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The property market is doing well in Malta and while demand is far outdoing supply in the rental market, the Maltese need to be careful to offer quality homes or we could become victims of our own success. DOUGLAS SALT talks shop with Veronica Stivala.
The property market is booming and there is a huge demand for property, especially rental property. While this is naturally a positive, the Maltese need to be careful to harness these successful prospects with care, and to ensure that quality is given the utmost attention. For as they say, the devil is in the detail. I meet Douglas Salt, company director and regional manager of the Frank Salt Real Estate St Julian’s and Spinola, who makes some wise observations as well as some sage advice on how Malta should successfully manage its property scenario.
“The property market is active across all strata of society,” comments Mr Salt as he sits in the neat, clean boardroom of the Frank Salt Offices. As a result of the tax waiver scheme, many first time buyers got onto the market. This had a positive domino effect as very often, first time buyers buy second hand property which means that those from which they are buying are also on the market to buy another property for themselves.
One can speak equally positively for the rental property market, which is booming as a result of the massive amount of foreigners who are looking to relocate or retire to Malta for a number of reasons, Malta’s super weather conditions being one of its star attractions. However, while the scenario is positive for landlords, some tenants are suffering: the demand is far outweighing supply and landlords are not as willing to keep tenants who rent from one year to the next as they did previously.
“I can’t say the rental market is coping,” observes Mr Salt, adding how the demand has shot up for both long and short-term lets. “There is a big demand for long lets from people living here as well as those here for a shorter while.” Pull factors such as increased low-cost airlines mean the demand for short lets has increased tremendously.
Mr Salt speaks with the confidence and reassurance of one experienced in his field and I ask him further questions in the hope of getting a better feel for the property market myself. He advises how “if people are willing to go into short lets, there is a lot of money to be made there”. I ask him whether it makes more sense to invest in stocks and shares, or to invest in a property. In terms of investment, Mr Salt notes how while stocks and shares can be more quickly disposed of, at the moment they will not give the high interest rates that rental property will. Plus, what property has is the appreciation of the property itself. “You are looking at not just the return on investment, but the annual growth rate of about six per cent, so when you take the two together it makes more sense to invest in property being as the demand is so high.”
Mr Salt adds how the visa and passport schemes are going to fuel the demand for rental property.
The operative word, however is quality. “Standards are something people are looking for,” stresses Mr Salt. “The property has to be modern, smart looking, well-maintained, with good mattresses, good pillows.” The list goes on.
The Importance of Quality Property
An operative word in our discussion of property is quality. Mr Salt stresses how we also still need to improve our product tremendously. While the company director acknowledges the work the Malta Developers’ Association is doing to educate its members, he notes how a lot still needs to be done as foreigners are sensitive to facts such as noise, heat and cold insulation, properties being energy efficient. “If you can’t accommodate people, then it can affect their interest in investing and they might even reconsider the relocation itself. “We are becoming victims of our own success at the moment,” he observes.
We speak about what kind of demand there is. While first time buyers still look for two-to three-bedroom, one- to two-bedroom properties are probably more the current market demand, explains Mr Salt. Discussing the areas, he notes how while the Sliema and St Julian’s areas used to be the target for rental investments, today one gets good returns in many peripheral areas not previously considered such as San Gwann, Swieqi, Ibrag, Attard, Marsascala, etc. “Our busiest rental agent is in the south,” points out Mr Salt.
To meet the current demand, people need to look at what property they have, furnish it and rent it, rather than get bogged down with squabbles, notes Mr Salt. “We should be encouraging foreigners to rent in villages, and farmhouses,” he says. The issue, he says, is that foreigners have very different views to the Maltese and want to walk or cycle to work, which is why they are not considering such areas.
Leading the Game
We discuss Frank Salt Real Estate’s positioning and market share. There are no definite studies of the local situation, but Mr Salt likes to “think that our market share is one of the highest among estate agents,” notes Mr Salt. “Certainly,” he continues, “we are leaders in real estate”. Frank Salt has been around for 46 years and, in Mr Salt’s words, there isn’t an idea in real estate that wasn’t started by Frank Salt Real Estate. “A lot of the ideas you see on the market such as property magazines, branches, exhibitions overseas, were started by Frank Salt.” The company was the first to computerise their offices and the first to set up their own training academy to make sure their consultants are trained before they go into the field.
This is Frank Salt’s secret to success: a well-trained and loyal staff. “They are a cut above the rest, and we are grateful for that,” comments Mr Salt.
He notes how Frank Salt believes in the local property market. “Our philosophy is to expand slowly in a sustainable manner while still producing a quality product that someone spending a lot of money deserves.”
Looking back on 2015, Mr Salt says this year has been phenomenal. They are now half-way through their five-year plan and with their projections being met they can capture more market share and outdo their performance next year.
Looking to the future, Mr Salt does not see any mood for slowdown. “Property prices are going up but you need to be sensible because if you outprice the market it will slow it down,” he notes.
Douglas Salt’s rental property tips
- While investing in a rental property, it is sometimes better to buy four of a lower value and which you can rent out more easily, rather than one expensive property which might be more difficult to rent out
- The secret of a rental investment is to rent back to back
- It is worth investing in good quality finishes and furnishings for a rental property since this is what today’s tenant comes to expect. First impression counts!
Douglas Salt is company director and regional manager of the Frank Salt Real Esate St Julian’s and Spinola branches. He is President of Federation of Estate Agents and a member of the Valletta 2018 committee.
