Local Market Insights October 2021

Starting with the good news after a rough year and half since COVID hit economies both locally and globally, we are finally seeing a more settled business environment that gives all industries in Malta a more positive outlook. Yet, what we can realistically expect from the future depends entirely on how we are going to handle COVID from now on.

When the epidemic started, the real estate market flattened and the demand was the lowest it had been in the last 10 years. Both rental and sales properties were affected by the multiple lockdowns, and different restrictions. The rental market started slowly to bounce back from an average 30% price drop. Thanks to the inner power of the rental market, the residential market survived external factors like COVID relatively well and business soon started catching up once more. On the other hand, the commercial rental market saw a much greater supply than demand. Some prime rental commercial properties have remained empty for years and it is important more than ever before for agents to guide property owners along the way, in a realistic way that reflects the current market.

Thanks to the variety of tax incentives and the fact that Maltese property owners sell for profit and not out of desperation, the sales market prices have not gone down to date. Prices have more or less remained the same as pre-COVID, and if we can trust that COVID won’t bring any further restrictions and lockdowns, we may soon see a slight increase again. At the moment, in particular low end properties are high in demand for mostly first time buyers. Rental investors are seemingly cautious and most of them are only looking for under-priced deals. In the leading zones such as Sliema and St Julians only a limited inventory is available and among those, there is merely a handful of ready-to-move-into, furnished and equipped properties that clients could actually choose from. Developers are careful in their purchases as well.

We are optimistic about the last quarter of the year, but we advise property owners to still remain realistic and not to be over-confident. The rental prices were already higher pre-COVID than what people were willing to pay for property. If anything, Covid managed to positively balance the rental market. If we maintain a healthy rental and sales market, the country can keep its strong foundation of the real estate industry intact.