In his latest reply to a PQ by Noel Farrugia (PL) with regards to property tax, the Hon Tonio Fenech, Minister of Finance, Economy and Investment, stated that it was not government policy “that foreigners are incentivised to purchase property in Malta.” The remark caused quite a stir in the Times of Malta readers’ comments below the report. But is this justified?
The current situation finds the Maltese islands with a surplus of 70,000 vacant properties. This figures when taking the National Satistics Office (NSO) 2005 Census report of 53,000 vacant properties, (of which, it might be pertinent to point out, only 15% were in need of significant repairs) and adding further permits for 40,000 units, authorized by the Malta Environment and Planning Authority (MEPA) since that date.
If one were to extrapolate further, a report commissioned by the construction industry and carried out by major auditors, concluded that if all the mega-projects presently applied for - Midi, Fort Cambridge, TownSquare, Metropolis, Pender Place, the Addolorata Tower, Xemxija Towers etc. - are finalised, the current vacant rate of 30% will climb to almost 50%.
Given these figures, the questions begging to be answered are:
1. Why indeed should Government incentivise foreign buyers when a market correction is certainly due given the staggering number of vacant properties on these islands?
2. Given that a number of people are looking at foreign property investors as a plug in the current gap between supply and demand, would it be healthy for such a large percentage of properties to be owned by speculators and investors who might dump their investments or even default overnight, as has in fact happened elsewhere in the Mediterranean last year?
3. With the value of property rentals already in negative territory when considered as a return on investment, what possible further use can there be for all this vacant property?
4. What are the revisions required to the above figures to factor in further land released for development by the recent rationalistion scheme?
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