Every country, every business, every person has been affected by the coronavirus pandemic. The question we get asked daily is: how has the local property market fared?
In a nutshell, 2020 has proven that Maltese real estate is remarkably resilient, and here’s how.
Adapt or be left behind
Fingers crossed and ever hopeful, Malta couldn’t get away from COVID-19. It took a little while to reach our shores, but in the end, we were unable to escape its clutches. Almost immediately, all property buyers, sellers, landlords and tenants erupted in rampant speculation about what this would mean for the real estate market.
At RE/MAX, we have been in a position to analyse the situation and understand what really needs to be done to keep the market ticking along – professionally and steadily.
Technology and training are crucial, and both have been at the top of RE/MAX Malta’s priorities since the get-go. In fact, RE/MAX has consistently been at the forefront of technology in the local real estate market and continues to upgrade and update its tools and related training yearly.
Price correction and stabilisation
Malta’s property market had already started to slow down in summer 2019, which was to be expected. After the rentals boom and the consequent price hike, a stabilisation of prices was much needed – and COVID-19 was just one of the triggers.
Ultimately, people still need a roof over their heads, so the property market will never grind to a complete halt, which is what has happened in other sectors. What we are seeing and will continue to see is a natural rise and fall of supply and demand as the market – both locally and internationally – adjusts itself to the realities of the pandemic.
Rentals – hit but surviving
The largest knock to the property sector has been felt by real estate rentals. There has been a 15 to 30 per cent downturn in lettings across Malta, which is unlikely to recover for another couple of years at least.
Malta used to have a very small property rental industry. This, however, exploded with the arrival of foreign companies, as well as their employees, in the iGaming and financial services sectors. In fact, 85 per cent of RE/MAX Malta’s rentals depend on foreign clients.
What we are witnessing in 2020, though, is that fewer people are immigrating to Malta. As more and more companies have adopted a working-from-home approach to survive this period, foreigners have been able to return to their home countries to ride out the pandemic. The result? An undeniable lettings slump, which seems likely to persist.
Landlords’ new reality
We are yet to see how the working-from-home concept will impact rentals in the long term, but we like to believe that things will eventually return to normal. People in many industries appreciate the face time that an office environment brings, and many see this as irreplaceable. In the meantime, though, landlords are facing some tough decisions.
Some rely on their rental income to repay loans and to fund their own lives. If the lettings sector remains precarious, they may be forced to sell their properties. However, in the current market, a quick sell is highly unlikely to garner a lucrative return. The numbers we are seeing show that sellers are likely to make a 3.5 to 4 per cent return on their investment, as opposed to the 5 per cent we saw prior to 2020.
Bargains to be had
Despite the knocks to the economy, the property market is full of good deals for buyers because aside from the slight price correction not much has changed.
People are still looking to buy, which is positive. What we are seeing, though, is that buyers’ choices seem to have quickly evolved – mostly due to people’s experiences under lockdown measures.
Lifestyle – especially mental and physical health – is now front and centre in people’s buying requirements. What this means is that buyers are generally looking for outside space at home, and sales of villas with gardens and pools have increased. The ability to spend time outdoors while at home is now a top requirement rather than a luxury associated with wealthier clients.
What this means for the future of Malta’s real estate market is still to be determined. However, a complete overhaul of what and how property development takes place on the island seems likely – or, at the very least, sorely needed. The current restrictions placed on balconies and terraces impact what can be offered to low to mid-income earners, and this will become a pressing issue if pandemic-like living conditions persist.
Time to reflect
The results of 2020 will see some businesses come out on top while others fall by the wayside. And the secret to success? Knowledge and skills for increased innovation and adaptability.
2020 has given Malta’s real estate market and agencies a chance to reflect and re-evaluate. RE/MAX Malta has taken this opportunity to invest in and upskill our associates. In-person viewings have slowed down, but thanks to our agents’ tech-savviness and the company’s digital investments, we have had the flexibility to conduct tours online and keep honing our knowledge in this regard.
“Rethink, restructure and reorganise” has become our mantra. Tend to the weak spots, increase support for agents, improve their career prospects and that of the company. Only in this manner can any stakeholder within Malta’s real estate sector truly overcome this wave of uncertainty.
Contact the RE/MAX Malta team today for more information on how you can make the most of buying, selling and renting property in Malta and Gozo.