Close to southern Italy and North Africa, yet boasting a sophisticated European property scene that is a magnet for top designers and architects, Malta scored highly in the recent International Living Quality of Life Index, with freedom and security, climate and the environment all being awarded between 85 and 100 percent. Though restrictions are placed on how many properties foreigners can buy on Malta, there are opportunities to buy, and rent out, multiple properties in special investment areas – Specially Designated Areas (SDAs). Tight regulations govern the conditions of purchase and rentals in residential areas outside the SDAs.
Mark Bodega, Director at HiFX.com, the UK’s leading independent online foreign currency exchange brokers, explains why he thinks there is still reason to exercise caution. He said: “It was apartments that led the house price crash. Malta’s EU explosive housing boom in 2003 to 2004 saw tremendous house price increases and sharp rises in construction activity, but with waning demand and oversupply, the housing boom is now officially over.”
However, with such a small landmass, the future for house prices looks promising. Even if the pace of capital appreciation has slowed, developers cannot simply keep retreating further inland as they have done in Spain.
Jeffrey Buttigieg, Regional Director for Re/Max Malta, comments that: “Developers of high-end projects such as Portomaso and Tigne Point have had encouraging results throughout 2009, and are looking forward to a prosperous 2010. Those struggling are the developers of smaller, low-budget properties, though first-time buyers who were struggling to purchase a property previously are benefitting from the lower property prices and low interest rates.”
For those looking to invest in a holiday home or rental property, he recommends that the focus for a property search should be in an area where resales are easy to achieve, in one of the Specially Designated Areas such as those mentioned above and also Ta Sellum, Fort Chambray on Gozo, and Pender Gardens.
The rental market in Malta is predominantly based in the fashionable St Julian’s and Sliema area, with a good selection of seafront and inland apartments close by. This is the main centre of employment and entertainment on the island. “If you’re looking for a luxury villa, you can widen your search to Madiena and Ibrag,” says Jeffrey “but certainly, the number of buyers venturing into the niche market, such as 300-year-old farmhouses, has fallen and been phased out.” Those in search of the true peace and tranquility offered by a more remote property are likely to opt for the island of Gozo.
But for the majority of overseas buyers, attracted to the fiscal advantages of buying in an SDA, the Tigne Point development, just 15 minutes from the international airport, is well worth considering. Tigne Point is also just a short boat ride across the harbour from the island’s beautiful baroque capital city, Valletta, a World Heritage Site.
Vanessa Lupi, from the Marketing Department at Frank Salt Real Estate on Malta, says: “Though the island has never attracted hordes of buyers, the last couple of years have seen constant growth in the local market. Those who have invested here in the past have seen a significant return on their investment.”
Vanessa continues: “Another contribution to the demand for property was the introduction of low-cost flights to and from Malta, making it easier for people to visit. The number of people buying for investment purposes is now relatively high, mainly due to a healthy rental return of four to five per cent, as well as capital appreciation adding to the value of the property.”
Malta has much to offer UK expats. The competition might traditionally have been Spain, Portugal, Turkey, Cyprus, Greece and the South of France, in terms of weather and accessibility but being a small island, travel and distance between locations is easy. “Everywhere is a couple of minutes’ drive from place to place,” says Vanessa, and, although Malta shares beautiful year-round weather, sun and sea with these other destinations, local agents agree that Malta has a number of unique selling points for British buyers including: driving on the left, most Maltese locals speaking fluent English, excellent national and private hospital and medical services and a reciprocal health agreement between the UK and Malta. The islanders also boast that they are friendly and hospitable people, and that integration with local communities is very easy. The island has low taxation, no rates or council taxes, a low cost of living, excellent schooling in English speaking schools and the University, and daily flights to all major European and North African airports. The expansion of budget flight routes has also created a competition in prices, which has a knock-on effect for expats, families visiting and holiday makers.
It is perhaps Malta’s longstanding tradition of buying property rather than renting that, according to Jeffrey Buttigieg, may have contributed to the increase in property prices over the years and that has continued to keep the industry solid. He says, “Our buying procedure is simple and straightforward, plus it protects both the vendor and the buyer alike. There is no ‘gazumping’ or ‘gazundering’ or outbidding in Malta.”
Over the coming years, with land becoming more expensive, properties in Malta may become smaller and more open-plan, in order to create more space. More condominiums may prove popular with developers and it is anticipated that new-builds in SDA will attract increasing numbers of English, German, South African and Northern European buyers. Retirees and families will remain interested in character properties, of course, but agents anticipate increasing interest from investors, attracted by the luxury of life and limits on over-expansion offered by Malta.