Islands in the Med attracting expats
These little Mediterrnean islands are quietly prospering and steadily attracting expats.
Many European states must be envious of the small Mediterranean island of Malta and its diminutive neighbour Gozo, where property prices actually increased by 3-4 per cent last year. “We’ve not suffered from all the financial problems elsewhere and our economy’s remained fairly steady,” says Joseph Lupi, managing director of Frank Salt Real Estate.
Regarded as a safe haven by the French (escaping new tax regimes back home), Italians, Spanish and the British, this new European entrant (admitted to the Union in 2004 and adopting the Euro in 2008), is one of the favourite spots to buy a holiday home, retire or relocate.
“The island’s seen a record year in tourism, low unemployment rates and astable business environment,” explains James Vassallo, sales and marketing manager at Tigne Point, one of Malta’s flagship new developments. “Of course, some elements could always be better, but when put into perspective it’s not hard to see why Malta’s become so popular with overseas buyers.”
Indeed, you can enjoy its Mediterranean climate (swimming in the sea in the winter months), make substantial savings on taxes, drive on the left, use the same electric plugsas in Blighty, not worry about communicating (offi cial languages are Maltese and English), and enjoy nine UNESCO World Heritage sites, including the Megalithic Temples.Crime levels are low, standard of medical services and education is high and a recent poll put Malta on top as the best place in the world to retire. And, property prices are not prohibitive, with a three-bedroom apartment starting from around €200,000.
What’s up and what’s down
The central zones of the island near the capital Valetta and the headquarters of gaming and financial institutions have reaped benefi ts, with expats working on the island requiring homes on long lets, says Lupi. “They like to be near the harbour area with its restaurants, bars and five-star hotels.” Rents here have increased marginally, and look likely to rise further.
Vassallo believes top mixed-use developments are faring well, with both new homes and re-sales achieving close to asking prices. “Though speculative buying has ceased, established schemes and boutique projects with higher specifications and amenities have done the best.”
He adds that an appealing aspect of the market is that locals are the primary drivers. “With one of the highest per capita property ownership ratios in the EU, the Maltese have always invested in bricks and mortar, which is important for overseas buyers not depending solely on fluctuations in resort markets.”
Prices for homes on Malta and Gozo vary, depending on where you are located, points out Lubi. For instance, a three-bedroom seafront apartment in marina complex Portomas in St Julians (with a five-star Hilton on site) will set you back €995,000; while a three bedroom apartment in rural Gozo that might suit retirees (where you get landscaped communal gardens and fresh produce from the fields as part of the property) costs €250,000.
Equally, away from the busier side of Malta at Attard, a three-bedroom centrally positioned apartment with two balconies currently fetches €195,000, compared with a twobedroom duplex in St Julians (a 10-minute walk from the sandy beach at St George’s Bay) priced at €280,000. There are more old houses (some still in their original state) on Gozo, including a renovated centuries-old three-bedroom house with air conditioning and furniture on the outskirts of the village of Xaghra Gozo for €290,000.
Predictions for 2013
“2003 will see a general election in Malta and a high probability in change of government, which will clear the uncertainty about future direction and policies and give a further boost to the property market,” suggests David Pace at Move2Gozo.com. Also, most of the mixed-use developments will reach completion, he adds, “a further factor to underline the property market and note the lack of new schemes in the pipeline”.
With Valetta named European Capital of Culture in 2018 and politicians agreeing that Malta needs to attract foreign investment, Lupi thinks the island will continue its upwards climb with more financial institutions arriving onshore.
THE HEADLINES OF 2012
BUSINESS BOOM DRIVES MARKET.
Over the last year, property showed signs of recovery after four years of decline. Thanks to a boom in gaming and financial service markets rentals picked up, with investors purchasing property yielding 6-7 per cent in income (especially in hotspots St Julians, Sliema and Ta’ Xbiex).
NEW ECONOMIC INCENTIVES FOR FOREIGNERS.
Keen to attract foreigners to retire and invest in business on the island, the government decided to reduce income tax and create strategies to woo more people to Malta.
LOCAL MARKET HAS HELD ITS OWN, especially at the upper end, while there have been dips in the low- to middle-segments. But, Malta’s witnessed no double-digit drops.
ONGOING INFRASTRUCTURE UPGRADES IN GOZO improve the quality of life, keeping up interest in the island where prices 10-15 per cent less than Malta.
LATEST MARKET MUST-KNOW
• The newly launched Malta Retirement Programme means EU retirees owning or leasing property on Malta or Gozo pay a flat tax rate of 15 per cent. They will need to reside in Malta for a minimum of 90 days a year averaged over any five-year period and purchase a home on Malta for at least €275,000 or lease one annually for €9,600 (Gozo rates are lower at €250,000 or €8,750, respectively).
• Although untarnished by the European banking crisis, Maltese banks have withdrawn funding for developments and are only keen on lending to end users on an individual basis.
• It would be prudent for a fi rst-time purchaser on Malta looking at off-plan property to buy from a developer with a good track record of having delivered in the past, Vassallo advises.
• Pace believes there’s a high probability that taxes on property transactions will change in the next budget, which will have an effect on the immediate future of the property recovery.
• Property registration and title is straightforward. A local notary (selected by the purchaser) carries out research on the property at the national registry to verify clear legal title and seek assurances there are no outstanding debts or problems.
Source: A Place in the Sun by Cheryl Markosky