Touching the luxury property market in Malta
May 25, 2009 · Print This Article
The standard of Malta Property is improving in a major way; developers today are using better and more expensive materials to bring their product to a high standard thus they are reaping higher occupancy than the less professional developer in Malta.
There are a few major projects in Malta that have set these standards and have lifted the expectations of what the Maltese and Foreign investors would expect from a property in Malta. Portomaso, developed some 6/7 years ago in St. Julian’s, was the first development to set these high standards and today is the benchmark of luxury properties in Malta.
The project is based on 128, 000 acres of land with a 110 yacht berth and is complimented with the 5 start Hilton Malta hotel. There are over 300 luxury apartments, approximately 80 % of which have views of the Marina from a sizeable terrace. When thought of, many people thought the project was just a dream and the Maltese would not take to this kind of lifestyle project, however Tumas Group proved many wrong and the apartments were scooped up immediately by both Maltese and Foreign investors and people looking to upgrade their lifestyle. This project actually sparked a boom in the property market, effecting both the rental and sales markets, creating a huge demand for these typical projects filling the bandwagon with other developers looking to meet the same standard and even attempting to surpass the benchmark set by the Tumas Group.
Today, there is Tigne Point, which is located in Tigne at the point overlooking Valletta. The project is still in development with 75% completion. Residents started moving in last year and this project is already looking to set another standard of lifestyle. Looking to set only because the project is not finished yet but if you view the apartments that are ready you will see that this project is quality. I must say there were delays (they are on schedule now) however without discussing the tenants that were waiting, some projects are worth waiting for and these tenants will probably feel the same way when the project is completed. The project will include over 16, 000 square metres of commercial space which will be set around one of the largest piazza’s (squares) on the Islands and it will also include an office space that will have 1500 square metres per floor.
A beautiful pool for residents should be ready during this summer plus there is underground parking. All in all, one needs to look at the plans and go on an onsite visit to appreciate the project. Other projects that are in process of being completed are Pender gardens, Metropolis as well as Fort Cambridge. All representing a high standard which has definately put Malta on the map. These are just some major projects of a certain size where we have seen some speculation and a lot of movement from investors. There are however some smaller projects that are being built of high standard and Ideal from Investment.
You must also not forget the various villas that are being upgraded, many with lovely pools, landscaping and quality finishings ideal for pied a terre.
The luxury property market in Malta is definately a sector of investment one should look into for speculation, pure investment or to get into the rental market. One would suggest that you contact a reputable real estate agency for professional advice before you buy a property in Malta. To be continued……
Overpriced property ‘corrected’ by 10 to 15 per cent - RE/MAX Malta
May 22, 2009 · Print This Article
Written by Joanne Ripard http://www.timesofmalta.com
Property that has been overpriced by inexperienced developers is seeing a correction to more realistic values.
Remax regional director Kevin Buttigieg says prices for property in the most sought after locations like the Sliema, St Julians and surrounding areas have held their ground. But prices in areas such as the south and part of the north have been corrected with adjustments of between 10 to 15 per cent in most cases.
Mr Buttigieg, who with his brother Jeff, added Malta to the world’s largest real estate network in April 2004, says his franchise has seen sales for the first quarter of this year rise by 15 per cent on the same period last year. He attributes the increase mostly to first-time buyers acquiring property in the €112,000 to €200,000 bracket. That is double the first-time buyers’ figure for the corresponding period in 2008, and 200 per cent over the first quarter in 2007.
“This is the best time to buy - it is a buyers’ market and the interest rates are attractive,” Mr Buttigieg points out. “People are seeing they can afford to take out a loan for a better property and grab opportunities when they arise. It must be pointed out that if sellers have their own financial difficulties, like making losses on the stock market, and suddenly find that they need to sell their property quickly, the price is reduced for a quick sale. It does not mean that property prices actually went down.
“It simply means this person had to sell because of unforeseen circumstances at a lower price to carry out the transaction quickly. Unfortunately people see this as a drop in price. It is not the case at all.”
Buyers, he says, are also becoming more demanding. The onus is on developers to offer better quality and the agents to provide a better service.
The property market, he points out, witnessed “massive growth” between 2000 and 2007 as developers fuelled a boom and up to 50 per cent of property was sold on plan. Mr Buttigieg, who says only one in four property sales in Malta involve agencies or freelance agents, insists many buyers who entered into promises of sale for properties during those years, often failed to lay down specifications for finishes. Quality on completion was often poor or far from expectations.
Developers - from large organisations to owners of villas and terraced houses - saw that people were willing to pay and upped their prices by 10 to 20 per cent a year in areas like Sliema and Madliena. As the craze caught on, developers operating in Fgura, ?abbar and St Paul’s Bay raised their prices to up to 20 per cent. Sales began to slow down when prices became unrealistic.
Mr Buttigieg believes buyers overspent on property in the period between 2005 and 2008 and it was not long before the brakes were applied. He says valuations and pricing determined according to a trend are slowly fading as more agents price property according to size per square metre as is the norm overseas. Remax’s 70 agents in Malta use electronic measuring guns to be able to supply clients with the measurements of every room in a property - one way, Mr Buttigieg says, to save both clients and agents time.
The recently established Federation of Estate Agents has been pushing for the government to issue a house price index periodically so that owners and estate agents may have a reliable guideline on which to base valuations and prices.
“In most countries overseas, agents are able to access official statistics on a database to find out what property in the area or even in a particular street was sold for in the past,” Mr Buttigieg explains.
“In that way, agents are able to show sellers and buyers that a determined price is realistic. It would help no end to have this facility here. Many people are disappointed when they make plans for their future on the basis of what they think their property will fetch, and are bitterly disappointed when the return is far lower than they were led to believe it would be.”
With the experience gained in selling property in Malta for only five years - he says transactions prove Remax is the top seller of Malta’s high-end property developments - he contends that the days of buyers signing on the dotted line blindly for properties still on plan are over.
“People are more exigent nowadays,” Mr Buttigieg points out. “Everyone wants more luxury in a property, and more and more people can afford it. Finishes will often determine if a sale is closed or abandoned, whether the property is intended as the buyer’s residence or as a rental investment. People also want their money’s worth. That is why the economic crisis will bring about a clean-up.”
All the “cowboys”, he says, will slowly be driven out of business: the sloppy developers, the shady professionals, and the turnkey contractors finishing properties with seconds imported from the East. The more professional agents who don’t like the look of a development are already refusing to be associated with low-quality properties.
Mr Buttigieg has noticed that developers with property on their hands which they have failed to sell are correcting their mistakes and replacing shabby finishes with upgraded materials and accessories.
He insists attention to detail makes all the difference. Even estate agents have to work harder. There was a time, he recalls, when agents acted like taxi drivers, scurrying clients from one property to another around the country, armed with a set of keys.
In the same way as the practice does not work with overseas buyers, it does not work with the Maltese. Clients expect agents to be familiar with properties before a viewing, know of every minor detail and even help them arrange meetings with the banks, and recommend furniture, furnishing and fittings suppliers.
“Within three years of kicking off a career in this business, most agents will earn their commission from repeat business - 75 per cent of their sales usually involve past clients or referrals. It is essential that quality service is offered to clients,” Mr Buttigieg insists.
“Besides, as a trainer leading a Remax programme overseas said recently, ‘a crisis is a terrible time to waste’. Crisis or no crisis, we plan to expand with another four offices on the island so there are franchise opportunities available for the more entrepreneuring agents”.
Mr Buttigieg also calls on the government to lend the developers and the stronger estate agents more support to promote Malta better. He says that, on the whole, the industry has really not done its bit to market the country. He points out that the developers and agents are ready to do it but they needed the government’s support.
Is it all doom and gloom in the Maltese property market?
May 13, 2009 · Print This Article
Everyone is talking doom and gloom in the Maltese property market, yet property sales are still growing. The real estate market has just changed, and perhaps for the better.
The rise in property prices in 2005, 2006 and 2007 were unjustified increases created by vendors, who were just being too greedy. Naturally, many investors who were hard hit in the stock market and decided to diversify their investments by purchasing property did not help. This sudden demand created a fake economy that was bound to burst. It was just a matter of time.
Normally, banks and financial institutions increase their interest rates to stop this type of inflated economy, but in reality they too were enjoying incredible profits, so their decision was to be cautious but go with the flow and enjoy it while it lasted.
The government did not help either. The timing to slow down this positive attitude in the country was not favourable and election was close, so it also decided to go with the flow and hang on. But how has this affected us? Where do we stand today?
Many ask the same questions. ‘Have property sales decreased over the last couple of years?’ Of course they have. ‘Has property gone down in value?’ Of course it has, but in reality the decrease in value is justified and certainly could have been much worse.
Iceland is a perfect example of what a country can go through when one allows unjustified increases in property value. Dubai and Bulgaria are going through similar situations, because supply is much larger than demand.
Architects and real estate professionals need to be careful to give precise valuations and not just try to satisfy vendors by giving them values they want to hear. I have often been asked by clients to give a fair valuation, and on entering a property vendors blurt out the sum they expect to sell it for.
The first quarter of 2009 has shown a rise in the number of sales in upmarket properties in good areas, such as villas, bungalows and seafront luxury properties, and also a decline in sale prices in the first-time buyer sector, two trends that indicate that the property market is slowly stabilising itself, since higher-value properties are always the first to smoothen the curve.
Hopefully, this momentum will continue. However, more importantly, to benefit from this new wave of buyer activity, it is imperative that properties are marketed properly and at a competitive price.
Property sales at auctions are doing well. There are a substantial number of first-time buyers looking for a home and we have seen a large numbers of extremely wealthy foreigners seeking property in Malta due to favourable tax rates.
The government should keep pushing such attractive incentives. One silly law is that a foreigner is only allowed to purchase one property, unless it is located in a designated area. Foreign investment has kept Malta alive for centuries, and a wealthy foreigner wishing to invest in Malta should be made welcome.
Analysing market trends, one notes that potential investors now deem the market to be at its lowest point. Lower bank interest rates are spurring renewed activity among buyers, who previously adopted a wait-and-see attitude. These factors could well represent a sudden release of constrained demand. Moreover, vendors are listing homes at fairer and more competitive prices, which consequently leads to an increase in viewings and more offers.
At the auctions, we have seen an increase of serious vendors. These might want to buy a larger home or invest in a business or are just looking for early retirement. The point is that the real estate market in Malta is still going strong. There might be an abundant amount of apartments, but the demand for good value property is there.
A few Maltese investors are turning to Sicily, England and Spain to invest their savings. They believe the grass is greener on the other side. I wonder how quickly one can now sell a property in Bulgaria or an apartment in Dubai.
Buying property in Malta and Gozo has always been a sure investment; it’s just a matter of time. Unlike other countries, we do not suffer the drastic fluctuations of property market value because we have always invested in our own homes.
We are not accustomed to rent but to buy, and because land is extremely limited, the value of property will always be a secure investment, especially if we think positively and invest wisely.
Courtesy of www.timesofmalta.com
Finding a buy to let in Malta
May 2, 2009 · Print This Article
Funding a property to buy-to-let is different to funding your own home. The key difference is that you need to approach buying to let as a business, throw personal choice and preference out the window and consider carefully how and what you spend money on within the property. You may need some professional advice from your preferred real estate company in Malta.
There are specific costs you will come across when buying and preparing a property for letting that you need to add to the formula when you are looking for a buy to let property in Malta. You have to calculate the notary fees, stamp duty, tax on rental, architect fee’s if they are required, as well as the costs to redecorate and furnish the property. You have to keep your eye on the ball as there will be real estate agents in Malta that will calculate a percentage rental income without including these costs so ask the question. They may not do it maliciously but only through inexperience and lack of training so you need to always be a step ahead. Especially in today’s market, if you buy incorrectly you may find yourself with a financial burden that you can be stuck with for a while until you manage to sell. You also need to calculate that if you are buying a property to let in Malta or Gozo then you need to plan long term and look at eventual appreciation of the property.
It is recommendable to speak to an accountant and view what expenses you can claim back against rental income. If it is furniture, plumbing works, rental commission, a brand new kitchen, VAT from rent or other expenses it is important that you are in cue. Planning is key.
However, as with buying a property for yourself, one of the first considerations along with the above should be how you are going to fund the purchase. You may have the cash to buy the property outright, or need to part fund and part-borrow. You may be able to borrow more money from your existing lender, or you may be able to borrow most of the money through a buy-to-let mortgage.
As this is a business and not a personal purchase, most investors prefer to borrow as much as they can. The reason is that any expenditure on arranging the mortgage, such as advice and fees for securing the loan plus the interest paid on the mortgage, is tax deductible. However you decide to do it, if you borrow you must advise a lender in writing that you intend to buy-to-let. A real estate company with a letting department will be able to assist you on where to go and will be able to value the property for bank purposes.
RESEARCHING POTENTIAL PROPERTIES
It is important that you do our research and find out what customers are renting, who are renting these properties, what location is the most propular and what types achieve best rental income. One would not think that percentage of rental income achieved from a one bedroom apartment would be more than a three bedroom apartment and neither would anyone think that a appreciation of a one bedroom apartment would be less than a luxury apartment in Portomaso.
It is important that you lay all the cards on the table with your real estate agent and discuss all possibilities. View as many properties as possible and consider the options so you make a knowledgable decision.
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