Over the years, Malta has become a hub for lucrative sectors such as gaming and finance, which has led to an influx of foreigners from all over the world to invest in Malta.
As a result, the demand for rental property has increased and left the island scarce of vacant properties available for this inrush of foreigners.
The island is experiencing this paucity of rental properties, but the majority of rental enquiries remain for coastal areas, stretching from Valletta to Swieqi due to the fact that foreigners usually work in these areas and would find difficulty commuting elsewhere.
This is why people should seize this opportunity to participate in the current rental market by investing in an ideal rental property.
In fact, 80 per cent of properties sold in these areas were sold as investments and not as residential homes. Many people recognise the rental income potential and are enquiring to invest their money in a property that can give them a significant return on their investment.
The rental market has boomed over the past eight months, with prices on rentals increasing by 25-30 per cent due to the low supply. In order to cater for the demand, real estate agencies need a constant supply of properties.
Most people looking for rental property will have an average budget of €600 to €1,000 per month, expecting a three-bedroom apartment with a view.
However, it must be kept in mind that prices are determined by a number of factors, including location, finishing and furnishing of the property. Prices can range between €450 to €4,000, but various aspects must be taken into consideration. With hindsight, regardless of the specifications, rental property prices are bound to continue increasing even though such an increase will not halt the demand for rental property.
While most enquiries for rental property are from foreigners, the demand to rent from locals has also increased and comprises around 20 per cent of enquiries. However, the reasons for renting by locals differ to those of foreigners, as most Maltese people prefer becoming homeowners. Usually, locals will move to a rented property as a temporary solution before moving to a permanent, purchased residence.
Most people looking for rental property will have an average budget of €600 to €1,000 per month
Although locals are not the primary clients for rental property, they are more likely to occupy those few unfurnished rental properties. The majority of people who relocate to Malta do not do so with all their belongings and therefore expect a property that is fully furnished.
In fact, approximately 90 per cent of rental properties are furnished in order to cater to foreign tenants. Furnishing rental property is always encouraged, as unfurnished dwellings remain vacant for a much longer period of time.
Due to the high demand for rental property, room sharing has also become increasingly popular. There are many owners opting to rent their five-bedroom property to separate tenants at around €350 per month, thereby generating more revenue than if they were to rent the entire property to a single tenant. This could be a better alternative, one that is capable of generating a profit increase of 25-30 per cent.
Ultimately, owning a second property or a portfolio of properties for rental is always a wise investment. People who believed in property from the start are benefitting from the significant rental returns, with rental prices predicted to continue to increase, as the inflow of foreigners remains unrelenting.
Moreover, these foreigners are making their residency permanent, thereby reducing the number of vacant properties available to the number of foreigners entering the country.
Regardless of the increase in rental property prices, the market for these properties will continue to flourish and it is our responsibility to offer investment opportunities and to keep prospective owners abreast of the current rental market to help them make informed decisions.
Rents have increased with a strong demand for a limited supply, which is why real estate agencies are urging people to invest now in order to cater for the long-term demand for rental property.
Benji Psaila is Gzira branch manager and letting specialist with Dhalia Real Estate Services.