Malta mar­ket shows no signs of slow­ing

The is­land’s strong econ­omy and state in­cen­tives are driv­ing de­mand for lim­ited space

The Star (St. Lucia) - Business Week - - FRONT PAGE - BY GEORGE HAM­MOND, FT PROP­ERTY COR­RE­SPON­DENT Pho­tographs: Getty Im­ages; Getty Im­ages/iS­tock­photo; Dream­stime; Getty Im­ages/Robert Harding

Malta, an ar­chi­pel­ago na­tion be­tween Si­cily and north Africa, has been a mag­net for sea­far­ing em­pires and mer­chants for mil­len­nia

Malta, an ar­chi­pel­ago na­tion be­tween Si­cily and north Africa, has been a mag­net for sea­far­ing em­pires and mer­chants for mil­len­nia. Phoeni­cians, Greeks, Ro­mans and most re­cently the Bri­tish have landed their fleets on the Mediter­ranean coun­try’s shores, us­ing Malta as a base for con­quest and com­merce.

Ar­rivals in the cap­i­tal Val­letta to­day are seek­ing the spoils of peace rather than war. Since the coun­try gained in­de­pen­dence from the UK in 1964, Malta’s econ­omy has grad­u­ally been re­shaped — and has flour­ished since the coun­try’s ac­ces­sion to the EU in 2004. Since join­ing the bloc, prop­erty prices have also been on a steep in­cline, un­der­pinned by a strong econ­omy and gov­ern­ment in­cen­tives. “Dur­ing the pe­riod of our ex­is­tence there has never been any one year where we did not reg­is­ter year-on-year growth,” says Kevin But­tigieg, chief ex­ec­u­tive of RE/MAX Malta, an es­tate agent es­tab­lished in 2004.

Be­tween 2000 and 2007, Malta’s house price in­dex rose al­most 80 per cent (53 per cent when ad­justed for in­fla­tion), ac­cord­ing to prop­erty data provider Global Prop­erty Guide. Fol­low­ing the fi­nan­cial cri­sis, prices were more volatile be­tween 2009 and 2013 but have been in­creas­ing steadily over the past five years.

Sup­ply is, and will prob­a­bly re­main, tight. Malta is the 10th-small­est na­tion by area in the world — be­hind city states such as Monaco and the Vatican City — cov­er­ing just 320 square kilo­me­tres. The coun­try is a fifth of the size of Lon­don, and Val­letta could com­fort­ably fit in­side the UK cap­i­tal’s Hyde Park. Op­por­tu­ni­ties to de­velop on new sites are there­fore lim­ited.

“Per­haps the most am­bi­tious [projects] now are the sky­scrapers be­ing de­vel­oped in the Saint Ju­lian’s or Sliema ar­eas, with com­ple­tion dates set for the end of 2020. Val­letta is also a very much sought-af­ter lo­ca­tion but prop­erty there is very lim­ited and prices have now reached his­tor­i­cal highs,” says But­tigieg, whose agency has a lengthy wait­ing list for prop­erty in the cap­i­tal.

In part be­cause of the lim­ited space for new-builds, “the gov­ern­ment has an­nounced a num­ber of in­cen­tives with the pur­pose of en­cour­ag­ing the restora­tion and re­use of sched­uled prop­erty and tax in­cen­tives for clients pur­chas­ing prop­er­ties in ur­ban con­ser­va­tion ar­eas” says Robert Spi­teri Paris, co-manag­ing di­rec­tor of Perry, an es­tate agent with three of­fices in Malta. Buy­ers in these ar­eas are only re­quired to pay half the stamp duty, nor­mally charged at 5 per cent of the pur­chase price.

The gov­ern­ment has also granted spe­cial des­ig­nated area sta­tus to sev­eral new de­vel­op­ments, mean­ing “both EU and nonEU na­tion­als can pur­chase prop­erty in Malta with the same ac­qui­si­tion rights as Mal­tese ci­ti­zens”, ac­cord­ing to Spi­teri Paris.

For­eign buy­ers are a grow­ing con­tin­gent, he adds, es­ti­mat­ing that ex­pats now make up 90 per cent of Perry’s clients look­ing for rental prop­erty and half of those look­ing to pur­chase.

In part that is thanks to gov­ern­ment in­cen­tives aimed at at­tract­ing for­eign buy­ers, most re­cently a cit­i­zen­shipby-in­vest­ment scheme called the

Malta In­di­vid­ual In­vestor Pro­gramme, aimed at non-EU buy­ers. The scheme has “gen­er­ated prop­erty sales and rentals, as well as an as­sured in­come to the coun­try” says But­tigieg. Rental yields in Malta, which at­tracts tourists through­out the year, are around 4.4 per cent gross, ac­cord­ing to Global Prop­erty Guide.

Fol­low­ing five con­sec­u­tive years of record sales vol­umes, lo­cal es­tate agents are op­ti­mistic. But­tigieg de­scribes Malta as “a sellers’ mar­ket” and Spi­teri Paris an­tic­i­pates “con­tin­u­ing de­mand for qual­ity prop­erty in the year ahead”. Space seems to be the only con­straint. Spi­teri Paris iden­ti­fies a lack of avail­able stock as a chal­lenge. At the last cen­sus, in 2011, the pop­u­la­tion den­sity in Malta was 1,320 peo­ple per square kilo­me­tre, against an EU av­er­age of 116.6. Those seek­ing an es­cape to soli­tude, there­fore, might be ad­vised to look else­where.

Saint Ju­lian’s, look­ing to­wards Sliema, both pop­u­lar ar­eas with de­vel­op­ers

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