Buying a Property in Gozo

property investment

Gozo is the second biggest of the islands that form part of the Maltese archipelago, being approximately 14 km long and 7.25 km at its widest point. Often described as “Malta’s pretty little sister”, Gozo is more rural, undeveloped and still has a charming character in comparison with Malta. 

This island is also known as “the breadbasket of Malta” since a lot of farming activity and cultivation of fresh produce is evident everywhere you go. Although in recent years building and construction activity has picked up considerably, Gozo still remains the favourite of not only the Maltese but also many visitors to the country. 

It is a place for retirement, remote working, holidays and for getting away from the frenetic pace of Malta. 

If you are interested in buying a property in Gozo, this article will be of great help.

Why Choose Gozo for Property Investment?

Gozo is the preference for many property investors due to its laid-back lifestyle and charming character. It is also one of the few places in Malta where you can still find a “bargain”, as many of the villages have seen inhabitant numbers decrease over the years with many homes just standing, left to the elements. These are perfect opportunities for those that want a renovation project, but it must also be mentioned that they are becoming scarce. This is because most properties in Gozo are being snapped up by local and foreign investors who have a penchant for the past and those who want to own a home that is full of character. 

It is a favourite destination for retirees and families, as it is a safe, quiet and charming island that has a lot to offer. During the summer season, the influx of tourists sees population figures increase dramatically, especially in the popular resort areas of Marsalforn, Xlendi, Qala and even Mgarr. Gozo is a short ferry trip from Malta after embarking at Cirkewwa on the Malta side and arriving at picturesque Mgarr Harbour on Gozo. The total trip takes about 40 minutes.

Gozo Carnival takes place in February each year, drawing in thousands of additional visitors to the island. 

Continuous Growth in the Malta and Gozo Real Estate Market

Malta’s property market has been bullish and buoyant for many years now. Buyers, sellers and landlords have realised unbeatable financial returns year after year and this is likely to continue, fuelling the current construction boom.

Another plus point in Malta is that should you have owned a property for more than three years, the capital gains tax is more favourable. Combine that with the proven capital appreciation we covered earlier that applies to the real estate market and any investor stands a very good chance of seeing exceptional returns on their investments. This is not the case in many other European countries and the Maltese exception has catapulted the country to the top of the ladder.  

Being a full EU Member State, Malta’s government is democratically elected every 5 years and the country is considered to be an advanced economy by the International Monetary Fund, PLUS a high-income country by the World Bank. It is innovation-driven and Malta proudly promotes itself as the first “Blockchain”Island. Besides tourism, I-Gaming is one of the most important industries and the economy overall is described as highly industrialised and service-based. 

Due to Covid-19, Malta’s Central Bank predicted that post a contraction of 8.2% for 2020 due to the pandemic the country’s GDP will recover and grow by 5.0% for 2021, 5.5% for 2022 and an estimated 4.7% for 2023. Malta also has a very high employment rate of 74% with unemployment standing at only 3.4% for figures extracted for 2019 (as per TradingEconomics.com 2019 and the IMF). 

In Malta, 3-4% out of 200,000 local households are paying monthly commercially related rents. In 2018 out of 2.6 million tourists arriving in Malta, 300,000 stayed in accommodation that was not rented meaning they were staying with friends or owned a property. As we can see, the bulk of rentals are geared towards catering for the lucrative tourism market and short-term rentals. According to the latest figures, the most dramatic increase occurred in the last five years when tourism figures increased dramatically (bar taking into consideration the recent influence of Covid-19). This spurred on the building industry to go all out in the quest of supplying enough new properties for a demanding buyer’s market and is unlikely to end. The Maltese also have a strong cultural heritage of owning property rather than renting as mentioned before and it is estimated that only 20% of Maltese rent, with a good 10% of those under protection of the rentals act of 1995 (which is under revision). 

Although countless new building projects are also to be found on Gozo, the preference for most buyers is something old and of some age such as farmhouses and houses of character. This is especially true when investors are looking at settling permanently on Gozo. 

For those that come for weekends or holidays, the preference is ease of living and this is where apartments and short-let properties come into their own right. Farm houses, B&B’s, boutique hotels and lock-up-and-go properties as the most popular choices for this market sector, spurring many investors to look at these as options to buy and turn into a lucrative income-generating business in its own right.

Gozo’s property market is red hot at the moment and certain property types are commanding premium prices because of short supply. These will be farm houses, houses of character and also new lock-up-and-go properties such as apartments in the right tourist locations.

Benefits of buying property in Gozo

Gozo

There are several advantages to buying property in Gozo. Primarily prices are more affordable than in Malta although some of the property types offered for sale now match that of Malta such as farmhouses and houses of character.

Gozo is also the go-to place for locals from Malta for a break over the weekends and holidays, so there is a demand for short-lets all year round. Gozo is massively popular with UK expats and many other international tourists due to its historic and rural charm, fantastic diving spots and many outdoor activities on offer. Everything is within easy reach, sometimes within walking distance due to the island’s small size. The world-famous Blue Lagoon on Comino, which falls under the management jurisdiction of Ghansielem, Gozo, attracts up to ten thousand visitors A DAY during the summer and many of them stay on Gozo during their holidays, thus needing accommodation and fuelling the short-lets market.

Whether you are buying property on Gozo as a holiday home, permanent home or as a rental investment, you are likely to see a steady appreciation over time.

Gozo vs Malta Property Investment

For reference, the easiest way to check whether Gozo rental investment is more profitable than Malta rental investment is to compare different regions of the two islands. This is because the locations on the main island of Malta have a huge influence on price. In the graph below, the median used as the kick-off is Sliema at 100% and then the rest is compared to that figure. Therefore, Gozo still offers the best value for money when it comes to rentals:

Long-term rental price index in different towns/villages/localities in Malta vs Gozo

Region City Index
North HarbourSliema100%
South HarbourValletta91.2%
North HarbourSt. Julian's90.3%
North HarbourGzira75.1%
Northern RegionNaxxar66.2%
Western RegionIklin64.8%
Southeast RegionMarsascala53.7%
GozoVictoria 47.2%

(Reference://immigrantinvest.com/en/insider/malta-realty-prices-and-taxes-2021/)

Types of Properties in Gozo You Can Invest In

Apartments and Penthouses

Understandably apartments and penthouses are the most easy to rent out due to their lock-up and go characteristics. Penthouses nearly always come with a view, making them very desirable amongst tourists. Apartments can range in size from a small lock-up-and-go studio to a large 7-bedroom unit of monumental proportions. Apartments are low-maintenance and generally will have a minimum of two balconies, one from the front leading off the living area and one from the master bedroom at the back. Sometimes both balconies will be on the front. Luxury apartments located on or near the beach and promenades are favoured by affluent locals and international buyers alike, as it is usually close to popular shopping areas, restaurants and a favourite location frequented by Café society. 

Apartments and penthouses can be found all over Gozo, but the most popular areas are that of Mgarr, Xaghra, Qala, Xlendi, Marsalforn and even Gozo’s highest altitude village, Zebbug. Obviously the closer you are to the touristy areas, the better if you are going to rent your property out for short-term lets.  

Villas

Larger properties such as modern villas are not often found in Gozo, but as in Malta they are popular with families and often come with a pool. These homes can be of age or modern and minimalistic, while one can find some unrenovated gems as well. Perfect for bigger or extended families, villas are places to entertain, relax and even have business meetings.  Often available with extra land and rooms are large in size, these large properties can include reception areas, dining rooms, or even ballrooms and they often have spectacular views. They are ideal for business ventures such as small boutique hotels, embassies, guest houses and more. The surrounding neighbourhoods are discreet, quiet and tranquil and the types of homes normally have a minimum of three to eight bedrooms. Highly sought-after, updated villas usually feature in the luxury sector of the property market and come with security systems and all the other mod-cons. 

Farm Houses and Houses of Character

One of the fastest capital appreciation sectors of the real estate market in Gozo is the demand for Houses of Character has soared the last 2 years. Due to a limited supply, prices increased substantially resulting in many of the owners of these properties now holding on to them as long as they can. These types of homes usually require more maintenance and up keeping costs due to their age and are thus an on-going investment. Farm Houses and Houses of character are to be found all over Gozo and some date back hundreds of years and therefore are full of historic features.  Constructed to accommodate larger families, these properties usually have anywhere from two to four bedrooms, most of them on the upper levels. A favourable distinction of these homes were their inner or back courtyards, offering respite and shade during the hot summers and easy access to nearly all the rooms, as many have external staircases to access upper levels. In the case where it qualifies as a historic building, sympathetic upgrades are key. Essentials such as ventilation, plumbing, waterproofing and electrics may be required.

Things to Consider Before Investing in a Property

Malta Residency and visa programmes

It is important to keep a few things in mind when buying a property in Gozo or Malta as a foreigner/EU/Non-EU or even if you have Maltese citizenship but have not lived in Malta as a resident for 5 years.

If you buy a property in Malta and have not lived in the country for at least five years continuously, you have to apply for an AIP permit should the property be outside one of the officially designated areas. Here is the full list of the approved designated areas.

If you buy in a designated area, you do not have to apply for an AIP (Acquisition of Immovable Property) permit and you can buy as many properties as you like and even rent them out.

Should there be the need for an AIP permit, the process is simple and uncomplicated, but you can only own one property as your primary residence and the minimum amount you can buy for is around the €130,000 mark. Ask your agent for the exact figure as this changes regularly according to the Maltese House Price Index.  You will be allowed to buy for a lesser amount, given that when the property has been fitted, renovated and upgraded, it will be valued by a recognised architect as around the required mark. This is a popular option for those that buy for instance a shell apartment.

Costs involved in the purchase

Gozo offers a myriad of options when it comes to real estate investments. It is unlikely that you will find something substantial under the €100,000 threshold, but the best will be to speak to your estate agent. Below we look at some options and what you will get, followed by a breakdown of different property types and their cost per square metre.

  • €100,000

A small apartment which will need renovation of some kind or a shell apartment in one of the better known villages such as Xlendi or Marsalforn. 

  • €100,000 – €150,000

A liveable apartment of modest size can be found in this price bracket, but the block will most likely not have a lift and it may need some upgrading.

  • €150,000 – €200,000

The upper end of this amount is most likely to be your starting point for something in the right area or village that’s move-in ready.

  • €200,000 – €250,000

This will be the perfect entry-level bracket for an apartment that is in good condition and in a good location.

  • €250,000 – €300,000

In this budget range you will be able to find a sizable apartment and even start looking at penthouses or an older home in need of renovation.

  • €300,000 – €400,000

This budget will allow you to buy a good apartment in a nice location with sea views, up to 3 bedrooms, a penthouse and even a small House of Character. You will also be able to purchase a lovely property in one of the designated areas. 

  • €400,000 – €500,000

If this is your budget range, start looking at prime properties in good areas with sea views and a location close to the beach. Otherwise you can look at large houses of character or farmhouses that may or may not need some work to bring it up to spec. 

  • €500,000 – €1,000,000>

Your choice will be endless and depending on your taste, you will have access to old and new, the best areas, views, locations and more.

Average price per m² by housing type in Malta

Average type per m2 in malta

(Reference://immigrantinvest.com/en/insider/malta-realty-prices-and-taxes-2021/)

Location

If one is not familiar with Malta or Gozo, we have to stress the importance of location when considering investing in property. If the property will serve as a holiday home only for you and your family, the property can literally be anywhere depending on your budget and taste. 

If it is to be rented out as a business, other factors will play a role. Properties that are rented out short-term to the tourist trade are usually located in or near hotspots such as Victoria, Xlendi, Marsalforn and Qala or Mgarr. It is important that short-let properties are near or on public transport routes, close to shops, restaurants, the beaches…in fact anything that will play a role in the life of visitors and tourists.

Away from the hustle and bustle of the city

Should your choice be a farmhouse, these will usually be on the outskirts of villages and towns or even be in a remote location. Farmhouses and the right house of character are popular all year round with locals and tourists alike. These types of bigger properties provide a space and ideal location for escaping the frantic buzz of busy life. Farm houses almost always come with a pool as well, just what families want on a weekend break from Malta or the summer holidays. Farm houses are also popular during the Christmas season and are usually well-booked in advance.    

Close to the beaches and tourist attractions

Marsalforn and Xlendi are extremely popular with locals and tourists alike, especially during the hot summer months. It is here that you will find many hundreds of apartments and penthouses owned by businesses and individuals alike. Both areas are bustling with hotels, restaurants, bars and diving centres. Both Xlendi and Marsalforn have easily accessible beaches that are safe for families and both offer a “complete holiday”. Both locations are serviced by public transport and besides their obvious offerings also have access to wonderful walking trails and the countryside. Xlendi offers spectacular views from the cliffs on both sides of the bay while the nearby Sanap Cliffs are a short walk away.

Xlendi and Marsalforn are ideal locations for locals and tourists alike to own a holiday apartment, but both also count a substantial number of expats as year-round residents. Another village popular with especially holidaymakers is Qala, as it offers a traditional town square thronged with bars and restaurants and has the bonus of Hondoq Beach being close by, one of the prettiest on Gozo. 

Close to business centres and office hubs

Gozo does not have office hubs and business centres like Malta, but with the new Digital Nomad Visa on offer by the Maltese government, Gozo’s reputation as a laid back, affordable destination for creatives and intellectuals in the world of AI,  programming, digital design and marketing is picking up pace. Gozo has incredibly good access to telecommunications and high speed internet and this has made the island very popular amongst freelancers, illustrators, animators and even writers. Gozo is also a popular destination for movie crews from all over the globe, as scenes from “Game of Thrones”, “Gladiator” and others have been filmed here.  

Gozo has an established business and industrial park spread over several blocks on the outskirts of Victoria, where one can find anything from national companies to creative blacksmiths, carpenters and more. 

Purpose of Investment

Investing in a rental home

Buy and self-use (holiday home)

If one decides to purchase a property for self-use as purely a holiday home, the only restrictions are the AIP requirements should they apply and the minimum amount if you are a foreigner. As you will not rely on the property as an income-generating concern, this sets you free to buy a property of any type and in any location. If you buy the right property, your investment will appreciate handsomely over time as the buoyant Maltese property market has proven over the past few decades.

Buy to rent out/let

If the purpose of your investment is to generate an income when you are not in residence, our best advice is to speak to one of our agents when it comes to location, as this will be crucial to making it a success. Besides buying the right property, Frank Salt Real Estate can also manage your property by letting it out, looking after its maintenance and paying your bills on your behalf when due. In the meantime, your property investment will appreciate in value over time. As discussed before, Gozo is incredibly popular year-round as a getaway destination for both locals and tourists all year.

Buy and sell

Many people have found it very lucrative financially by buying and selling properties for a profit. Again, here one needs dome experience of the local market before you do this otherwise the best advice is to get one of our experienced and qualified agents on your team. They will be able to advise you of the best deals, find the right property in the right place and market it accordingly so that it will be more likely to sell sooner than later. After all, speculating in the property market is a hands-on venture and our agents will be the best locally-based representatives you can have when you are not in Malta or Gozo. 

Age of the Property

Although the initial sales price may look like a bargain when it comes to previously owned properties in some areas, it’s a case of “buyer beware!”  It is advisable that you have any second-hand property that you are interested in, evaluated and checked thoroughly by an architect and structural engineer. Buying cheap can end up being very expensive and as they say, “you get what you paid for”. This is not to say that there are not many bargains out there for grabs, just do your homework thoroughly and avoid impulse buying at all cost.

On the other hand, buying a newly-built property will have you enjoying guarantees and rights as per the law and should anything go wrong, you have legal avenues to pursue in order to cancel the sale and get refunded. Buying new also means you will not have any capital outlay to get the property up to standards for human habitation, as is often the case with resales. In order to maximise returns on your investment, old or new, Frank Salt Real Estate has a dedicated Home Interiors Division manned by qualified specialists who can assist in getting your newly acquired property into tip-top shape and looking its best when you start looking for those all-important tenants, long- or short-term. 

Quick guide on the process of buying property

investment

Obviously you have to qualify a budget, what type of property you want and the location that suits you. After having viewed properties with a qualified estate agent and finding the one you want, the process of buying is fairly simple. Your agent will arrange all of the documentation and processes needed to transfer and register the property in your name as the new owner. 

Below find a simplified overview of the process, step-by-step: 

  1. Draw up a Promise Of Sale (Konvenju) using a notary. This is the legal and binding contract with conditions as set out and agreed upon between you and the seller. 
  2. A date will be set to proceed to the next step of signing the final contract.
  3. During this process experts will investigate and fact-check everything regarding the property. 
  4. The notary will verify who owns the property, the area of land and its boundaries and whether there are any legal issues related to the property/or land. Additionally the notary will investigate what type of ground rent is applicable if at all, determine what fixtures and what fittings are included in the sale.
  5. The notary and their associates will execute searches on the property, check for any guarantees on the property, verify planning permission, building regulation certificates and also verify that the seller is the undisputed owner of the property.
  6. Once this is done, the notary will prepare to transfer the title deed of the property in to your name.
  7. As the buyer you will have to pay stamp duty/tax on the property.
  8. Now it will be time to sign the final contract.
  9. At this time you will also have to settle any fees owed to the notary, pay the stamp duty and pay the deposit of 10% of the purchase price if you have not already done so.

It is very important that you confirm with the estate agent and notary in writing that all diligence procedures have been followed and it is a good idea to have your independently appointed lawyer to scrutinise the contract before you submit your final signature. Under newly introduced property laws in Malta, the representatives of both the buyer and seller will be held liable if anything goes wrong or was not declared, so you as the buyer will be well protected. Once everything has been approved and signed, the contract will be registered with the Public Registry and you can take possession of the property.

Final Thoughts

Gozo as a real estate investment destination is a sound one. As with all business decisions, it will all depend on having the right information, making the right decisions and having the right team working with you.

It may be easy to get swayed by what looks like a bargain property coming on to the market, but depending on the intended purpose  of the property, all the factors like ownership, location, structural integrity, laws applicable to the existing property and its future intended use needs to be investigated and vetted thoroughly. This all takes time to be researched and clarified and having a really good local estate agent on your side can save you a lot of time and trouble. 

Your first step as a property investor is getting in contact with one of our branches who will assist and direct you through the entire process. Frank Salt Real Estate has been around for more than 50 years and as Malta’s oldest and largest family-owned and run real estate company, assisted countless buyers and sellers, local and foreign over that time. When it comes to dealing with Malta’s tough new property laws regarding anti-money laundering, proven ownership and looking after any investor’s best interests, you can rest assured that with our agents by your side, you will be dealing with a professional, government-qualified and licensed  real estate expert.