Malta Property Blog

Letter to The Times of Malta, from Francis Raeymaekers, Mellieħa.
Date of publication: March 28, 2012

I refer to the editorial Mixed Messages From The Property Industry (March 21) and as a director of one of Malta’s few property search companies would like to make some observations.

The Maltese construction sector is in the doldrums for two significant reasons: lack of funds and greed. Greed as typified by substandard construction where corners are systematically cut in the quest for ever greater “paper” profits. Some glitzy developments built with no or little ventilation, window fixtures installed with foam guns, and so on and so forth. Greed, as typified by overdeveloping developments, constantly adding to the current stock by clever manipulation and re-application of planning permissions. All impact the resaleability of the developments, creating substantial overhang and despair for owners who made the error of buying in the first place. The word gets out and funding dries up. The…

The Housing Authority has received a strong response to the new scheme that entices people to offer their vacant properties up for rent to provide a home for the 535 people on the waiting list.

So far, owners of more than 500 properties have expressed interest in the scheme which opened on February 27 and closes on April 30.
The authority is, however, expecting a surge over the next few weeks when property owners start receiving compliance certificates from the planning authority confirming their properties were built according to permit.

A spokesman for the authority said that, through this scheme, owners of vacant houses or apartments in Malta and Gozo may lease their property to the authority at a withholding tax rate of five per cent instead of the usual 35 per cent rate.

The property will then be rented out by the authority to its clients for a minimum of 10 years.
Among the conditions is that the property has to be finished, has been empty for the last six months and has a month…

Source: The Times of Malta Editorial - March 21, 2012

It is increasingly difficult for ordinary people to understand what is really happening in the property development market. Economic statistics published recently indicate that “the construction sector’s contribution to the economy has been shrinking over the past four years”. On the other hand a leading estate agency “saw an overall increase of 12 per cent in sales of property and an equal increase in letting last year”. So what is really happening in the property market?

An analysis of this market has to start with an examination of the current supply and demand dynamics of this industry. There are various estimates of the amount of properties available for sale at present. Michael Falzon, president of the Malta Developers’ Association, confirms that “there are a lot of units for sale from oversupply that was built over the years”. Unofficial but reliable estimates put the figure of vacant properties at between 50,000 and 70,000 …

The number and value of properties purchased by foreigners increased significantly last year, reversing a three-year slump in the sector, according to figures obtained by The Times.

But, while Finance Minister Tonio Fenech welcomed the results as evidence that economic growth was attracting foreigners to purchase “property of quality”, realtors said the €186,000 average price of these properties was “nothing to write home about”.
According to the figures, foreigners bought 994 properties in Malta and Gozo in 2011 – a significant increase over 2010, when foreigners bought 886 such properties.
Most significantly, the €185 million total value represents a 20 per cent increase over the corresponding 2010 and 2009 figures, when properties sold to foreigners fetched approximately €146 million. While the number of foreign-bought properties is yet to reach 2008 levels, foreigners spent practically as much money on domestic real estate last year as they did in 2008.