Portomaso has scored highly in two of the three top categories at the International Property Awards held recently in London I am delighted to share with the readers of International Property my views on the Maltese property market - a subject so close at heart to our 157-year old institution. For the purposes of this article, it would be worth making a clear distinction between the property market for residential and commercial purposes.  A similar distinction is required due to the fact that there exist some minor restrictions for non-Maltese residents. Prior to its accession to the European Union, Malta negotiated a derogation on the question of investment in real estate. In fact, prior to EU accession, the Maltese population at large was concerned that EU citizens would be massively interested in buying secondary residences in Malta and therefore, induce distortions in the real estate market. The EU acknowledged the sensitivity of this problem particularly because of Malta’s small size and the scarcity of available land.Therefore, it accepted to breach a fundamental principle of the EU, the Free Movement of Capital, to allow Malta to regulate the acquisition of secondary residences for EU citizens without any time limit.This is the only permanent derogation to the acquis that has been granted in the whole accession negotiations with the former ten acceding countries.
This partial constraint notwithstanding, the local private sector has over the past decade or so invested heavily in large-scale projects which were targeted at both the local and international market.
 Amongst the most ambitious of these is the Portomaso project - an exciting beautifully landscaped seafront development. Portomaso comprises a 295 bedroom, 5-Star hotel managed by Hilton, a 115-berth yacht marina, sea-front luxury apartments, a 10,000 sqm office tower, underground parking and two commercial centres. This project created numerous opportunities for employment as well as for foreign currency earnings for the country. In fact, buyers into the development include British, Italian, German, Swedish and Americans. Portomaso has scored highly in two of the three top categories at the International Property Awards held recently in London. It received the Gold Award in the Best Marina Development category and the Silver Award in the Best Luxury Development category.The awards are considered to be highly respected symbols of prestige and excellence in a competitive market, both for developers and the buying public. International property developers covet the International Property Awards in the same way that film stars covet the Oscars. A spokesman for the developers stated that the international recognition and publicity resulting from the awards to Portomaso was a further step towards putting Malta on the map and is proof that it pays to aim for excellence.
The influx of foreigners setting up business and/or residence in Malta has led the MIDI consortium of Malta’s leading entrepreneurs to invest in the Manoel Island/Tignè development. Manoel Island is a small island within Marsamxetto Harbour which is linked to the popular Sliema/Gzira area of Malta with a bridge and which has played important roles throughout Malta’s history as evidenced by the historical forts which still adorn the island. Such physical characteristics provide for an ideal setting for the project, which comprises luxurious residential, commercial and touristic developments as well as a yacht marina and the restoration of Fort Manoel, which will be put to new use. Properties in this project are selling rapidly despite the fact that the project has not yet been completed.
The Cottonera Waterfront Project is another major development, this time in the southern part of the island.The project is expected to embellish one of the Grand Harbour’s eastern creeks apart from generating another flow of new jobs. The development includes the building of modern apartments, a conference centre and a 600-berth yacht marina. Similar to the Manoel Island project, the setting of this development is also a historical one as Cottonera played an important strategic role in the Harbour during the time of the Knights of the Order of St John. This is evidenced by the numerous historical buildings in the area that are to be restored as part of the project. In fact, the historical “Scamp’s Palace” has already been converted into a casino. The “Captain’s Palace” will be principally used as a hotel with other parts dedicated to offices and business outlets.
Besides these large-scale projects, it is pertinent to mention that the private sector is actively engaged in other real-estate developments, which are targeted at a prospective investor who is looking for a property with characteristics closer to the Maltese identity. These could include houses of character in core villages or old converted farmhouses in rural areas and in Gozo - Malta’s sister island. Several of these farmhouses are also available on long/short lets even through the internet. Projects like these are contributing to urban regeneration in the Maltese islands as well as enhancing buildings in old Maltese villages. Previously dilapidated buildings have been tastefully restored to enhance the environment, atmosphere, characteristics and overall living standards in a number of villages and towns across Malta and Gozo.
Foreign investment in commercial property is also widespread especially as this is not constrained by EU derogations. Foreign investors have bought and/or leased commercial property for business in a number of sectors including manufacturing, tourism, catering, Information and Communication Technologies (ICT), financial services, retail and leisure.
It is also pertinent to mention the issue of local rent laws as this is of direct relevance to the would-be investor in real estate. Residential and commercial rent agreements entered into post-1995 are fully liberalised. Rents are negotiated and fixed according to market forces and may vary slightly according to locality. Certain restrictions apply to agreements entered into prior to this date and our Chamber is at the forefront in seeking to rectify these constraints with the local authorities as they are of direct relevance to the business community.
All in all, investment in real estate on the Maltese islands is considered a sound decision. Property in Malta has appreciated at a substantially high rate and was never known to depreciate. Economic activity in this sector is also considered to defy economic cycles. In fact the local real estate sector is not known to endure long periods of depression. There are presently around fifty established real estate companies operating in Malta - the vast majority of which are represented by the Malta Chamber of Commerce and Enterprise.
Louis Apap-Bologna is the Managing Director of Frederck Darmanin and Co. Ltd. and former President of the Malta Chamber of Commerce and Enterprise. Prior to being elected President, Mr Apap-Bologna held other important posts within the Malta Chamber of Commerce and Enterprise, including Senior Vice-President and Chairman of various Chamber Committees and Trade Sections.
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