A mine of choice in Malta

With its location in the middle of the Mediterranean, Malta is well used to being invaded, back as far as the Romans. However, the next invasion of the island won't be by bloodthirsty empire builders but by property investors attracted by its history, climate and prices that are among the cheapest in Europe . . . but not for long, warns Shane McGinley

Where is it?

Situated in the middle of the Mediterranean Sea south of Sicily the Republic of Malta consists of seven islands, although only three are inhabited: Malta, Gozo and Comino.

What's so special about it?

With its location in the Mediterranean, across shipping lanes, the island, much like Gibraltar, has always been an attraction for invaders looking to control it. Everyone from the Romans, the Arabs, the Normans, the Turks, Napoleon and the British ruled Malta. It eventually gained independence in 1964, but is also part of both the Commonwealth and the EU.

Best kept secrets: The population of Malta is estimated at only 404,039 and the small capital of Valletta is home to only 6,315 people. However the island is far from lonely as the population density is recorded as 1,282 per square kilometre, which is one of the highest in the world. For tourists, the island has proved equally popular. 1,124,233 people visited Malta in 2006 and it ranks as the 49th most popular tourist destination. The number of foreigners buying in Malta has grown by 35% in recent years.

Who lives here?

Malta has been the backdrop for many movie epics, most recently the blockbuster Troy, starring Brad Pitt, Eric Bana and Orlando Bloom. The island was home to actor David Niven.

What's the property market like?

Over the last few years property prices have been growing in Malta, especially since it joined the EU. Traditionally, annual growth was 8% but it has risen to 12%-15% recently.

In January 2008 Malta is due to switch over to the euro and many agents have predicted that it will lead to an upward rise in prices this year. In its predictions for 2007, Knight Frank Residential Research put Malta's growth rate at 12.5%.

How do you go about buying property?

For local development there are many English newspapers such as The Malta Financial and Business Times and The Malta Independent. There are many local agents and it is safest to use those accredited by the Federation of Estate Agents in Valletta, the Federation of Overseas Property Developers, Agents and Consultants or the Association of International Property Professionals. There are some restrictions on buying. EU citizens can only buy one property in Malta or Gozo, except in the 'Specially Designated Areas' [SDAs], where there are no limits. These are usually upmarket areas where prices are growing fastest and demand is highest.

Properties outside the SDAs can only be used for personal use and a second property can only be bought after residing on the island for five years. When buying the first step is to get a notary and once a property has been chosen they will set up the agreement. Upon signing, a deposit of 10% is usually paid.

Where are the best places to buy?

The SDAs are located around Portomaso, Cottonera Waterfront and Sellum Village upmarket areas where rental return is good and demand for property high. The Northern part of the island around Bugibba, St Paul's Bay and Qawra are very popular for holiday apartments. Gozo, the smaller island, has been enjoying growing popularity as it is more rural and quieter than Malta.

What's the rental market like?

The Global Property Guide reports that on average rental yields are around 6.9% for properties in Valetta and a little higher in Gozo. Because of the recent building boom there is an over supply of apartments, therefore rental yields have been stagnant for about 10 years and have gone down in some areas.

Foreigners can only rent their property if it is valued over 233,800, it has a pool and it is officially registered with the Hotel and Catering Establishments Board. Foreigners can also only rent their properties on a short term basis. The best rental properties are two-bed apartments at least 120sq m and situated in the SDAs.

What's the resell market like?

Foreigners can only sell their Maltese properties to Maltese citizens. They can only sell to other foreign nationals if a Maltese or EU buyer is unavailable.

What type of property is available?

Recently the Malta Environment Planning Authority (MEPA) removed building height restrictions in some areas, which has seen a lot of houses being sold to make way for apartments. For rental purposes farmhouses have proved to be better investments.

Average property prices?

Apartments at Marina development Portomaso start from 315,000 for a studio and rise to 990,000.

In other SDAs such as Sellum prices range from 220,000 for a one-bed apartment. On average, a 120sq m Maltese apartment in a good area costs about 1,957 per sq m; making it one of cheaper areas in Europe.

What are the tax breaks?

Foreign buyers are subject to a withholding tax of 25% on any rental income; however there is no property tax and capital gains is 12%.

FAST FACTS

Getting there: Ryanair and Air Malta Fly from Dublin
Area: 316 km2
Population: 404,039
Currency: Maltese Lira (1.00 MTL = 2.3) Euro in 2008.

Weather: Mediterranean temperate climate with temperatures ranging from 15degreesC to 30degreesC.

Transport: The public bus service is easy and quick.

Renting a car is a good idea as taxis are expensive.

Ferries run regularly between Malta and Gozo there is a boat service to Comino. There is one airport.

Going out: Malta's vibrant music scene includes club DJs, the annual Maltafest and the international Jazz Festival every July. The Manoel theatre in Valletta, built in 1731, is one of the oldest working theatres in Europe.

Eating out: A mixture of different cultural in"uences.

Many specialities are Sicilian or Moorish in origin.

Rabbit is very popular traditional dish.

Shopping: Markets are a frequent site in small towns in Malta. Sliema and St Julian's are the best for international shopping and Gozo is great for antique stores.

www.sundaytribune.co.za

Back to About Propertyline International