Article

Article by: stephanied@propertylinemalta.com (Trafford Busuttil) Published: 19/12/2008

WHY IS THE MALTESE PROPERTY MARKET UNIQUE

To put the heading of this article into perspective we have to take a very brief look at other international property destinations. The main difference between Malta and all other countries, except for Singapore, is size. One must appreciate that although we live on a beautiful island, the archipelago is only 27 km by 14.5km with a population of approximately 400,000, not taking into account the doubling of the figure during the peak tourist months; making us the most densely populated country in the E.U. and second on the world ranking.

The natural question to ask is how does this make us unique? The answer is Land – or may I say the lack of it; land in Malta is at a premium. Let us imagine for one minute that someone took the pains of listing and numbering all the available plots of land on a sheet of paper. Now every time a plot is sold we will erase one from the list, without replacing it, this would leave us with a dwindling list and subsequently with a dwindling resource. In reality this is what’s happening and solutions need to be found, as this is the major contributor that fuels the growth in property prices.

The situation in other countries is different. Due to their size, land availability is not a major issue, meaning that property prices can be stabilised and indirectly controlled by increasing the size of planning belts. However, this does not mean that our situation is so dire that we cannot think outside the box and actively search for solutions on how to put this finite resource to better use.

The more obvious of then all is vertical growth; this would appear to be the solution. On the other hand, we must be very careful not to destroy the character and uniqueness of the Maltese islands. Please do not get me wrong, I believe whole heartedly in vertical growth, as long as it is restricted to specific areas and that the island will not be turned into another Manhattan. The main reason behind my trend of thought is that there are a large number of cities dotted with sky scrappers but only one jewel in the Mediterranean by the name of Malta. Personally I think we should utilise the resources we have, put vacant property to better use and offer fiscal incentives to property owners and clients to take up residence in designated towns and villages that need regeneration.

Another option is land reclamation; on this subject there are those that would argue that since we are an island that is the only way to go, whereas others will adamantly insist that this will ruin the topography of the islands. Both schools of thought have valid points, and it is of course a most difficult exercise to strike a balance between the economic growth of the country and the preservation of the environment.

Just like any other market, the driving force behind the residential property market is demand. This is fuelled by approximately 2500 marriages annually, possibly an equal number of separation, foreigners moving over, investments into holiday homes and purchases for rental use. Bring the total number of transactions annually to approximately 10,000. This figure is significant since it is a clear indicator that the Maltese property market is extremely active and more importantly, that it enjoys a very strong home grown market. With 77% of the population living in home owned property and a substantially high second home (holiday home) ownership. It seems that for us Maltese the logical way to go is to live in a home owned property, unlike many of our European neighbours. Living in an owned property not only gives people a sense of security, but is rendered easier here in Malta by the fact that local banks finance up to 90% of the value of the property. By natural deduction I would say that it would make monetary sense to invest in your own property rather than pay a monthly rent to a landlord. When you pay a monthly rent the only benefit achieved is that of having a roof over your head, whereas investing a similar amount in a property of your own could bring along greater security and capital growth, being the increase in value from the purchase price to the eventual selling price.

Trafford Busuttil

Chairman of the Real Estate Trade Section – Malta Chamber of Commerce

President of the Federation of Estate Agents

Managing Director of Propertyline International

 

External Article Link: http://www.property-partnership.com/overseas-property-guides/overseas-property-guide.cfm?id=198

Article Link: http://www.property-partnership.com/overseas-property-guides/overseas-property-guide.cfm?id=198

Please contact the author at stephanied@propertylinemalta.com for more information.