Malta’s economy experienced unprecedented growth over the past seven years, placing it among the EU’s leading examples of best investment destinations for real estate.
As the market in general went from strength to strength, the local economy benefitted from the influx of foreign workers looking for rental properties all over the islands.
Demand was boosted even further, fuelled by Malta’s popularity as a holiday destination of significant historical importance, its scenic beauty and also by having a reputation as a holiday hotspot that offers value for money with glorious weather and crystal clear seas to boot. Both long- and short-term rentals were thus in extremely high demand by a seemingly insatiable but varied consumer market.
Up to the end of last year, one often heard of urban tales where any centrally-located rental property advertised on social media or in conventional press rewarded the owners with an overwhelming response: queues of possible tenants lined up vying to be awarded occupation! This continued demand spurred on many land and property owners to explore options of building new apartment blocks or to extend existing ones, leading to building cranes now being accepted as part of our panoramic landscape.
When it comes to rentals, landlords are at the coalface of factors that affect the market, whether it is positive or negative. Reaping the benefits of the unprecedented demand pre-COVID, the building industry blossomed and construction fever hit Malta like never before.
Then the rumours of the global pandemic emerged towards the end of December 2019 but this took some time to have an impact on the market, and its effect was only felt when lockdown, along with absolute travel restrictions, were implemented.
All indications are that, currently, the local rentals market is indeed busy with a positive, focused reboot
Understandably so, foreign workers returned home to their families during this frightful time, the stream of international tourists dried up and many countries put locks on their airport and cruise ship terminals’ arrivals doors until further notice.
This fallout from the pandemic caused problems for landlords from the start but, fortunately, many of them had the sense of heart and head to negotiate with their tenants who stayed on in Malta and whose work contracts were renewed. The solution was for landlords to allow tenants to skip a month or two’s rental payments or to lower their monthly rentals in order to bridge this difficult time.
Another positive as a result of the current situation is that rental prices have stabilised and have come down in some areas, although prime locations have stood their ground despite COVID-19.
One must always remember that property is an excellent long-term investment and to prove this, we saw that in June 2020, amid the pandemic, a record number of residential sales were recorded for the whole of the Maltese islands. Experts ascribe this to the fact that the pandemic has seemingly changed the face of employment forever on a global scale.
Many companies now realise employees can work productively from home and the BBC reported that many rentals in London have remained the same pre- and post-pandemic. Other buoyant markets such as Lisbon also saw residential house prices remaining the same or, in some instances, even increase. In many of these popular tourist centres, the solution was for landlords to opt out of Airbnb or similar short-term rental schemes in exchange for somewhat reduced, long-term rentals of their properties to stable tenants with good credit records.
It’s the age-old adage of supply and demand − and COVID-19’s impact has been for landlords and their tenants to find ways to readjust and adapt. Successful rentals rely on people to be more creative and innovative when it comes to the renting out of properties and this will have a positive long-term effect.
All indications are that, currently, the local rentals market is indeed busy with a positive, focused reboot. Opportunity is in the waiting for everyone and the renewed energy surrounding it is palpable: it’s a market that is reinventing itself with a view of being more realistic, undeniably more stable and, thankfully, more affordable for all.
Over the millennia, humanity has seen the Black Plague during the 1300s, the Spanish flu in the early 20th century and, in modern times, the swine flu, SARS and now COVID-19, but the practice of paying a sum of money to live in a property has been around for thousands of years and will surely outlast any pandemic now and in the future.
Philippa Tabone, letting manager, Frank Salt Real Estate