Leading the Rental Investment Boom
Malta is currently experiencing a boom in rental investment, Frank Salt Real Estate consultants said, ultimately resulting in more investment in property with the aim to rent rather than sell.
The company’s team is currently made up of over 150 incumbents; a workforce of over 100 property sales and letting consultants, complemented by the administration team, all operating from 14 branches spread across Malta and Gozo.
The Spinola branch is strategically positioned on George Borg Olivier Street on the St Julian’s seafront. Managed by company director Douglas Salt, it encompasses a good mix of property consultants, bringing together varied experience from different fields and industries, and all dedicated to offering a boutique service to their clients searching for that special property. Their client base is no different to that of the other branches, with buy-to-lets being a core market driver for the team.
Sean de Domenico, a letting consultant at the firm’s Spinola branch, attributed the boom to various factors, with the influx of foreign nationals relocating to the island being top on the list. Malta is currently experiencing an exponential surge in foreign nationals moving to the island. Foreign companies are opening shop here due to the favourable taxation incentives offered by the island, whilst individuals are relocating here seeking greener pastures, thanks to Malta’s booming economy and expanding industries.
The demand is also augmented by expats and others retiring or taking up residence in Malta. “For sure, the days where Malta was considered mainly for holiday homes in the sun are over. Today our weather, sun and sea, are only a fraction of what the island has to offer! Sean exclaims.
So how is this positive influx of foreign nationals and their rental investment in Malta affecting the rental market and rental prices? “These are definitely on the increase. Owners are aware of the current shortage in quality rental properties. A property that would have rented out at €1,000 last year, now will easily rent out at €1,200. It would be safe to say that prices have increased by 10 to 15% this year, for good quality properties. Considering the supply is not as high as the demand, prices will continue to rise, so it is wise to consider a rental investment sooner rather than later.”.
“Some may argue that the increase in prices here in Malta is a negative factor, however the way I see it, is that 90% of our clients are foreign and therefore pay similar if not more in their native counties. Look at London, Berlin, Paris and all the other major cities in Europe and compare them to our property market, I can guarantee that you will not get a high end property in London or any of the mentioned above for €2,000 like you can in Malta, with beautiful sea views and to the highest of standards.
Douglas Salt, believes that foreign companies setting up shop on the island has had an excellent ripple effect on the property industry, both in terms of property sales and rentals. “Foreign companies opening an office in Malta pay an effective rate of 5% tax on income, which is unparalleled in Europe. Corporate taxation in Malta is at 35%, however shareholders are entitled to claim back part or even the whole of the tax paid by the Malta company. This is what makes the Malta taxation system attractive, ingenious and unique.
Mr Salt also spoke of those acquiring residency on the island. “Malta offers a number of programmes which make the island attractive for those seeking at taking up residence in a foreign company, often either to benefit from taxation incentives, or for better access to the EU and the Schengen zone. We also have a strong citizenship by investment option, which is actively being promoted by government across the globe. All these programmes require that candidates have a long-term place of residence in Malta, either by leasing a property, or through outright purchase.”
All this makes investment in rental properties a hot opportunity right now. “Very few people know that a rental investment is currently yielding an average of 5% rental return per annum. This can go up even higher, depending on the location, the level of finishing, and the original price that the property was acquired for. People would ask, wouldn’t it be safer to invest in bonds? I don’t think it’s the case. If you had to look at the most recent issue of government bonds, their yield was of some 2%. Looking at the private sector, the latest bond issue of some month ago was of 4.5%, but with a catch, as the bonds venture is unsecured. With a buy-to-let property, you are looking at an average rental return of 5% in the short term, to which you have to add capital appreciation in the long term. And if there is something that the Maltese believe as most secure in terms of an investment, that would have to be property.”
So what can a property agency offer over and above a Sansar and the internet? Stefan Borg, member of Spinola branch’s team of property sales consultants, explained that Frank Salt “has much more to offer. To start off with, you have the goodwill that the company has to offer. No other agency in Malta boasts of as strong a reputation as ours, one that we have built over more than 45 years since the company opened shop in 1969. If you are looking to sell or rent out your property, when we take a property on our books, we cover our clients with a qualified contract, thus ensuring that the clients’ interests are well protected. Then there is the marketing element, whereby with an agency such as Frank Salt you have a network of associates that are all actively promoting your property with clients. The same happens with buyers, who know that when dealing with Frank Salt, they have complete peace of mind and probably the largest selection of quality properties to choose from.
Sean adds on that with Frank Salt Real Estate, the service offered does not stop at selling or renting out a property. “Normally our clients also rely on our guidance throughout the whole process. We help them with all the other related stuff, from getting a home loan for first time buyers, to getting an internet connection or relocating your pets by a foreign national who is new to Malta. The list of examples of how we try to support our clients is never ending, and this we do as an added value.”
“Frank Salt’s policy is team work!” Property Sales Consultant Nadya Muscat explained. “If a client has a specific requirement that is not in your area of expertise, thanks to the teamwork at Frank Salt, you can go to a colleague who has more knowledge in that area and get help. This provides a faster and more accurate result than if you were stumbling along on your own.” She explained that by going through an agency, clients can benefit from their experience and an extensive database. “Once a client explains what their needs are, we can narrow down the property search as close to their specifications as possible, this way saving time and providing a better choice at the same time. The agent also acts as a mediator between the owner and potential buyer, doing their best to resolve any complications that might arise, which is more likely to help the sale go through, and in this way also providing a sense of security.
Nick Portelli, another sales consultant believes it is impossible to see every property that is available on the market, stressing that this is where a property agency comes in. “You not only have to find the property, but you have to understand its intricate details. When you have a good quality property it won’t stay on the market for long”.
Looking at the prospects of the property market from a general point of view, Nadya explained that the sales market is also on the up and up.
“The past 18 to 24 months have seen property sales are gaining momentum, and not only when it comes to buy to lets. National initiatives like the First Time Buyers scheme have helped the market tremendously, with the effects also rubbing off positively on the Second Time Buyer market. Once a first time buyer buys a home, that owner can start looking into buying their new property.”
Stefan Borg pointed out that as an extra initiative for Second Time buyers, Frank Salt Real Estate offers such clients a cashback of €1,000 when they buy and sell a property through the company over a period of 12 months.
How about the quality of properties currently available? According to Nick Portelli, the most recent addition to the Spinola branch team, new properties being built often reflect today’s demand, with an emphasis on quality finishes, spacious layouts and outdoor space. A number of developments are also being built keeping the rental market in mind, often offering smaller abodes that cater for clients seeking 1 or 2 bedroom accommodation, instead of the conventional local demand for 3 bedrooms.
Douglas Salt adds that with the new measures introduced in the Malta 2016 budget will also boost interest in older type properties, particularly vacant ones that are set in Urban Conservation Zones.
Discussing client-agent relationships, Stefan shared that for him, understanding a client’s needs is essential. “It is only then that you can provide the best quality of service possible”. The challenge which all such consultants face, he said, “is winning over the client’s trust in a very, very short time”. Stefan has been dealing in property for quite a while.
Frank Salt has been in the market for the past 45 years and Douglas Salt described the agency as being leaders in the field. “We are strong in the foreign market, where we have, by far, the largest share on the island. We have also always been dynamic and leaders in adapting to market conditions and taking advantage of new opportunities. Thanks to this we can today also affirm that we are leaders in rental investment properties – with all our consultants having received specific training on how to look at property from an investor’s point of view. If one is thinking of investing in a buy-to-let, they should definitely speak to Frank Salt Real Estate first.”