The property market is booming, as is evidently clear from the amount of cranes and real estate agent boards. In 2015, over €2 billion worth of property was sold, representing 15,557 contracts. This is an increase of 35 per cent in just two years.

But, taking a cue from the highrises planned for the future, is “up” the only way?

The directors at Belair, a leading real estate agency, are torn. They are clearly happy about the growth, but they do so with an element of concern that people will get carried away.

“This is a bullish market but we are concerned that people are forgetting the long-term nature of property as an investment and they are not considering that things could change – particularly when it comes to ‘buy to let’,” managing director Ian Casolani said.

“They are basing decisions on the best case scenario. When times are good, we tend to forget the bad times. But what if interest rates go up or if rental demand goes down? Investors must be sure that they would be able to sustain the mortgage because, if things changed and they were forced to sell, they might find themselves doing so at a time when many others are doing the same thing…”

Director David Aquilina urged people to do their homework.

“I know that there is a fierce debate at the moment about who should do valuations. But without going into the merit of who should do it, the important thing is that investors look at the real value of the property,” he said.

What they want to prevent is people buying property “at any cost”, to the extent that they are being irrational about the price they pay or about its location, which will have a huge impact on the return on their investment. And this is not only limited to property buyers but also to developers, particularly those who do not have decades of experience to temper their enthusiasm.

The property market in Malta has been through a boom before, and survived without the bubble bursting as it did in some other countries. After the boom prior to EU accession, the banks put the brakes on by introducing prudent lending. Now, it seems the market is being driven by perception, and the feel-good factor which comes from such buoyant sales. However, they believe that the situation is fairly stable at present.

According to the tax authorities, only 1,000 properties were sold to foreigners (through AIP) in the past four years. The difference is the average price: €400,000, compared to €128,000 overall

“Of course, there are threats to our taxation system but we are fortunate in that tax is only aspect of why so many foreign companies have come here, including the skills base, services and the lifestyle,” Mr Casolani said.

The ‘lifestyle’ aspect is one of the main things driving the future of the sector, both for offices as small companies set up to get a foothold on the island expand into operations, and for their expatriate staff.

This is one reason that Mr Aquilina is optimistic. A number of “exciting projects” are in the pipeline over the next few years, which offer just that: a lifestyle rather than just accommodation, with leisure and retail solutions as part of the complex.

“For years, the top end of the market has been about the limited availability at Portomaso, Fort Cambridge and Midi. A sector overheats when there is not as much supply as there is demand. So a broader choice – and one which includes more affordable units – is a great thing for all involved,” he said.

(from left): Belair directors Jean Camilleri, Ian Casolani and David Aquilina.

Naxxar director Jean Camilleri agrees that it is now all about lifestyle, which is on the drawing board for the projects proposed at the former Exchange, and Corinthia and the former Institute of Tourism Studies at St George’s Bay, to name but a few.

“All these are promising to offer the edge that is simply not available in many developments. It is a myth to say that there are numerous vacant properties which could solve the bottleneck in supply. Most of them are simply not what foreigners want,” he said.

Having said that, although foreigners are providing the new “demand”, they are by no means the only drivers of the sector, even though statistics are patchy. According to the tax authorities, only 1,000 properties were sold to foreigners (through AIP) in the past four years. The difference is the average price: €400,000, compared to €128,000 overall.

“The Maltese are always our base market and the impact of the first time buyers’ scheme on sales has been well documented,” Mr Casolani added.

They also traditionally tend not to be highly leveraged – meaning that they are able to “wait it out” if the outlook worsens, something that the Belair directors believe will help the sector if ‘irrational exuberance’ is allowed to overcome common sense and the natural nose for a bargain for which the Maltese are better known.

“Foreigners would react to a swing in the market or a change in personal situation far more quickly than a Maltese would. A Maltese would almost never sell at a loss, whereas a foreigner might,” he said.

Maltese might be the foundations of the market, but Mr Camilleri, however, feels that there is still a long way to go when it comes to selling to foreigners.

“We have been talking about branding Malta for so long. A lot has been done and many entities – including Belair – do road shows and take part in exhibitions. But it is a drop in the ocean. We are just one of hundreds.

“The new developments will make a difference as they are a niche market. People do not only want to buy. They also want to feel that a property is a good investment. As the prices increase, so do expectations.”