Overpriced property ‘corrected’ by 10 to 15 per cent – Remax Malta

  • 26.June 2009
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Property in Malta that has been overpriced by inexperienced developers is seeing a correction to more realistic values.


Remax regional director Kevin Buttigieg: "Crisis or no crisis, we plan to expand with another four offices on the island." Photo: Chris Sant Fournier.

Remax regional director Kevin Buttigieg: "Crisis or no crisis, we plan to expand with another four offices on the island." Photo: Chris Sant Fournier.

Remax regional director Kevin Buttigieg says prices for property in the most sought after locations like the Sliema, St Julians and surrounding areas have held their ground. But prices in areas such as the south and part of the north have been corrected with adjustments of between 10 to 15 per cent in most cases.

Mr Buttigieg, who with his brother Jeff, added Malta to the world’s largest real estate network in April 2004, says his franchise has seen sales for the first quarter of this year rise by 15 per cent on the same period last year. He attributes the increase mostly to first-time buyers acquiring property in the €112,000 to €200,000 bracket. That is double the first-time buyers’ figure for the corresponding period in 2008, and 200 per cent over the first quarter in 2007.

“This is the best time to buy – it is a buyers’ market and the interest rates are attractive,” Mr Buttigieg points out. “People are seeing they can afford to take out a loan for a better property and grab opportunities when they arise. It must be pointed out that if sellers have their own financial difficulties, like making losses on the stock market, and suddenly find that they need to sell their property quickly, the price is reduced for a quick sale. It does not mean that property prices actually went down.


“It simply means this person had to sell because of unforeseen circumstances at a lower price to carry out the transaction quickly. Unfortunately people see this as a drop in price. It is not the case at all.”


Buyers, he says, are also becoming more demanding. The onus is on developers to offer better quality and the agents to provide a better service.


The property market, he points out, witnessed “massive growth” between 2000 and 2007 as developers fuelled a boom and up to 50 per cent of property was sold on plan. Mr Buttigieg, who says only one in four property sales in Malta involve agencies or freelance agents, insists many buyers who entered into promises of sale for properties during those years, often failed to lay down specifications for finishes. Quality on completion was often poor or far from expectations.


Developers – from large organisations to owners of villas and terraced houses – saw that people were willing to pay and upped their prices by 10 to 20 per cent a year in areas like Sliema and Madliena. As the craze caught on, developers operating in Fgura, Żabbar and St Paul’s Bay raised their prices to up to 20 per cent. Sales began to slow down when prices became unrealistic.


Mr Buttigieg believes buyers overspent on property in the period between 2005 and 2008 and it was not long before the brakes were applied. He says valuations and pricing determined according to a trend are slowly fading as more agents price property according to size per square metre as is the norm overseas. Remax’s 70 agents in Malta use electronic measuring guns to be able to supply clients with the measurements of every room in a property – one way, Mr Buttigieg says, to save both clients and agents time.


The recently established Federation of Estate Agents has been pushing for the government to issue a house price index periodically so that owners and estate agents may have a reliable guideline on which to base valuations and prices.


“In most countries overseas, agents are able to access official statistics on a database to find out what property in the area or even in a particular street was sold for in the past,” Mr Buttigieg explains.


“In that way, agents are able to show sellers and buyers that a determined price is realistic. It would help no end to have this facility here. Many people are disappointed when they make plans for their future on the basis of what they think their property will fetch, and are bitterly disappointed when the return is far lower than they were led to believe it would be.”


With the experience gained in selling property in Malta for only five years – he says transactions prove Remax is the top seller of Malta’s high-end property developments – he contends that the days of buyers signing on the dotted line blindly for properties still on plan are over.


“People are more exigent nowadays,” Mr Buttigieg points out. “Everyone wants more luxury in a property, and more and more people can afford it. Finishes will often determine if a sale is closed or abandoned, whether the property is intended as the buyer’s residence or as a rental investment. People also want their money’s worth. That is why the economic crisis will bring about a clean-up.”


All the “cowboys”, he says, will slowly be driven out of business: the sloppy developers, the shady professionals, and the turnkey contractors finishing properties with seconds imported from the East. The more professional agents who don’t like the look of a development are already refusing to be associated with low-quality properties.


Mr Buttigieg has noticed that developers with property on their hands which they have failed to sell are correcting their mistakes and replacing shabby finishes with upgraded materials and accessories.


He insists attention to detail makes all the difference. Even estate agents have to work harder. There was a time, he recalls, when agents acted like taxi drivers, scurrying clients from one property to another around the country, armed with a set of keys.


In the same way as the practice does not work with overseas buyers, it does not work with the Maltese. Clients expect agents to be familiar with properties before a viewing, know of every minor detail and even help them arrange meetings with the banks, and recommend furniture, furnishing and fittings suppliers.


“Within three years of kicking off a career in this business, most agents will earn their commission from repeat business – 75 per cent of their sales usually involve past clients or referrals. It is essential that quality service is offered to clients,” Mr Buttigieg insists.


“Besides, as a trainer leading a Remax programme overseas said recently, ‘a crisis is a terrible time to waste’. Crisis or no crisis, we plan to expand with another four offices on the island so there are franchise opportunities available for the more entrepreneuring agents”.


Mr Buttigieg also calls on the government to lend the developers and the stronger estate agents more support to promote Malta better. He says that, on the whole, the industry has really not done its bit to market the country. He points out that the developers and agents are ready to do it but they needed the government’s support.

Written by Joanna Ripard – Times of Malta