Overview
Malta being in the heart of the Mediterranean, has always been attractive for tourists and for foreign property buyers. The country used to enjoy fantastic countryside views and beaches, especially so in the island of Gozo. The country also enjoys a typical Mediterranean climate. In the pre-1990, the property prices were moderate, and investing in property in this island used to be a recommendable bargain. Usually good property value could be obtained at reasonable prices.
For the prospective investor
The prospective investor should today consider the following points when considering the purchase of property in Malta:
|
|
Property prices have gone excessively up: Massionettes : >
Lm 50,000 (EUR 115,000) With these kind of prices, one can easily find a
better value for money in other Mediterranean countries: buying
property in Malta is definitely not a bargain ! |
 |
Most roads in Malta are in a disastrous state - many have poor
foundations and surfacing is either non existant or of very poor
quality. |
|
|
A large part of the countryside has been destroyed; Malta has largely become concrete jungle, full of empty buildings (23% of the places are vacant). Yet the country is a continuous building site. Even more, most of the beaches are polluted or given away to private hotels. The landfill at Maghtab is hazardous. It will take 20 years to rehabilitate this landfill. The poisonous gases which come out of this landfill affect a large area of Malta. Particular places which are susceptible are: Bahar ic-Caghaq, Naxxar, Mosta, Qawra, St. Andrews, Bugibba, Ibragg and Pembroke. In the map shown below, the voilet color indicates the main affected areas of the island.
|
|
|
The property prices do not reflect in
anyway the supply-demand curve. The prices are highly artificial and
controlled by pure speculation. Potential sellers are expecting
their value for property to increase as Malta joins the EU. This is
a fallacy also in view of the fact that a special agreement has been
reached in controlling purchase of property by non-residents with
the EU. Property sales in Malta have been steadily going down in the
past 4 years. Nevertheless, the Maltese government has completely
failed at moderating the property prices. |
|
|
Surprisingly enough, the Maltese Planning Authority has recently issued new permits for building sites, even though there is evidently over-supply of property and little demand. This is destroying the remaining countryside which has already dwindled considerably. |
Property Sales
The figure below shows the total number of property sales that have taken place in Malta in the last few years:
The next figure shows the property sales that have taken place to non-Maltese residents:
The above figures speak by themselves: the property sales have been going down, no matter what estate agents try to make potential buyers believe: and the real reason is not inadequate supply but inadequate demand. The only reason why property prices have been going up in Malta is pure speculation - Many people are trying to make a quick fortune out of the property they own: some of them are lucky, but in the long run, the market forces will prevail and the whole situation will collapse.
An interesting comment in this regard can be found in Moody's Report on HSBC Malta regarding the use of property as loan securities. This report was taken from the Times of Malta and is available here.
There are also a specific class of people who call themselves "property consultants" - these are not architects but merely unprofessional agents who try to make a living out of buying and selling property ! No warrant is required in Malta to become a property consultant.
Future prospects
In view of the above points, the potential investor should pay extra care
when considering the purchase of property in Malta. Although the country
is politically stable, the property issue is very likely to explode in the
very near future. Property prices are excessively high in relation
to the true demand. Thus liquidity in property is extremely low and it has
become increasingly difficult to sell property in Malta. A considerable
number of Real Estate Agents had to close shop due to the much reduced
business (even though local estate agents tend to deny this and try to
keep the prices up in order to increase their 5% commission on property
value). Some real estate agents are do buy property which is at the
true market price for speculation purposes - the Maltese government does
nothing about this matter. It is highly likely that the prices of Maltese property has to
go down in the foreseeable future in order to reflect the true demand.
Once this trend starts to manifest itself, it will be extremely difficult
to make any profit from property investments in Malta.
