As Malta has no mining or manufacturing activities it had to find other avenues to make it attractive as an investment destination, one of them being real estate. Property investment in Malta has become a fundamental and important part of the country’s economy and has seen superb growth since 2007.
Malta and Gozo have seen countless new construction projects and property sales are at an all-time high. The Malta Developers Association’s (MDA) latest figures show record numbers of Promise of Sale Agreements are being signed month after month. The result is that Malta’s property market has continually outperformed many others in the EU and this has made the country a very attractive destination, not only because of the capital appreciation of its real estate, but also because investing in real estate can qualify for consideration when acquiring Malta residency/citizenship by investment, given that certain criteria are met.
The following are added reasons why a property investment in Malta makes sense
The capital appreciation for property
It has truly been a buyer’s market in Malta for many years, if not decades. Locals place strong emphasis on home ownership as an investment and as a savings measure – simply by not having to pay rent to someone else. Ownership of property is also encouraged from generation to generation and this has contributed to demand. Malta Citizenship by Investment and residency programmes have also contributed in driving the prices of real estate up.
A comprehensive guide to Malta’s escalating property prices: The Malta Property Price Index
Current factors contributing to the success of the real estate market include the country’s fast growing economy, favourable tax structures, the low-interest financial environment and more disposable income by individuals. and also an increase in well-paid foreign workers employed in iGaming, banking and the IT sector.
House prices are still increasing despite the pandemic and the latest figures released by the MDA shows that for February 2021 an increase of 40% in Promises of Sales were recorded when compared to the same time the year before.
Incentives for First-Time home buyers from the Maltese Government was introduced and an increase in well-paid foreign workers employed in IGaming, banking and the IT sector adds to the demand thereby pushing up prices.
Popular types of investment property
Financing your property with a loan
The Profitable Rental market
Malta’s rentals market is extremely lucrative, both long and short-term. This is due to several factors
- Popularity as a tourist destination
- The number of contract workers requiring accommodation
- The influx of foreign students that attend Malta’s language schools.
- Rental properties also provide housing for citizens and residents who do not own their own homes.
- Low interest rates. Income generated through rentals far exceeds the interest charged on any home loans
The ROI for Capital Appreciation and Rentals are both between 4% to 9% pa depending on factors such as where the property is situated, the finishes in the property and size.
Should you rent out as a short term rental or a long term rental?
Short-term Rental Yields of Investment Properties based on Airbnb
Pre pandemic, May 2019 saw nearly 9000 short-term listings on Airbnb alone for Malta. If the AirBnB is centred around the usual tourist areas of Valletta, Sliema, St Julians and St Pauls Bay, occupancy rates are around 70%. The average price per night is around the €80 mark and this is incrementally increased by extra bedrooms, having a pool, views and the ability to accommodate additional guests. The majority of these rented out properties are entire dwellings such as apartments, houses of character and villas.
More than 2,100,000 tourists visited the islands during the first nine months of 2019 and Malta’s increasing popularity has turned the short-term let industry into a huge business. As a result of this, the demand for rental properties increased dramatically, especially in the buy-to-let category.
There is no doubt that global travel will again increase and the demand for property to accommodate all these travellers and tourists will keep up in tandem. With interest rates at a relative low in Malta, it makes more sense to invest spare cash in a property and let it out. Whether a property is let long- or short-term, the income generated from letting out a property currently covers not only the interest charged on the bond amount, it in many cases it can make the owner money.
