An Interview with Grahame Salt
Grahame Salt, one of the directors at Frank Salt Real Estate, states that the foreign property market in Malta “had received a severe blow when the Permanent Residence Scheme was put on hold, only to be transformed into something unattractive later”.
How and when did Frank Salt Real Estate start off?
My father kickstarted FSRE back in 1969 after a short stint of working with another agency at the time. It started off with three employees out of one branch in Paceville and has since developed into a 13-branch business, employing over 100 employees.
Did you and your brother Douglas take over your father’s business? Or is he still active in the business?
My father sold the business to my brother, sister and myself around six years ago. He handed over a very healthy business and we have been building on this ever since. Once he sold, my father then took a step back in the running of the business and left it in our hands. Joe Lupi, our managing director, who has been with the company for many years, has been a great pillar, of course.
What was the property market like 10 years ago, compared to today’s?
The market in Malta always moves in cycles. 10 years ago, the market was very different, in the sense that prices were significantly lower than they are today. Supply was also lower, and the banks’ lending policies were more stringent too. There has always been stiff competition in our field, one way or the other. Today, the market has matured. There is no longer much of a speculative element in the market – back then, people would buy and resell property on konvenju (agreement of sale). Today, we need to look for ‘end buyers’ right from the start. Selling properties on plan has also become limited. We have seen a tremendous improvement in the quality of properties being offered on the market.
What has been FSRE’s secret of survival?
Our secret has been to always to stick to basics. It’s a family-run business and every branch of the company operates in the same way. We all pull the same rope. Everyone within the company understands the ethos that we promote. The client is always first and we put a tremendous emphasis on training our staff to be the best and most professional consultants in the field. We also have, over the years, fine-tuned our marketing strategies, both locally and overseas. Keep on doing the right thing and success will follow. Also, we have always strived to be innovative and forward looking.
What other markets has the company explored over the years?
Homes of Quality is a specialised branch of the company that deals with a special segment of the market. We felt the need to dedicate the right amount of effort towards this niche market and it has proven to be a great success. Today, HOQ, which is run by myself, is one of the company’s most successful divisions. Other services we offer are property management and insurance, after sales to clients requiring assistance in setting up their properties, project management and property development.
How has the internet change the industry, especially when it comes to property searching?
The internet is incredibly important as almost everyone is computer savvy today and people simply love browsing from the comfort of their homes. We try to offer as much information as possible online and constantly feed the people what the market offers. The human element is still extremely important though, as nothing can match a client to a suitable property as well as an experienced consultant can! However, the internet helps with a lot of the preliminary work.
How does your agency differ from other agencies?
We differ insofar as we consistently ensure that we are ahead of the game. We are the largest fully-owned estate agency on the island which ensures a homogenous operation, while offering the best service possible. We enjoy an excellent reputation and are trusted by everyone who works in the field. Our 42-year experience has helped expand the company’s brand. Our vast property database is constantly updated as well.
Do you believe there’s been a lull in the market, or slowdown?
The market does cycle occasionally. Over the past three years, due to all the excitement abroad (or lack of it!), the local market was also affected as people were waiting to see what the repercussions here would be. However, I believe that the local economy was not really badly affected. There was however an oversupply of properties following a boom in 2007/2008, and this meant vendors felt that their properties were taking long to sell. This is natural since supply was too high! However, this supply of new properties has slowed down and the market has balanced itself out again. What’s worth mentioning is that last year, the foreign market received a severe blow when the Permanent Residence Scheme was put on hold, only to be later transformed into something unattractive. The sooner everyone realises that we need foreign influx of capital (foreign buyers) into this island in order to keep the cogs turning efficiently, the better. Sales to foreigners only account for about 8% in total annual sales, but they still remain an important element of the market of course.
What do you think can be done to improve the situation?
With regards to the local market, market forces will sort out supply and demand naturally as they always have. With regards to government intervention, we need to make a serious effort to attract foreign buyers to our shores. We need to stop playing around and do this seriously. Other factors contributing to the rise in property prices are MEPA’s new fees, which should be controlled. These days, in order to apply for a block of 10 apartments, one will have to incur the hefty fee of around €60,000 to €70,000 – and that’s just to apply for a permit!
Do you agree with the Malta Developers Association stating that government-appointed architects don’t really have the feel of the market when it comes to reviewing a property and imposing fines on buyers?
Experience should allow them to get a pretty good feel of the market, but only if they consult people with a pulse on the market, such as estate agents. Generally speaking, I have never felt that architects are ideally positioned to value properties – they have virtually no experience in the sales of properties. There are exceptions, of course. Also, it upsets me to see the fees that are sometimes quoted by certain architects who do not even visit the properties they are valuing. However, these are hopefully the exception and not the rule.
What is your advice to first-time buyers eager to get on the property ladder?
First of all, think clearly about what you want to buy. Establish exactly what your budget is going to be before you even start to look by going to the bank, and so on. Otherwise, you could end up disappointed and you could waste a lot of precious time. Also, don’t start off by thinking that you need to view hundreds of properties before purchasing. If you are given proper guidance and if you are not just randomly shooting in the dark, you should be able to find a good property fairly quickly, and once you see one you like, don’t keep hoping that there may be a better one round the corner… a classical mistake!
What are buyers searching for these days?
The most common request is for apartments of all shapes and sizes. However, I am pleased to note that I there’s been an increase in demand for houses once again.
Is there an influx of unsold properties?
We have always had a large database of properties for sale at any one point in time. There are between 8,000 and 11,000 properties on sale in Malta a year, so these properties are constantly being turned over. Properties do not sell if they are overpriced, or if there is something really wrong with them. On rare occasions, owners are just unlucky that the right buyer has not yet come along. However, if owners follow our advice with regards to price and presentation, they generally sell within a reasonable time-frame.
What is, in your opinion, the most expensive area to purchase property?
Villas in High Ridge-Madliena, apartments in the Portomaso and Sliema Seafront (particularly Tigne Point) areas, houses of character/palazzos/country houses.
What do people look for most: price, location, space, views?
One of the most important factors is location of course, but price and accommodation and views also hold a lot of weight.
And how do prices compare to other countries like Spain?
When comparing like with like, we compare reasonably well. Although today there are many competing markets and some of them are very cheap. Malta is an established market and we have a lot to offer, so our prices are not low. If you mention Spain, the market is so vast that it is hard to compare. We are probably very competitive when we compare ourselves to certain areas, but the Costa Del Sol area is huge and some properties offered there are very cheap. But is the location so desirable and is resale potential good? I am not so sure. Markets have in fact recently crashed there.
Which are the worst mistakes one can make when purchasing a property?
Look out for permits. Today, this is a major concern. Also, make sure that accommodation suits you for the next few years at least.
Do you predict the market will improve this year?
I think the local market should do reasonably well this year. Local demand has no reason to fall and prices today are very realistic. If we manage to get our act together and produce an attractive package for foreign buyers also, then this year could turn out to be a very good one.
What are the common reasons that come up why properties are failing to sell? Overpricing?
Normally this would be due to overpricing or bad presentation. Some people don’t take our advice on price. Others try to sell their property without the effort of making it look presentable.
It’s generally accepted that in the past, mortgages were too easy to come by. Have we gone too far the other way now by having to go through a lot of red tape before being granted a loan?
I think banks have always been reasonably cautious in Malta. The general rule was that loan repayments could not exceed a quarter of monthly income which is affordable. However, today the banks are a little wary and at times are being over-cautious. Fear of failure is normally what causes us to fail!
What are the main reasons certain sales or purchases fall through?
The main causes are faulty permits or clients not checking their budget properly before searching for a house. They then realise they cannot afford the property they enjoyed any longer.
Finally, how’s the rental market doing?
The rental market is doing extremely well. We have been successful in attracting a good number of foreign companies to Malta and this has resulted in a huge demand for rental properties. I don’t think the market has ever been better.