In recent years, Malta’s property market has seen an increase in interest and foreign investors flocking to Malta due to the picturesque towns, beaches resorts, and the mild climate. The market has shown no sign of slowing anytime soon, certain issues could impact its growth in the long run. We take an in-depth look at three important factors to be aware of in Malta’s real property market.
An Investment that is solid and backed by Tradition
The property market Malta has been the subject of headlines more frequently than usual during the last year. In good or bad ways, Maltese people have always been awed by property and aren’t expecting that to change anytime very soon. The past has shown that they Maltese tend to prefer being home owners when they have the resources. In the past, the homeownership percentage within the Maltese Islands has always been high , and is currently at 78.8 percent for 2022 (NSO).
To illustrate the robustness that the markets have, we need to review this year’s financial turmoil. This catastrophe caused the most severe interruption on market stability in the US market ever since Great Depression and resulted in an eight-year decline within the UK housing market and the decline of the Greek market. The global financial crisis had no impact in it’s impact on Maltese housing market which remained steady.
One of the main characteristics that is a constant feature of that of the Maltese property market that remains to this day is the lack of land available to develop. Prior to 2010, the amount of land that was available was never a lot. But, in the past decade, we’ve seen “the rise of high-rises and new developments are aiming for the skies. Many fear that this could cause the destruction of Maltese cityscape while others argue that, on Island, all option is upwards.
The high-rises in question are a new item available on the market. In the past, luxury properties was typically restricted to houses and villas that were distinctive, we cater to the growing demand for luxurious properties in the form of luxurious penthouses and lavish apartments with breathtaking sea views.
This Market Is Stable
In the last 10 years there has been an increase in the value of property investments. The increasing demand for property has had an impact on the market which resulted in more units being available in various price ranges. The interest in foreign investment and interest from abroad also increased during this period.
Now , the landscape is changing. The expansion in the market for property has been slowed, and prices, which have been steady, have reached a plateau as shown in the Construction Industry and Property Market Report for 2019, prepared by KPMG. We believe this is the result of the industry returning to normal levels of demand following an era of high performance.
It is simply the market reversing an unsustainable pattern of growth and is far from being a ‘bursting bubble or a ‘bursting bubble’ as some have recklessly claimed it to be. It is vital to realize that demand for real estate is still quite high with buyers turning to areas such as the Western Central and Southern localities in the event that their budget is not able to allow for homes within the Harbour region.
Its Rental Market The Rental Market Malta
Over the last five years, we’ve witnessed the rental market boom as never before thanks to the influx of foreigners choosing to move to Malta their home, as well as the efficient promotion of Malta as a destination for tourists. This has led to an unprecedented increase in the number of rentals for long and short-term rental.
We’ve seen the amazing results of a nationwide effort to attract investment into Malta. Certain industries, including technology, gaming and aviation, have attracted foreigners. The expats and their families make up an important portion of the rental market for long-term rentals. Since these foreigners could afford to pay higher prices for their housing and homes, many Maltese who depended upon renting homes were squeezed.
Tourism and The Rental Market
Tourism has been a major component in the Maltese economy over the last century, however, it has not reached the levels of its peak up to now. In fact, “tourism has been increasing in the last few years and has nearly tripled from 2009” (NSO 2022). We’re seeing a significant connection between property and tourism markets, which is a result of the rise from the share economy.
The growth in popularity brought by the AirBnB-style of private accommodation is another element in the rapid development that is the rental industry. The increasing quantity of tourists visiting Malta has led to a rise in need in short-term leases. Because it is fairly easy to create the tourist rental (hosts have to get an approval by Malta Tourism Authority Malta Tourism Authority), it has gained traction in Malta. Anyone who earns rental income from short-term rentals may choose to pay a lower flat tax of 15.
Regulations in the Real Estate Market
We are currently in an unprecedented situation. The government has begun regulating renting market. In January 2022 renting short-term for 6 months and long-term rentals that last longer than six months, and flatshares are governed under the Private Residential Leases Act. The major changes made by this law are that lease agreements need to be approved by the authority, lease terminations are governed by minimum notice requirements for the landlord and tenant in order to ensure compliance. Failure to do so is subject to a penalty.
A new plan will provide affordable rents to those earning low incomes by constructing the Fgura area with 118 apartments. Renters who were previously caught in the gap because they were not eligible for social housing, but not making enough money to pay the costs of renting. This is a significant step towards positive direction. However, we believe that 118 units won’t suffice. We are hoping that the venture succeeds and will justify additional investment in similar projects.
Predictions for the Future Of The Market In Malta
Because of the recent political events that we anticipate an increase in real estate market, one that is already forecasted by the KPMG market report. It’s unclear what will happen or how long. In the local economy, it is very strong however we are yet to find out how the international marketplace will be affected. But, we’re not deterred. As is evident by the current economic downturn, Malta can weather the storm.
We must attract high-end commercial and residential investments from abroad We must be proactive to penetrate and maintain the luxury market. This is how we will repair the damage by Product Malta. As a country we need to unite and put our energies into creating a brand new image and demonstrating what makes our beautiful island so unique.
CEBI, Level 3, Dar Ġuzeppi Zahra, University of Malta, L-Imsida MSD 2080, Malta