Over 80 per cent of the apartments in the Mercury House development in Paceville, designed by world-renowned architectural firm Zaha Hadid, have already been snapped up, according to the leading agent for the project, Re/Max.

Managing director Kevin Buttigieg said that it was standard procedure for developers to test the market for their project prior to its launch – even before the permit was issued. The response was significant, with most being taken by foreign investors, he said, who got a hefty discount for the perceived risk in a project that was still ‘on plan’.

Asked what would happen if something went wrong and the project did not get off the ground – as happened with Metropolis, for example – he said this was why investors had bought at a “super-reduced rate”.

“But let us put things in perspective. For a start, KPMG is handling the project – who are as solid as you can get – and the developers have financing in place if they need. But why use financing if you don’t need to?” he said.

Let us remember that the project will employ between 1,500 and 2,000 people once built: it will have the largest Hard Rock hotel and casino in Europe, residential units and a mall which will be twice as big as Tigné Point

“[Developer] Joe Portelli held back the rest of the units as it is in his interest to sell them for a higher price later on. Those who bought at Mercury House will be able to double their money once it is ready.”

Re/Max is also handling the controversial City Centre (the former ITS site) and Mercury House, which has also been making what he calls “reservation agreements”. Mr Buttigieg was confident that the project would get off the ground, given the fact that the land had been put up for sale by the government, rather than the private sector.

I am sure that [db Group’s] Silvio Debono would not have signed the purchase contract unless he had a verbal confirmation that the permits were okay

“I am sure that [db Group’s] Silvio Debono would not have signed the purchase contract unless he had a verbal confirmation that the permits were okay.

“I am not going into the merits of how much he did or should have paid – but let us remember that the project will employ between 1,500 and 2,000 people once built: it will have the largest Hard Rock hotel and casino in Europe, residential units and a mall which will be twice as big as Tigné Point.

“It is a win/win for everybody. And it will upgrade the area – which is currently a dump. It will turn it into a six-star area, which St George’s Bay deserves.”

Mr Buttigieg said that the ITS project would also have a positive spill-over effect on other projects, such as the Corinthia development, and the Villa Rosa development.

“This is why the Villa Rosa developer will only lease out his units and not sell them – as he knows they will appreciate,” he said.

“We have solid developers and solid investors and all these projects are going to go ahead. Now all we need is to get through the red tape.”

Mr Buttigieg said that demand was booming – and has figures to prove it. Re/Max has seen 13 years of consecutive growth, with 2016 showing a 38 per cent increase over the previous year on sales value, and 32 per cent increase in terms of units sold. It is planning to increase its 400 agents to 500 by the end of 2017 – and its performance recently won it the coveted Re/Max Region of the Year award for the third consecutive year.

“The award reflects the commission earned but also four other elements: the input, retention, inter-region assistance, and the ethos of the local operation,” he said, adding that over these last two years, he had spoken at four conferences with another three coming up.

Artist’s impression of Mercury House development in Paceville.Artist’s impression of Mercury House development in Paceville.

“There is huge interest in Malta. There is no doubt about it, Malta is a great place to live and those who come here also benefit from our tax system. Only 10-12 per cent of the foreigners who bought citizenship actually buy a property – the majority opt to rent – but after six months of coming and going from Malta, they are now finding that they want to base themselves here. And those who do buy go for more than one unit as they see what a good investment it is, especially given prevailing low – or negative – interest rates.”

He said that although prices have gone up by six-seven per cent per year, driving yield down, they were still much more competitive than the rest of Europe.

“I could have bought a two-bedroom apartment in Sliema and St Julian’s for €250,000 three years ago, now I would have to pay €350,000. But rents have not gone up by the same margin – so while the sale price went up by 30 per cent, the rent would only have gone up by say 10 per cent. But that still gives a return of anything from four to seven per cent.”

He is very keen on high rises – which he prefers to call condominium complexes – as these are not just a place to live but an entire lifestyle, something sought after by high net worth individuals.

“They have a gym, spa and supermarket one lift ride away, coffee shops and restaurants outside, and a hotel connected to the apartments. Unfortunately at the moment, there is huge demand but we do not have enough properties to show – and the new supply will not come onto the market soon enough,” he said, adding that demand was coming from more and more sectors: not only gaming but also from oil companies, aviation companies, the new hospital operator, new services companies and others.

“There are all sorts of sectors coming to Malta that people never hear about,” he said, adding that Re/Max was also looking for some business from Brexit.

“We are in talks with major players which would definitely give a huge boost to the economy, both in terms of rent but also in terms of employment. Everybody wins when these big companies come.”

Re/Max is also looking further afield, with many non-EU nationals – some from as far afield as China – wanting a base in Malta to be able to qualify for a new scheme – the so-called Golden Visa – which gives them residence and the right to travel within the Schengen area.

“We are marketing this heavily in Dubai, Montenegro, the US, Switzerland and Turkey. The more instability there is, the more people seek alternatives for themselves and their families if the situation in their home deteriorates or if they want to be able to travel within the EU with more ease,” he said.

Of course, residential property is just one part of the equation as all these new sectors and activities also require office space. Mr Buttigieg believes that Mrieħel would be the perfect location for an enterprise zone. He is quite baffled that people would prefer “living next to a warehouse rather than to a new office block.

“There is only so much that you can build in Sliema and St Julian’s and the rental price tag is already high. So bigger companies which need loads of space would consider Mrieħel as it will become a proper business zone with supermarkets, pharmacies, restaurants, and a lot of activity.”

And what about the commute, especially for many of the foreigners who don’t have cars?

The upfront payment for the expropriation would be paid by the taxpayers but the government would make buckets of money from the stamp duty on all these properties that will be built

“They don’t mind having cars if there is adequate parking – which there will be in Mrieħel. And this is why condominiums will be popular as they will have parking spaces. Malta has changed. Nowadays the best five restaurants are no longer in Sliema or St Julian’s. They are all over the place,” he said.

Mr Buttigieg was also crossing his fingers that the Paceville master plan would not be abandoned completely – even though he agrees that it needs to be adjusted and fair to everyone. He acknowledged the controversy over the expropriation of property in order to clear the way for roads through the heart of it.

“You have to remember that the upfront payment for the expropriation would be paid by the taxpayers but the government would make buckets of money from the stamp duty on all these properties that will be built.

“If it really needs to be done to make the projects interconnect and look good, those who suffer  will be recompensed with other property on a higher floor, for example, or by getting a higher percentage allowed of built up land,” he said.

This article first appeared in The Business Observer, published with Times of Malta

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.