COVID-19 has forced property investors in Malta to face considerable uncertainty, yet Mauro Sammut believes the picture is not as bleak as it first appears. The co-franchise owner of the RE/MAX Office on Tower Road in Sliema dispels a few myths.
Up until a few months ago, investment properties in Malta had spent a decade rising in popularity. Budding and seasoned investors alike bought into a buy-to-rent market sparked by an influx of international companies and their workers.
Mauro Sammut“Loosely grouped, there are two kinds of property investors,” explains Mauro Sammut, whose work is based in Sliema, St Julian’s and the surrounding areas – Malta’s most sought-after region by both local and foreign buyers and tenants.
“Regular investors purchase property in bulk and extend their portfolio to include plots for development. They also consolidate by buying up adjacent properties to refurbish and then rent or sell.
“Others choose to make a one-time investment in a property or two to get themselves on the rental ladder as landlords.”
The pandemic, though, has brought unforeseen changes to once expected patterns in the market. “Professionals who’d previously downsized from villas to prime seafront apartments on Tower Road are now reverting the trend,” Sammut continues. “Homeowners are reconsidering their relationship with outdoor space and we’re seeing an increased demand for houses with gardens.
“In fact, there are several investment properties currently on sale in the form of seaside apartments. A factor to consider here is that the rental market is experiencing a dip in demand after foreign workers returned home due to the pandemic. Yet while rentals to foreign tenants have dropped slightly, local occupants remain. Property is still a good investment, but landlords can now expect a 3.5 to four per cent rental yield, rather than the five per cent of recent years.”
When asked whether investment opportunities will survive the current climate of uncertainty, Sammut’s response is clear: “The question to ask is will the eventual COVID-19 vaccine give people peace of mind? Only then will we truly begin to see the foreign segment recover.”
Homeowners are reconsidering their relationship with outdoor space and we’re seeing an increased demand for houses with gardens
At RE/MAX’s Tower Road office, efforts have been refocused on the local market.
“Our properties remain in the €350,000–€800,000 range,” explains Sammut, “but we’ve registered a noticeable shift in the type of buyer in 2020. The Maltese think it’s the right time to buy, at least from an investment perspective. A good deal now will lead to a return on investment when the markets eventually stabilise.
“Buy-to-let apartments remain an investment opportunity and they’re readily available and ubiquitous in Malta’s urban areas. Generally, one- to two-bed apartments are suitable for first-time investors. They experience less wear and tear than larger apartments and make for more straightforward rentals in terms of running costs and maintenance.”
Property investors generally look to generate a good rental income or profit once the property is sold. Whatever the case, the greatest determining factor is location, which impacts both purchase value and rental income.
“Real estate in Sliema and St Julian’s will always present a worthwhile investment,” asserts Sammut, “and there remains a larger percentage of foreign workers who rent in the area over other parts of Malta. It’s important to note, however, that price variation occurs across the region depending on the precise location and property type.”
The most popular and financially lucrative buy-to-let units are one- and two-bed apartments in special designated areas, including Tigné Point, Portomaso, Pender Gardens and Fort Cambridge. Townhouses in need of refurbishment are often bought by turnkey investors, who buy to flip for profit. Sea-facing apartments, specifically on Tower Road, also make for a solid investment, while plots for villas in Madliena and the surrounding areas are available to investors with a large budget.
Reflecting on where the market goes from here, Sammut explains that the RE/MAX Tower Road team has turned its attention to a different kind of investment: the human one.
“Trust is crucial to what we do. We sell properties but we invest in our clients. Given the current climate, we’ve had the opportunity to nurture our relationships with clients – both new and returning. Wherever the market takes us, we’ll continue using our strict ethical practices to give sound guidance on investment properties, thus ensuring a satisfied and returning clientele.”
For information on investing in property in Malta and Gozo, visit www.remax-malta.com.