The real estate market in Malta has traditionally contributed to the growth of the country’s economy. The COVID-19 pandemic, however, disrupted the market. However, consumer confidence in Malta’s real estate sector has helped it remain resilient. According to the Global Property Guide, which monitors the international property market, apartment prices in Malta increased by 6.5% on average in 2017, after adjusting for inflation. Meanwhile, prices for terraced houses rose by just 1.6%.
COVID-19
COVID-19 has impacted the price of Maltese commercial properties for sale in Malta real estate. It has affected long-time and new CRE owners alike, as well as those who missed out on buying property in the past. It has also affected businesses like bars, cinemas, and bingo halls, and the rents they receive. The study highlights trends in the commercial real estate market, which may be helpful for authorities.
The COVID-19 pandemic has exacerbated structural trends in certain segments of the market, such as retail. Demand in the retail segment has been declining, largely due to the shift of consumers to e-commerce. The shock from COVID-19 could have a longer-lasting impact on demand for hotels and offices. In some sectors, such as retail, businesses may adopt liberal work-from-home policies or replace in-person meetings with virtual ones.
Government policies to encourage the use of commercial properties in Malta
Commercial properties are a popular choice for investors, allowing a variety of industries to locate and expand. Available commercial spaces include office buildings, restaurants, showrooms, and flexible multi-purpose spaces. Fully finished properties are move-in ready, allowing start-ups and relocating enterprises to get started without any hassle. Other options include managed office spaces, which offer a host of services, including reception staff, high-speed internet connections, and phone lines, giving business owners a professional business presence.
A variety of different government policies are available to help new businesses succeed in the Maltese economy. The Maltese Government has made various efforts to improve the business climate by granting tax breaks and other incentives to those seeking to invest in the island. These measures include the Home Deposit Scheme, which will be implemented on 3rd June 2020. The scheme offers interest-free loans up to EUR175, 000 for first-time buyers under 40, and the Malta Development Bank will act as an underwriter for private company bonds. Micro Invest tax credits are convertible into cash grants of up to 30% of the amount that the enterprise has earned. The grant is limited to EUR2, 000 for Malta-based enterprises, EUR2, 500 for Gozo-based companies and female-owned businesses.
Impact of COVID-19 on commercial property values in Malta
The study’s findings show that COVID-19 has had a profound impact on the local real estate market. While the entire Maltese market remains relatively untapped, it does highlight trends that should help authorities make more informed decisions. A recent study by Muscat et al. suggests that the Maltese commercial property market is experiencing unique times. A recent study, published by RE/MAX Europe, interviewed more than 2,000 leading RE/MAX agents across 27 countries. The study found that, overall, most agents expect residential rental transactions to remain stable. However, the study also shows that, in Malta, the number of residential sales is expected to decline, with a slight decrease predicted in 2020.
The report found that the impact of COVID-19 on commercial property values is likely to be greatest for malls, which will be the most affected and may take the longest to recover. In the past few years, retail malls have been facing a challenging environment due to falling footfall and high vacancy. However, COVID-19 has increased the level of pressure on class B/C malls, extending the same challenges to class A properties.
Impact of COVID-19 on rental rates for commercial properties in Malta
In the short to medium term, COVID-19 is already having an impact on the commercial real estate market in Malta. Landlords are advised to refrain from renegotiation because they may find themselves trapped into terms that are no longer beneficial. While the recent events have left the Maltese community shaken, many are still seeking to invest in real estate. This may lead to a resurgence in the commercial property market.
Conclusion
The study also provides an analysis of the rental market on the island. There are no national statistics available for rental prices, but it shows a general trend across different segments. For example, during the first quarter of 2020, the rental price for apartments decreased by 14 per cent, while the corresponding figure for long-term rental properties increased by 14 per cent. While the data does not reflect the whole Maltese market, it does show some trends which could guide authorities in future decisions.
