When the financial crisis of 2007-2008 hit the global market, Malta’s economy remained relatively stable, as did its property market. This helped pave the way for the boom the market is experiencing today. The Maltese property market has gone from strength to strength over the past couple of years, with 2017 being one of its best performances, and with 2018 shaping up to be another bumper year.
2017 was an outstanding year, as sales increased considerably over the previous year. The number of people employed in real estate also went up – in line with the rate at which the property market is growing. While most new employees currently focus on sales, we have also seen a remarkable growth in the rental market.
Fuelled by an ever-increasing demand from both locals and foreigners – and particularly from investors, developers and iGaming executives – the letting, development and sales markets have flourished in the past five years, with most areas seeing encouraging price increases.
Indeed, with more units being built, and some of the island’s biggest property projects now in the pipeline, investment in property is still one of the most solid and attractive types of asset.
This rate of increase in the size of the market is due to a positive outlook within the country as a whole and within the market. First-time buyers were enticed by the government’s incentive to pay less duty upon the final contract and buy-to-rent investors could see a definite improvement in the quality of the property delivered by developers and in the number of enquiries for their property.
When the financial crisis hit the global market, Malta’s economy remained relatively stable, as did its property market
With numerous rehabilitation and construction projects taking place at the moment, certain areas which were previously not in high demand are also experiencing a boom. Whereas property in such areas shifted at a much slower pace up to seven years ago, this market has grown by around eight per cent per annum since then.
Returns on property across Malta are in the region of seven to nine per cent, while rent prices have continued to grow too, as supply is currently only just about meeting demand. These patterns are set to continue well throughout 2018 and for the foreseeable future as the Maltese Islands continue to attract international attention.
Although the market is incredibly strong, its growth rate may be making it harder for first-time buyers to get on the property ladder, mostly due to the fact that the market’s focus has shifted from first time-buyers to investors.
To address this issue, the government has introduced a number of schemes and initiatives in collaboration with local banks and these are actually helping buyers to secure a deposit, and also facilitating loan repayments through subsidies. On the other side of the channel, Gozo has also experienced an increase in sales, and also in the number of property transactions on the island from that of two years ago.
In fact, 2018 will definitely be a great time for locals looking to buy a summer home on Malta’s greener and more rural sister island, as the government has decreased the stamp duty charged on these properties from five to two per cent.
This applies to those purchasing residential property in Gozo by the end of 2018. The promise of sale agreement must be registered with the Inland Revenue Department by the end of the year for the offer to apply.
Projections for the next few years are encouraging. With the letting market being so strong, many people are choosing to invest their money in property. This in turn has boosted the property sales market; and while Malta’s size restricts development zones, it is safe to assume that property on the island is highly unlikely to ever outstrip demand. We also expect that the long-awaited regulation of real estate agencies and property consultants will profoundly change the nature of the property industry as a whole, ultimately resulting in a level playing field for all.
As things stand, Malta’s property market remains a safe investment for both local and foreign investors, with property prices still being affordable for most.
Moreover, as Malta continues to expand its business portfolio, with big names in the financial sector, iGaming companies, pharmaceuticals and aviation firms choosing to be based here, it is relatively safe to assume that the property market’s positive trend is not expected to slow down any time soon.
Alan Grima is chief executive officer of Dhalia.