Can the Property Market in Malta Survive the Challenges Ahead?

The fortunes of Malta, its economy, tourism industry and property market are all intrinsically linked and each has faced many challenges to date.  It’s fair to say that Malta has done well in meeting the majority of the challenges it has faced in the past head on - however, as recent events have shown there are more issues ahead if the nation is to continue to develop and prosper from real estate in particular.

The questions is - can the property market in Malta survive the challenges ahead?  In this article we examine the situation now, the future potential issues and the actions that are being taken to create a sustainable property based economy.

Escalating prices, lack of forethought in planning, over development and an over-intensification of concentration on the development of residential real estate instead of commercial space have been taking their toll on the attraction of the property market in Malta in the recent past.  The situation has almost reached crisis point and so an emergency meeting of real estate industry professionals took place earlier this week to discuss how the property industry can rise to the challenges ahead and overcome a number of the critical issues facing it. 

One of the main issues discussed was the escalation of prices for property in Malta.  Between 1987 and the start of 2007 property prices in Malta rose six-fold according to the Banking and Finance Professor from the University of Malta who spoke at the emergency meeting.  These price increases have accelerated most significantly in the last ten years and now Malta is no longer considered an affordable market for many international second or holiday home hunters.

Some believe that this fact alone is a disaster for Malta, its economy and also its tourism industry - others disagree and instead suggest that Malta has to re-brand itself and instead of targeting those seeking an affordable home overseas who will instead head for the likes of Turkey and Morocco, Malta needs to target the wealthier investor, those seeking a permanent retirement home overseas and also, it needs to develop additional industries alongside real estate and tourism that will bring the professional classes to Malta for employment as such individuals have significantly stronger purchasing power when it comes to property.

The theory as it stands is great…however…Malta has in the past given the green light for every conceivable type of residential development from low rise villas to high rise apartments, but little effort has gone into the construction or regeneration of commercial space.  As a direct result the nation is now so short of office space in particular which limits its ability to attract business to the island.

The good news is that this particular challenge has now been recognized and recently the Maltese government has been looking at ways of diversifying their economy whilst developing the necessary infrastructure to support incoming industries. 

Gaming and near-shoring information technology companies in particular are being lured to Malta with the promise of decent infrastructure, an educated, English speaking work force, attractive taxation rates etc., and Malta is working with leading development and finance companies from Dubai for the creation of SmartCity, a global ICT and media business services hub. 

SmartCity is being created out of the ruins of the industrial zone at Ricasoli and so in one fell swoop the government is regenerating run down space, creating more commercial space and also creating the perfect environment for inward sustainable foreign direct investment which could bring significant employment and increase purchasing power.  This should translate into a positive effect on the residential property market in Malta as well hopefully, and suggests that yes, the property market in Malta can survive the challenges ahead.

The final challenge requiring resolution that’s facing ‘property in Malta’ as a concept, a significant economic contributor and a stand alone market is less tangible to clarify.  The problem relates to the attraction and appeal of Maltese property and has probably come about because of a lack of a consistent approach to planning.  Malta has stunning historical architecture alongside ugly and rundown old buildings, it has dramatic and effective modern architecture alongside cheap and shabbily constructed new property stock.  So where exactly does the true image of Malta fit?  In our opinion someone, somewhere needs to decide the future direction that Malta is taking; is it trying to be a modern and exciting innovating and fresh location like Dubai or would it like to retain its unique charm and historical relevance?  Until it can decide there will continue to be a hotchpotch of new development and renovation done against a difficult to define backdrop.

Malta needs to determine its future path and the property market needs to develop alongside and accordingly.  Those in the real estate industry most certainly recognize this fundamental challenge facing Malta and we’re pretty sure the government understands the issue too.  So, in answer to the question originally posed by this article ‘can the property market in Malta survive the challenges ahead?’ – we’re positive and hopeful that it can.

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