Three year slump in Malta property sales, reversed - More foreigners buying property

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.

The statistical upswing comes as welcome news to the government, which has repeatedly insisted that property sales to foreigners were not strongly correlated to permanent residency status.
Malta’s permanent residency scheme, which offers foreigners significant taxation benefits, was suspended in late 2010 and replaced in the latter half of 2011 with a new system aimed at attracting high net worth individuals to Malta.
A Foreign Ministry spokesman said the latest figures provided evidence that the permanent residency scheme “was not the major contributor to property sales to Malta”. Of the 15,000 foreigners living in Malta, only 861 were permanent residency scheme holders, he added.
Real estate insiders welcomed the rise in property sales but laced their optimism with words of caution. “It’s undoubtedly good news,” said one realtor who asked not to be named, “but the new high-net-worth scheme has undoubtedly damaged business.”

Remax Malta general manager Josie Theuma spoke along similar lines. “We’re finding it harder to convince foreigners that ordinary residence might work for them. Many were interested in buying property here for fiscal reasons. Now, they’re choosing to look elsewhere in the EU, where permanent residency is less financially demanding.”
Property rentals to foreigners were also in the doldrums, said Let’s Move Malta CEO Simon Hansford.
“There’s been little consistency in the market. We’re seeing more rentals in the lower budget end and activity within the iGaming sector has slowed down somewhat.”
Mr Theuma reserved judgement on the new permanent residency scheme. “Up to now, the results have not yet arrived. My fear is we may have shot ourselves in the foot because we had a bit of a golden goose in the previous scheme. Time will tell.”

Article published on The Times of Malta, Wednesday March 14, 2012

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