Over the past few months, PwC Malta has been working on a project in conjunction with Jones Lang LaSalle and Archi+. This is a first of a series of initiatives focusing on the transparency of the real estate market in Malta.
The global real estate industry is facing increased pressures to act responsibly. As investors become increasingly exposed to real estate, the focus is shifting more towards investing and doing business in a transparent and sustainable manner. But why is transparency so important?
Transparency within the real estate market leads to increases in business efficiency, competitiveness, flexibility and investor confidence. It also facilitates the achievement of the country’s macroeconomic goals, through increased productivity, continued foreign direct investment, as well as improved policy development and long-term real estate planning.
Transparency has become even more important in today’s business world, in light of the heightened uncertainty and rapid change characterising the economic environment, owing as well to the repercussions of the COVID-19 pandemic and geopolitical conflicts.
Understanding the importance of these benefits, PwC Malta has embarked on a project working in conjunction with Jones Lang LaSalle and LaSalle Investment Management (JLL), together with Archi+, in deriving a real estate Transparency Index for Malta for the first time.
Through their Global Real Estate Transparency Index (GRETI or ‘the Index’) which now involves 94 countries and territories, JLL has been mapping the evolution of real estate transparency across the globe since 1999. The JLL GRETI is based on a combination of quantitative market data and survey results. It scores property markets on a transparency scale (ranging between 1, Highly Transparent, to 5, Opaque) and acts as an essential guide for companies operating in foreign markets and a unique benchmark of real estate market transparency.
PwC Malta led the compilation of survey results for Malta through consultations with key stakeholders within the public and private sector, including real estate investors, key developers, architects, lawyers, notaries, real estate agents and property managers. The Index, based on JLL's methodology, focuses on topics such as direct property indices, availability of property data in connection with transactions, valuations, the use of real estate technology in construction and property management (among others), real estate tax, land use planning, professional standards of agents, green building regulations and sustainability.
How did Malta perform?
Malta has been given a score of 3.64 in the Index and ranked 62 among the 94 participant countries, thereby falling within the Low Transparency category along with countries such as Morocco, Egypt and Sri Lanka. Malta scored well on some fronts such as governance of listed vehicles, regulatory and legal aspects, as well as the transaction process. Areas such as sustainability, technology and digitisation, and availability of data merit considerable improvement.
Is there any room for improvement?
The results of this first Real Estate Transparency Index should give Malta an indication of what needs to be done and prioritise the initiatives the country should address in moving forward to increase transparency, focusing on digitalisation and publication of market data for increased market confidence and incentivising more sustainable practices in real estate to encourage uptake.
Our first national JLL GRETI score allows the setting of targets which Malta should aim to achieve over the next few years. Taking into consideration the current and upcoming initiatives which are currently being rolled out by the Government, and initiating actions inother areas of concern as highlighted, Malta could achieve a score lower than 3.5, allowing the country to climb up a notch within the transparency ladder and classify within the Semi-Transparent category. This shift could potentially happen by the next round of the JLLGRETI in 2024.
The gradual improvement of our transparency within the real estate sector will enhance the level of trust and will continue to ensure the sustainability of the industry moving forward.
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