Investing in Rental Property

The influx of foreign nationals moving to Malta, be it to retire, to relocate or to work here, has paved the way for a new golden opportunity – rental investment. The growth of niche industries such as gaming, pharmaceuticals, back-end office operations and financial services and blockchain industry has led to a strong surge in demand for rental properties.

What’s more, interest in Malta as an ideal destination where to retire or relocate to is on the rise, with many opting to rent, and eventually invest in their own property. Local demand also factors in with many breaking tradition and opting to rent out. This is a widespread trend amongst the younger generation who prefer to rent out before purchasing their own property, as well as for single parents and separation scenarios.

It is thus for good reason that many have already seen the investment potential in this, which is two-fold: holding property as a secure investment that will retain its price and appreciate in the long term; and a steady stream of income in the form of rental payments. Factor in the excellent choice of good value property available at the moment and the attractive interest rates on home loans, and surely the recipe for a solid rental investment cannot be more fool-proof.

But what kind of rental return is one to expect? At present this is estimated at between 3.5% to 6% per annum. It very much depends on the type of property in question, the location and more importantly the level of finishing and furniture within the rental investment. Many prefer to rent out properties that are in the proximity of their workplace with Sliema, Msida, St Julians, Gzira and the surroundings being most sought after. Special Designated Areas, such as Portomaso, Pendergardens, Tigne Point and Fort Cambridge are popular high-end options, however smaller units in the region of €175,000 to €260,000 can still yield very attractive returns. Proper finishings and modern furniture is a plus, with all common appliances and daily commodities being expected by the tenant. This does not need to scare off potential landlords as options are now available where one may furnish a complete rental investment property from just over €15,000. In addition to this, various companies, such as Frank Salt Real Estate, can also help with the finishing and management of the property, turning the entire undertaking and day-to-day running into a piece of cake.

One final aspect to keep in mind when considering a rental investment is that whilst the loan repayment is likely to remain constant over time, inflation and the cost of living are likely to keep rising and population growth and demand for property from overseas will keep creating demand. This ultimately drives up rents, especially if supply cannot keep up with the pace – which is what Malta is experiencing right now.