Be­friend the Trend:

Finweek English Edition - - INSIGHT - IN­VEST­ING IN OFF­SHORE Blair Burmeis­ter

res­i­den­tial prop­erty is still an at­trac­tive op­tion for South Africans. Mau­ri­tius and the Sey­chelles re­main firm favourites – given that the in­vest­ment comes with res­i­dency qual­i­fi­ca­tion – but fol­low­ing the re­cent in­tro­duc­tion of a global res­i­dency pro­gramme in Malta, the coun­try and its sur­round­ing is­lands are emerg­ing as hot spots, of­fer­ing sev­eral ad­di­tional ben­e­fits for in­vestors.

The first week of July saw the advent of the Malta Global Res­i­dency Pro­gramme, which of­fers in­cen­tives for for­eign na­tion­als look­ing for an EU res­i­dence per­mit. But life­style ad­van­tages, tax-friendly reg­u­la­tions and dual res­i­dency aside, tap­ping into the coun­try’s prop­erty mar­ket presents a pros­per­ous op­por­tu­nity for cap­i­tal growth and rental earn­ings.

Joseph Theuma, gen­eral man­ager of RE/MAX Malta, says that the prop­erty mar­ket in Malta has seen a strong track record of near con­stant cap­i­tal ap­pre­ci­a­tion.

“The de­mand re­mains con­sis­tent and un­der­pin­ning mar­ket prices is de­mand from lo­cals,” he says. “This means that the mar­ket runs lit­tle risk of any volatil­ity brought about by sud­den disen­chant­ment from ex­pats liv­ing in the coun­try.”

Silema and St Julians are the most sought af­ter ar­eas – lo­cated on the most prom­i­nent sea fronts. Theuma says: “Madilena is ar­guably the best lo­ca­tion the is­land can of­fer for lux­ury properties.” The sis­ter is­land of Gozo, he says, is the best-guarded se­cret of the Mal­tese them­selves, a large num­ber of whom own a prop­erty there as a sec­ond home.

In or­der to be granted res­i­dency, ap­pli­cants must ei­ther pur­chase a prop­erty or be party to a rental agree­ment. Both op­tions are sub­ject to a min­i­mum ex­pen­di­ture pa­ram­e­ter. In the case of a rental, the price is fixed at R131 261 per an­num for properties lo­cated in Malta and R119 639 for those lo­cated in Gozo and the south of Malta. For pur­chases, the price floor is set at R3.7m in Malta and R3m in Gozo and the south.

To tap into the Mal­tese rental mar­ket, for­eign in­vestors must pur­chase a prop­erty in a spe­cial des­ig­nated area. Th­ese types of de­vel­op­ments ex­ist around the is­lands and are typ­i­cally up­mar­ket, if not lux­u­ri­ous properties. Theuma says that land­lords can ex­pect a rental re­turn of be­tween 4% and 6.5%.

“How­ever, the main cause of at­trac­tion for in­vest­ing in Mal­tese prop­erty would be cap­i­tal ap­pre­ci­a­tion. If one put aside the slight eas­ing in 2010/11, the prices of our properties have al­ways ex­pe­ri­enced an up­ward shift with in­creases rang­ing from 3% to 4% dur­ing slow­downs, to highs of 10% and over.”

Once res­i­dency is granted, for­eign na­tion­als must spend at least six months of the year in Malta. For in­di­vid­u­als trav­el­ling to and from the EU reg­u­larly, dual-res­i­dency is a ma­jor draw card, elim­i­nat­ing the process of ap­ply­ing for a Schen­gen visa each time.

From a life­style point of view, Malta af­fords a crime-free en­vi­ron­ment, pleas­ant cli­mate and a wealth of his­tory and cul­ture pack­aged within the Mal­tese ar­chi­pel­ago.

The coun­try’s track record puts prop­erty in­vest­ment as one of the most solid and as­sured means of in­vest­ment. Malta and Gozo now boast a size­able com­mu­nity of SA ex­pats, some of which have fully in­te­grated them­selves into Mal­tese so­ci­ety and Mediter­ranean life.

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