Maltese property prices are expected to rise moderately in 2011
Strategically located in the heart of the Mediterranean, Malta enjoys the sun most of the year. Blessed with long, dry summers and short, mild winters, this small island approximately 60 miles south of Sicily is a year-round destination for people from Europe and beyond. As well as great weather, Malta has history: in variety and abundance, romance, a breath of the orient, beautiful old houses of golden limestone, warm and welcoming people who speak English, safety, and good standards of education and health care.
Membership in the EU, a favorable tax structure and good infrastructure have made Malta a preferred destination for European retirees, lifestyle buyers and investors alike. For retirees, the income tax rate is as low as 15%. There are no inheritance, estate and municipal taxes. Corporate tax rates range from a maximum of 35% to zero. In general, the costs of living are lower than elsewhere in the EU.
Although most of the demand for property in Malta is driven by locals who consider property to be one of the best investments, foreign demand for Maltese property is also increasing with the improving economic situation in some EU countries. Fortunately, the recession has not affected the Maltese property market as much as it has in other countries and many foreign buyers now regard the country as a relatively safe haven for their funds.
The Maltese economy is quite stable and relies heavily on tourism. In recent years, the number of low-cost flights to Malta has increased significantly, attracting more visitors each year. 2009 and 2010 saw a marked increase in tourist traffic relative to previous years. Multinationals based in the Middle East are also setting up offices in Malta with the aim of reaching out to emerging markets. Consequently, the demand for rentals has increased.
Maltese property prices, which had weakened somewhat in 2008, are now in positive territory largely due to fairly low mortgage lending rates, increased demand for rental properties in some areas and the availability of quality properties at affordable prices. In general, the Maltese property market has fared better than many others in the EU, particularly those in Spain, Greece, Portugal and Cyprus.
According to the Central Bank of Malta, price growth for the second quarter of 2010 had settled at moderate levels compared to the previous quarter. The bank attributed the rise to apartment prices, which were higher than those for character houses, villas and townhouses. While duplex prices fell year over year, townhome prices stayed the same.
As indicated in a report based on a survey by the Royal Institution of Chartered Surveyors, price increases are generally better than expected. Although in some areas prices are falling, in others the trend is upward. Regions like St. Juliens and Sliema are doing well.
Citizens of EU countries can purchase property in Malta subject to conditions. However, they can purchase more than one property in SDA or specially designated areas such as Tigne Point, Portomaso, Cottoenra, Chambray and Manoel Island. A recent amendment allows foreigners to rent personal property to short-term tourists if the property meets the standards set by the Malta Tourism Authority.
Recently, the government decided to exclude non-EU citizens from the Residents Scheme. This move could have an adverse impact on property sales and prices in areas that are popular with citizens of non-EU countries.
Overall, this could be an opportune time to invest in property in Malta, provided you do a thorough market analysis and identify areas that have consistent demand for sale and rent and the potential for price growth. Apartments in Sliema, St. Andrews and St. Juliens are usually good buys. Maltese property has quite a few positives: prices remain relatively reasonable, buyers can choose from a range of modern apartments and charming old houses, and prices are expected to rise in the coming years.
Points about property transactions:
• Once the buyer and seller have agreed on a price, they enter into a preliminary agreement and the buyer is usually required to pay a 10% deposit.
• This agreement is subject to the issuance of an AIP permit for non-residents.
• The Notary Public conducts a search on behalf of the buyer to verify that the property has a clear title.
• Once the conditions of the pre-agreement have been met, both parties draw up and sign a definitive deed of sale.
• EU and non-EU citizens must meet a number of conditions in order to purchase property in Malta.
• They must also prove that the funds for the purchase originate abroad.