Identifying the Options for Rental Investments

  • 10.December 2016
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Rental investments are at an all time high at the moment on Malta and Gozo. There has never been a better time to invest your money in the real estate business with a good certainty of positive returns. Whether you are a Maltese national or a foreign investor, the local market takes some understanding in order to perceive what works best for which sector in order to clinch maximum benefits, possibly year round.  The rental market is at its most buoyant though it is mostly important to seek advise from a real estate agent that is specialised in the field that will help you purchase and possibly even rent the property before you sign the contract.

There are different segments of the Maltese rental market that attract different kinds of investment options and offer different returns. Whatever the investment budget at hand, you are likely to find something to work with, though just like any investment you must be guided.  Here are some distinct categories to consider with their pros and cons:

Flat rental

This is by far the strongest property investment option at present. The islands attract a huge number of foreigners, not only holiday makers in search of the typical self-catering apartment, but also several foreigners who are relocating here for work related assignments in industries such as iGaming, Finance and others not to mention foreign and Gozitan students that choose to purposely proceed with their studies in Malta. The internet has given many the possibility of being independently employed, freelancing their way far from home. This apart from older travellers of pensionable age, who come frequently for holiday breaks or to examine the local scene with the intent of eventually relocating here as ex-pats.  Rentals are also sought by the Maltese themselves, especially young students or young couples and single parents. Therefore the options are myriad, whether for short or long-term rentals.

A large sprawling seafront apartment with Infinity pool will evidently attract a different client from a tiny studio flat located close to the university. Selecting your rental investment means you have to identify the best location for your target market, since this greatly influences the type of people you attract, the amount of money you can collect and the manageability of the property. Holiday rentals obviously need to be fully furnished down to bed linens and toilet rolls, but apartments intended for locals can sometimes attract customers even when completely bare, since long-term rentals to locals mean they might already have previous furnishings they might want to relocate with.

In reality, as for any investment, spreading the wealth may be the best strategy unless you are planning on buying a property investment which eventually is where you plan on living in the future.  If you are purely looking at rental investments, purchasing more than one unit may be the smartest decision.  Though it may entail more work in the sense of chasing different tenants for rent money as well as maintenance and upkeep of the property it also serves as a safety net when it comes certain scenario’s when the property may become available for a certain period of time.   Whilst if you have one property, the turnover of revenue will be bare during these days/weeks/months whereas if you have two apartments for rent, when one comes available the other will still be garnering rent.

It is also good to note that when one is working in the medium to upmarket rental market, the higher yields come in smaller packages (one and two bedroom apartments).  This is because the initial layout of the investment is less whereas the demand is much higher than larger apartments thus rental prices will be higher per square metre and therefore the %age of rental yield will be greater.  With more apartments in your portfolio there will obviously more maintenance though this may also be resolved by hiring a property management company.

Garage Rental

There are thousands of cars on Malta and many families own up to four vehicles. Although the island is small, the road network is pretty intense and compact and commuting to different places in any one day generally requires car transportation. Therefore garage spaces are always much sought after and required. Garage rentals may not be as profitable as flat rentals but you have to bear in mind  that garages do not need to be furnished and this of course saves you money from the onset. Single or multiple car garages are both popular. You may want to look into the option of investing in garage space for commercial vehicles which is an interesting alternative. Garage rental is also an option for renting out for productive activities such as those carried out by car mechanics, sprayers, carpenters, upholsterers and more.  With this latter range of possibilities in mind, keep in mind noise levels, residential proximity and permits as may be required.

Villa rental

Villa rentals are mostly sought after by foreigners who move to Malta in order to relocate on a longer term due to employment reasons. Others require villa rentals for short term occupancy linked to vacation, training, diplomacy, academia or projects such as those linked to the movie industry or cultural events.  The villa rental business will require considerable investment and regular maintenance and upkeep in order to maintain the high standards linked to such a property and the price it would command.  Taking advantage of the high demand due to a lack of hotel beds is a natural decision though one must note that there are several planning applications that will bring in a number of new hotels and more hotel beds to cater for this lack of accommodation.

Part II continues with more rental options.