Intervention sought on property crisis

Property developers have called on the government to step in and help alleviate the “prolonged crisis” being faced by the property sector since this could have a “ripple effect” throughout the Maltese economy.

Malta Developers Association chairman Michael Falzon said he was concerned by the government’s “laissez faire” attitude when it came to managing the property industry.

He felt the government viewed development as a “milch cow” because of the revenue it generated but then had the wrong approach when it came to solving the problems it was facing.

Mr Falzon called on the government to carry out a professional economic and legal study to establish the stock of properties for sale or rent and to classify them according to market segment. He said the association could not afford to cover the survey’s expense, estimated at €33,000, but was prepared to finance part of it.

The past four years had been “unhappy ones” for developers and the coming five years would be even worse, he said, not only due to the slowdown in international economic conditions but also because of the uncertainty caused by the government’s attitude to the property market.

He noted that the share of the construction industry within GDP fell from to 3.1 per cent last year from 3.4 per cent in 2007. Moreover, the number of planning permits issued for dwellings fell to 4,444 last year from 11,343 in 2007.

At the same time the exposure of the financial sector (banks) to the construction industry had more than doubled since 2003, increasing to a staggering €1.5 billion last year.

He said the property sector had to be managed by the government in the same way it managed the tourism and manufacturing industry with entities like the Malta Tourism Authority and Malta Enterprise. Developers felt there should be one interlocutor with the government.

“The boom in the property market is over and the deflation has to be managed or else there will be trouble,” he said.

Turning to the Malta Environment and Planning Authority reform, Mr Falzon, an architect by profession, said its implementation was leading the entity into a “cul-de-sac”.

It was now more than obvious that this reform was tailor-made according to parameters suggested by some well-meaning but myopic NGOs and adopted by people who had no practical experience in the construction sector, he said.

This reform led to the addition of time-consuming, pointless bureaucracy shifting the waiting time for a permit to an initial stage when the permit application was technically not yet accepted and registered, he added.

In addition, Mepa was relying more on government subvention than before because, despite the steep increase in tariffs, income was lower because it was only receiving 80 development applications a month, down from 100 a week in recent years.

He said uncertainty was causing development to ground to a halt and risked the loss of thousands of jobs which depended on the industry.

The MDA had met Prime Minister Lawrence Gonzi and Finance Minister Tonio Fenech and proposals for the next Budget had been made. However, he preferred not to divulge their content.

Asked whether it was true that developers were finding it difficult to sell property, Mr Falzon said the higher and lower end properties were selling but the middle segment was very slow.