisted going down. This is why we believe we are currently experiencing an excellent buyers' market."
The implication is clear: Prices in some areas of the property market simply cannot keep going up and those who are sitting on their investments in the hope of future capital appreciation should think carefully about timing.
Mr Camilleri would like to see more vacant property come onto the market, believing that this would be a better option than building new units.
"We wish more property to come on the market - not simply to sell - but because there is a need to maximise our country's resources in this sector for economic and social wellbeing. Do we want more high-rise building with all their environmental, social and aesthetic implications? Do we want people to live in smaller apartments? Do we want to breathe life into urban and village cores?
"The trade off between development and demand is sometimes a bit skewed. There is supply which is dormant and there is demand in areas that are not matched by the supply side.
"I sincerely believe that we have a corporate responsibility towards the country and towards the economy. I would not be satisfied if we only focussed on increasing our sales turnover for its own sake. I would be more content if Dhalia were to be a contributor to economic growth," he said.
Indeed, Mr Camilleri has taken over the reins at a time of flux. In the past, investment and speculation was rife for the simple reason that there really was a pot of gold at the end of rainbow. Things have changed and the return on the investment is not as lucrative as it was 10 years ago for a number of reasons: overdevelopment; supply mismatch; less focus on aesthetics; sacrificing design standards for functionality; and exponential capitalisation.
The last point is one where Mr Camilleri believes that Dhalia has a role to play.
"One cannot consider development without considering the credit situation of most families and individuals today. For first-time buyers, prices might be steep and mortgages difficult to manage. We empathise with that. We strive to have one hand embracing the seller and one embracing the buyer. We have to protect the interests of both.
"I passed through it myself not that long ago. Buying a house is probably one of the biggest decisions that a couple will make in their lifetime and one that will condition their lifestyle for 25-35 years. With all the financial pressures of the wedding and so on, can we allow more stress to build up? This is why I keep encouraging my sales consultants to put themselves in their clients' shoes."
Another way that Dhalia can help is by working with the vendors to advise them on the real market value of a property.
"We are pushing prices down ourselves, working in tandem with a number of developers and sellers," he said.
This is quite a bold move in an industry that has long been blamed - not always justifiably - for driving up prices. Mr Camilleri said that one concrete example of the Dhalia/developer approach is Fort Chambray, where the developer realised the importance of achieving a balance between profitability and market value.
"The prices reflect current market prices and are not at all inflated. It's not in our interest to sell properties whose prices are inflated. A quick sale bearing an unfair price does not pay us, as corporate reputation is very important. A substantial part of our business includes repeat sales or references from satisfied customers - both buyers and sellers. At the end of the day, clients come back because we can give them a good service."
Indeed, Mr Camilleri is not limiting his vision to realistic prices but also to increased market share. Although there is no reliable data, the estimates are that only a quarter of property sales go through real estate agencies, which are facing increasing competition from direct sales from owners, free magazines distributed through households, sensara and even auctions.
One solution would be to opt for more self-regulation of the profession, dispelling any notion of shady operators; at present sales consultants do not need a warrant. Mr Camilleri is all in favour of it, noting that Dhalia was the first company to push for regulation.
He also stresses that an agency offers unparalleled experience and professionalism - and a huge database which makes the right match far more likely. Dhalia, for example, has a database of 10,000 properties, one of the largest on the island.
"There is a much better chance of finding the right property if you can spend a day or two showing people around than if you only have a handful of properties to offer them. The same applies to auctions. You might get a good deal and you might be lucky but an auction is an auction. At the end of the day it is a gamble.
"We have worked with developers and sellers for years now, so we have much more muscle to negotiate as we deal with several of their properties simultaneously. We understand what their margins are and what leeway they have. That gives a reputable real estate agency quite an edge and over time we win trust with sellers and buyers alike.
"People might avoid real estate agents to save on the commissions, even though they are not high. But ultimately, one never gets the same level of service and protection that a real estate agency provides.
"We also market the properties quite extensively. A large share of our budget is spent on marketing, at no cost to the seller," he said.
Dhalia already commands a respectable share of the local market so if it wants to expand there are two options: Selling more properties in Malta to foreigners; and selling Maltese properties overseas.
He warned against unrealistic expectations about foreigners buying property here.
"There are some fancy ideas that there are huge amounts of people out there just waiting to pounce on Malta. I think that these are delusions of grandeur. Most sales to our overseas clients tend to be sales of 'emotion', sales to people who like Malta as a destination. For this reason, I do not think that you can market property in Malta without marketing the island itself. Tourism, investment promotion and the property market go hand in hand.
"Malta is so far not perceived as a property hot spot. The reality is that some foreigners believe property here is overpriced compared with our competitors. It might be perceived as an excellent retirement location or holiday home.
"Obviously we are very strong in the UK market. But there are other markets opening up and we intend to tap them through strategic alliances," he said.
The foreign investments pouring into Malta are also having an impact on potential growth in the property market.
"In this area, the demand for letting by expats working into Malta is leading to serious supply shortage. I believe that a smart investment strategy needs to incorporate provisions in this respect as well. It's useless attracting foreign investments to Malta without providing them with the right infrastructure: office spaces; rental apartments; etc. On this level, due to the high demand, our inventories have run low."
With regards to selling overseas property, Dhalia Investments has developed a premier resort in Bulgaria - the Balkan Jewel - as Dhalia's experience is that Maltese buyers prefer to deal with a Maltese organisation and set up.
"We supervised the project ourselves. We visit the project every other week and speak to the contractors, the banks and liaise with our property management company. Colliers, an international property management company of good repute, delivers excellent service and can guarantee a rental return on the investment.
"People are buying both as an investment and as a holiday home. And there is quite a growing market from firms which buy a property for corporate hospitality - for example, to send top managers and executives on holidays or teambuilding trips," he said.
Foreign reviews have regularly poured cold water over forecasts of sustained double digit growth, claiming that the market is slowing down but Mr Camilleri has no doubts about the country's potential.
"I would beg to differ with the growth prospects. Bulgaria has only been a member of the EU for a year and I have seen what happened in the former Central and Eastern European countries in terms of development. Only last week global property professionals Knight Frank estimated capital appreciation in Bulgaria for Q4 2007 to be 33.7 per cent making Bulgaria top the list of global property investment hot spots, followed by Singapore, Poland and Hong Kong," he said.
"If you see what is happening in the Eastern bloc, I would say that it is as yet unchartered terrain. These places have been overlooked for a long time. Look at Croatia, which is now experiencing bumper tourism growth levels. Bulgaria is the same. There is a long way to go but once the infrastructure catches up, imagine the potential. And imagine how much the country would get in EU funds to help it do so. It is an Objective 1 country...
"And Bulgaria is only our first project. There is also potential in other areas like Cyprus. There are many opportunities to tap."
Building on the past
Mr Camilleri has spent the past few years working as the executive head of the National Euro Changeover Committee, which has been heaped with praise by the European Commission.
But Malta only adopted the euro last January. Is he leaving the project too early? He admits that the changeover project is far from over.
"As you know, it is very hard to communicate about the euro. And this is certainly not something that should end with the actual adoption but something which should carry on to encompass the after-effects," he said.
"When I decided to accept the position at Dhalia, I offered my resignation as I wanted to ensure that there was no conflict of interest between the two jobs but government asked me to stay on as an executive consultant and I agreed."
Mr Camilleri stayed on at NECC until mid-March on a full-time basis and will continue to help NECC, whose price monitoring role continues until the end of June. He is also still working on a number of other projects, including consultancy work in Slovakia, which hopes to adopt the euro on January 1, 2009.
Malta's experience is being set up as best practice for other countries. By June, the first draft will be ready of a compendium which will bring together all NECC's communication strategies and campaigns, tools and audio-visual material. The copyright will be given to the European Commission so that it can be used by other euro-adopting countries.
Dhalia was not the only company head-hunting Mr Camilleri. He received a number of unexpected approaches - including one to head the Malta Tourism Authority as its chief executive officer.
"I cannot say that I did not consider it," he said.
"But for some time, I had wanted to move to the private sector. It was the next logical step after 10 years in the public sector. I felt Dhalia presented the best opportunity for my career progression."
Property is virgin territory (excuse the pun) for Mr Camilleri but he thinks that at the end of the day, once over the learning curve, it is not rocket science.
"The euro was much more of a leap into the unknown as I am neither an accountant nor an economist by profession. Thankfully, I was able to put my mind to it, listen and learn, and experience what other countries did. Now I can say with hindsight that it has been relatively successful.
"I hope that, with time, the same thing will happen in the property sector. Of course, one needs to understand the market and the people but at the end of the day, it is about positioning yourself and creating a service culture. It is also about being able to negotiate.
Whether you are negotiating on the euro, dealing with journalists, selling a property, or closing a development deal it is your negotiating and relationship building skills that matter."