A Deep Dive into Malta’s Real Estate Market

A Deep Dive into Malta’s Real Estate Market

Over the past few years, Malta performed an amazing growth in its real estate sector. According to the Knight Frank Global House Price Index, in the second quarter of 2018, Malta’s real estate prices increased (16.9% on a 12-months basis, over the year before) by more than anywhere else in the world. 

         However, the popularity of the island state’s real estate sector, raise questions more than it provides the investors with answers:

  1.     Are some types of property more popular than others?
  2.     Are renters feeling the squeeze as much as buyers?
  3.     Should I rent or buy in Malta?
  4.     Is a second property a wise investment?
  5.     How long should I plan to stay in Malta before I can sell my house?
  6.     Can I find a deal by avoiding the most popular towns and neighbourhoods?

According to the same index of Knight Frank, Malta came in third at the end of 2016 and a respectable 20th at the end of 2015. This index clearly shows the positive consistent trend of Malta’s real estate market growth. Therefore, the index proves that Malta is one of the best places to invest in throughout Europe.

How did the Real Estate of Malta get so Popular?

It should be noted beforehand that the property price index for Malta is based on asking prices, because the final prices after the transactions in Malta are not published publicly.

In the recent years, anywhere in Malta that is attractive for foreign investors in the financial services industry has seen outsized growth. Among these, characteristics of the properties that are most popular include:

  •         Furnished apartments in newly built buildings.
  •         Valletta suburbs like Sliema, St. Julians and Gzira have seen real estate prices climb the most.
  •         Complexes that are in special designated areas are more accessible to foreigners who want to buy a home.

The top end of the luxury market has also done very well over the past years in Malta. Presumably, this segment is supported by Maltese nationals and foreigners cashing in real estate gains elsewhere. As Malta’s real estate market continues to climb, renting becomes more attractive and more tenants stay in the rental market for longer.

That demand has pushed residential rental yields above 5% for the first time in several years. That is because the Maltese government, in many ways, created an open, pro-immigration atmosphere through political regulations. There are, of course, still some restraints on foreign investors who are looking into ways to enter Maltese real estate market. Especially non-EU/EEA citizens (except Switzerland) face quite an amount of restrictions. For instance, foreigners that are interested in Maltese property either take advantage of the country’s Golden Visa program or for some other reason are likely to buy real estate in the designated areas that are specified by the government. This also stands out as a requirement for getting a mortgage in Malta. Thus, the prices in these designated areas tend to be higher.

There are no particular storm clouds on Malta’s economic horizon. The economy will probably continue to grow, regulation will be steady and the stable banking sector will continue to provide property loans in Malta.

In terms of the real estate outlook that means:

  •         Malta’s real estate prices will continue to appreciate, even if they pull back from the world-leading 17% territory.
  •         If the real estate price index doesn’t cool, the government will probably have to act, at least to support the section of the population who will be priced out of the ownership market and see their rents increase.
  •         Companies registering in Malta are already showing a willingness to locate outside of Valletta and that might help spread the real estate price increases out to other areas of Malta.

Long story short, because of its politically and economically stable atmosphere, Malta always stands out as an important option for investments, and the country’s 2019 real estate outlook supports this outcome, too.

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