Lack of movement in the property market is restricted mainly to low-quality newly built flats in the €116,000 to €163,000 price bracket, said spokesmen for three of Malta's leading property development companies, Midi plc, Portomaso and Blue Harbour. "Our experience certainly indicates that the luxury end remains largely unaffected by fluctuations and pressures in other sectors of the property market," James Vassallo, senior sales and marketing manager at Midi plc, said.
Maurice Tabone, sales and marketing director at the Portomaso sales office, agreed, saying that his office had seen an increase in interest over the last few days, and that the resale price of flats at Portomaso goes up with every sale made. "I can say with confidence that we have felt no negative effect at all," Mr Tabone said. "Sales have stayed buoyant because this is the kind of property that people actually want to live in. And over and above that, we are now seeing interest surge, because those who have lost trust in financial institutions overseas are seeking to put their money into property again, and they're choosing carefully."
Dieter Fenech, whose Blue Harbour company is developing luxury flats designed by architect Ray Demicoli, on the old waterfront at Ta' Xbiex, said that the crisis in the financial services sector in many parts of Europe and the United States has prompted Maltese investors to bring their money back home, causing a flurry of interest at the high end of the market which only adds to the already existing buoyancy. "People in Malta are now far more sophisticated than they were just a few years ago, and higher expectations mean that developments of inferior quality in locations that are not that great will take longer to sell," Mr Fenech said. "Meanwhile, the price is forced down by a combination of decreased demand and increased supply. But property which ticks all the right boxes continues to attract a strong level of interest which translates into sales. Some developers are having trouble coming to terms with this new reality because not so long ago they were selling anything they put on the market. The fact that some people are having trouble selling flats which fall short of current buyer requirements does not mean that the property market is in trouble. It just means that some developers are not tailoring their product to what people want."
Mr Vassallo agreed that the Maltese property market is being mistakenly considered as an integral whole rather than on a sector by sector basis which is how it should be done for the purpose of analysis. "People are discussing this matter on a one-size-fits-all basis," Mr Vassallo said, "even though it is clear that different sectors are experiencing different feedback from the market."
Of the Tigné Point apartments most recently released onto the market - those called T10 - 36 were sold in a matter of weeks. "We're talking here of sales worth €27 million in just a few weeks," Mr Vassallo said. "That's hardly indicative of a weak market. Most of them were bought by Maltese people, and the most expensive sold at €5,000 per square metre. This shows a staggering level of affluence in the Maltese economy. Many of the larger apartments and penthouses have been bought by non-Maltese who are relocating to Malta their families and, in some cases, their businesses."
Mr Vassallo said that market expectations have risen as development standards have improved. "More buyers are now after comfort and convenience, and so they are looking at lifestyle developments with the full list of amenities and estate-management systems. Some developers have raised their game to cater for this demand, but many others have not - though some of them have put up their prices regardless. People talk about over-supply but there is certainly no oversupply at this end of the market.
Portomaso is all but sold out and of the 260 Tigné Point apartments that have been released onto the market so far, 233 have been sold and the other 27 have been up for sale for just a few weeks, meeting a high level of interest. We put an average of just 40 apartments a year onto the market, and the remaining 160 in this project are mainly sea-front apartments that will be released over a full four years."
Mr Tabone, whose office sells the new development at Tas-Sellum in Mellieħa besides Portomaso, concurs. "At the high end of the market there is more interest and not less," he said. "We haven't got much left to sell at Portomaso but the resale prices are just mind-boggling. We have had to stop advertising our Tas-Sellum development because sales have exceeded projections already. We even had the Inland Revenue onto us because a flat that we sold there on plan in 2006 resold when finished last April for €200,000 more than the original price, and the IR needed convincing that it was a genuine price increase and that nobody was hiding any part of the original sales price." Mr Tabone said that his office is even receiving enquiries about a development in Marsascala which will not be launched for some months. "And yet demand is strong already," he said.
Mr Tabone said that a lot of the demand for luxury apartments in good locations was coming from people who were tired of living in large houses, but after living in good buildings, they were not going to compromise with their new acquisition. "People are prepared to pay large sums if what they are getting is much better than the norm," he explained. "I wouldn't say that it is lack of liquidity that is causing problems in some sectors of the property market, but lack of quality.
That's why the problems are clearly and distinctly in that sector of the market covered by the €116,000 to €163,000 price bracket. People have different standards now and they're not prepared to spend good money on just anything."
Maurice Tabone, sales and marketing director at the Portomaso sales office, agreed, saying that his office had seen an increase in interest over the last few days, and that the resale price of flats at Portomaso goes up with every sale made. "I can say with confidence that we have felt no negative effect at all," Mr Tabone said. "Sales have stayed buoyant because this is the kind of property that people actually want to live in. And over and above that, we are now seeing interest surge, because those who have lost trust in financial institutions overseas are seeking to put their money into property again, and they're choosing carefully."
Dieter Fenech, whose Blue Harbour company is developing luxury flats designed by architect Ray Demicoli, on the old waterfront at Ta' Xbiex, said that the crisis in the financial services sector in many parts of Europe and the United States has prompted Maltese investors to bring their money back home, causing a flurry of interest at the high end of the market which only adds to the already existing buoyancy. "People in Malta are now far more sophisticated than they were just a few years ago, and higher expectations mean that developments of inferior quality in locations that are not that great will take longer to sell," Mr Fenech said. "Meanwhile, the price is forced down by a combination of decreased demand and increased supply. But property which ticks all the right boxes continues to attract a strong level of interest which translates into sales. Some developers are having trouble coming to terms with this new reality because not so long ago they were selling anything they put on the market. The fact that some people are having trouble selling flats which fall short of current buyer requirements does not mean that the property market is in trouble. It just means that some developers are not tailoring their product to what people want."
Mr Vassallo agreed that the Maltese property market is being mistakenly considered as an integral whole rather than on a sector by sector basis which is how it should be done for the purpose of analysis. "People are discussing this matter on a one-size-fits-all basis," Mr Vassallo said, "even though it is clear that different sectors are experiencing different feedback from the market."
Of the Tigné Point apartments most recently released onto the market - those called T10 - 36 were sold in a matter of weeks. "We're talking here of sales worth €27 million in just a few weeks," Mr Vassallo said. "That's hardly indicative of a weak market. Most of them were bought by Maltese people, and the most expensive sold at €5,000 per square metre. This shows a staggering level of affluence in the Maltese economy. Many of the larger apartments and penthouses have been bought by non-Maltese who are relocating to Malta their families and, in some cases, their businesses."
Mr Vassallo said that market expectations have risen as development standards have improved. "More buyers are now after comfort and convenience, and so they are looking at lifestyle developments with the full list of amenities and estate-management systems. Some developers have raised their game to cater for this demand, but many others have not - though some of them have put up their prices regardless. People talk about over-supply but there is certainly no oversupply at this end of the market.
Portomaso is all but sold out and of the 260 Tigné Point apartments that have been released onto the market so far, 233 have been sold and the other 27 have been up for sale for just a few weeks, meeting a high level of interest. We put an average of just 40 apartments a year onto the market, and the remaining 160 in this project are mainly sea-front apartments that will be released over a full four years."
Mr Tabone, whose office sells the new development at Tas-Sellum in Mellieħa besides Portomaso, concurs. "At the high end of the market there is more interest and not less," he said. "We haven't got much left to sell at Portomaso but the resale prices are just mind-boggling. We have had to stop advertising our Tas-Sellum development because sales have exceeded projections already. We even had the Inland Revenue onto us because a flat that we sold there on plan in 2006 resold when finished last April for €200,000 more than the original price, and the IR needed convincing that it was a genuine price increase and that nobody was hiding any part of the original sales price." Mr Tabone said that his office is even receiving enquiries about a development in Marsascala which will not be launched for some months. "And yet demand is strong already," he said.
Mr Tabone said that a lot of the demand for luxury apartments in good locations was coming from people who were tired of living in large houses, but after living in good buildings, they were not going to compromise with their new acquisition. "People are prepared to pay large sums if what they are getting is much better than the norm," he explained. "I wouldn't say that it is lack of liquidity that is causing problems in some sectors of the property market, but lack of quality.
That's why the problems are clearly and distinctly in that sector of the market covered by the €116,000 to €163,000 price bracket. People have different standards now and they're not prepared to spend good money on just anything."