One of the more common ‘table topics’ of recent years has been Malta’s ‘economic boom’,
whether the growth is sustainable and what part the real estate market plays in all of this.
When considering Malta’s success over the years, one of the main drivers has always been
our ability to attract foreign investment and tourism to the island. This success was made
possible through an ongoing investment by all stakeholders, both private and public and also
by way of Malta’s international position, which was bolstered by Malta joining the European
Malta has numerous advantages, including its weather, safe environment, strategic location,
the tax system and at times our small size, which has served us well, making us more agile to
adapting to international changes and becoming trendsetters. This can be noted from the
introduction of Gaming, DLT legislation, and Citizenship by Investment and Residence
What has contributed to Malta’s growth in recent years and what effect has it had on the
real estate market?
When applied to recent years, increases in tourist numbers combined with high hotel
occupancy rates has led visitors to seek an alternative and reside in private
accommodation. This has supplemented the already existing short term letting the market
(English language students being part of that), resulting in individuals purchasing property
as an investment and to supplement their income. Accordingly, ‘buy to let’ has been a
substantial driver of the growth in the real estate market these recent years.
A second contributor to the growth has been a large number of expatriates relocating to
Malta to work. More and more international companies are increasing substance in Malta,
both in terms of office space and number of employees, which has influenced the rental
market, both residential and commercial. Needless to say, the increased substance had a
spillover effect on other industries such as entertainment, retail, catering, and others.
Malta’s position as a destination has been enhanced as a result of the digital age, which has
had a big effect on the internet, with social media platforms offering sharing capabilities,
such as hashtags, creating new exposure for Malta.
Malta is also a popular destination for retirees and high net worth individuals (HNWI’s)
looking to take up residence in Malta, either in terms of self-sufficiency or under the
Citizenship or Residence Programmes. Recent developments in these sectors, namely the
introduction of the Malta Individual Investor Programme and the Malta Residence and Visa
Programme, have not only attracted new investment but have also helped put Malta ‘on
the map’, which at times due to our size could be challenging.
One would also need to include socioeconomic forces, such as the number of
separation/divorce cases, population changes, the length of time people take to buy them
own properties, cohabitation, and the current low-interest environment, all as affecting the
current growth in the real estate market.
The sustainability and growth of the real estate market depend largely on supply and
demand and while supply is measurable, demand is less certain. One interesting point in
relation to supply is that even though it seems like we are currently living the largest
construction boom in the history of Malta, more construction permits were issued in 2006
and 2007 (individually), then were issued in 2017. The issue following 2006 and 2007 was
that at the time, the demand fell short of the supply of properties available leading to a ‘lull’
in the market.
What challenges is Malta facing and what should its long - term plan be to continue to
attract foreign investment?
There is a lot to discuss here, but on a high level, the following is what comes to mind.
Firstly, the international environment is constantly evolving. One example of change is the
introduction of the Anti-Tax Avoidance Directive (ATAD), in terms of which the EU States are
required to have certain anti-tax avoidance measured implemented into their local law.
Besides the ATAD initiative, there are other developments taking place within the
international fora and it is important that Malta is always ready to react to this changing
environment to remain competitive.
I believe that Malta should retain its stickiness as jurisdiction and continue to focus on
attracting (and retaining) good, substance-based business to the island. There has been an
increase in this over recent years which should be continued. Locally, a challenge we are
experiencing is the effect that increased banking regulation is having on investment inflows
into Malta. This increased regulation, at times, slows down the whole banking process and it
is therefore important that progress is made in this respect, without of course
compromising risk and still remaining in line with the applicable legislation.
Regarding individuals relocating to Malta, as mentioned, we have seen a lot of growth in
this area, which has had a direct effect of the number of properties leased and/or
purchased. In order to continue attracting these individuals to the island, Malta’s Citizenship
and Residence Programmes must remain competitive (without it becoming a race to the
bottom with other jurisdictions). This is my view may be done in two ways, firstly creating
more awareness about Malta and making relocating to Malta more enticing (ie: shifting the
focus from people looking only at the required cost and investment of these programmes)
and also by improving our offerings when it comes to entertainment (more choice and
variety), high-end shopping and infrastructure.
There are several other areas we should continue to focus on such as for example
manufacturing, aviation, and shipping. These industries have contributed greatly to Malta’s
growth and should still be given importance. Also, Gozo has a lot of potentials, but we must
learn from previous mistakes, create a holistic plan which ensures that Gozo retains its character. There has been some concern with respect to the tunnel project connecting
Malta to Gozo. The tunnel project in itself should not create unsustainable and irresponsible
development, its purpose is to facilitate access and the right checks and balances should be
put in place to ensure Gozo develops sustainably.
From an economic perspective, Malta has been successful over the past years. It is
important that this success is sustained while concurrently ensuring that everyone’s quality
of life is improved and respected.