Advert

Property prices: who is really gaining? - Michael Stivala

Building contractors and developers were not properly represented until the Malta Developers Association (MDA) was set up in 2010 by Sandro Chetcuti, who encouraged former minister Michael Falzon to get on board.

Falzon was subsequently elected as the association’s first president.

Before the setting up of the MDA, deve-lopers had no collective voice and had to lobby on an individual basis. This created unfair competition and no basis for any long-term plans for the industry.

In the eight years of its existence, the MDA has managed to convince the government to amend regulations, update policies and improve tax structures.

This would not have been possible without the extraordinary skill set of Chetcuti, who spearheaded these negotiations. These changes contributed significantly to the economic growth that Malta has achieved in the past few years.

The MDA has since grown to represent many separate sections within the building industry: real estate agencies and consultants, quarry owners, road constructors, landlords, renewable energy suppliers and the Malta Furniture Manufacturers Organisation, which is an affiliate.

The culmination of this hard work is that the MDA has become the voice of the industry. The MDA has always promoted and will continue to promote responsible, sustainable development and real estate ownership, thus safeguarding real estate as an investment.

Maltese culture and government policies have encouraged a high percentage of home ownership: an estimated 86 per cent of the population (of whom 65 per cent are owners without a mortgage).

We have to make sure that home ownership continues to be the main investment of most Maltese families and will be one of the main components of their retirement investment plan.

Property prices have been at the centre of public debate in recent months.

Many do not realise what the real reason is for the increase in property prices. Most of the land purchased by developers is owned by families who have inherited it or has been owned for some time.

The major factor influencing property price increases is coming from developable land prices. These properties are normally out of date with current building regulations and in dire need of refurbishment.

Contrary to popular misconceptions and political intrigue, it is these home and landowners who are reaping the main benefits of the increased property prices and absolutely not the developers.

During the past few months, construction costs have increased by almost 20 per cent

Property developers have been paying higher prices to start their investment, the cost of labour has increased sharply, and environmental, health and safety regulations have all added to the costs. During the past few months, construction costs have increased by almost 20 per cent.

Developers are building a better standard of apartment than ever before.

The developer’s profit margin has remained almost the same as it was in the past – keeping in mind that a project from the time of purchase until its completion can take years. After deducting all the costs, a project will have a profit margin in line with many other industries, even though at much higher risk.

As the MDA, we have always emphasised that we cannot afford any government-induced costs since this will increase further the cost of property, which will have a negative impact on affordability.

The increase in the local population and the boom in the rental market to cater for the influx of year-round tourists and foreign workers has increased the demand for property over the past few years.

It has become a seller’s market.

Homeowners are benefiting from the property boom. As a matter of fact, often private homeowners opt to collaborate with a developer to demolish their home and build an apartment block to rent or sell, reinvesting the surplus value for the benefit of their offspring and becoming developers themselves.

Others sell their property to a real estate developer and liquidate their assets at the current high market value, which increases the homeowners’ and family’s financial situation and benefits them.

The public and the media should be aware of these direct and indirect benefits to Maltese families and refuse to be manipulated by certain conservative environmentalists and certain politicians seeking to appeal to their voters.

As the MDA, we must continue working hard to make sure our industry will have a stable future and we need to remain united under a strong, experienced leadership, as we are today, for many years to come.

Michael Stivala is secretary general of the Malta Developers Association.

Comments not loading? We recommend using Google Chrome or Mozilla Firefox with javascript turned on.
Comments powered by Disqus  
Advert
Advert