History of the Real Estate Market

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In Malta, 95 per cent of the people own their own property and the real estate industry including construction is 15 per cent of GDP making it highly important to the government. Tourism accounts for 30 per cent of Malta s economy. This creates demand for holiday villas and apartments, hotels, and general demand for real estate as it is nearly 50 per cent of our GDP.

Since Malta s independence in 1964 from socialist to a nationalist government there was a massive swing to privatisation such as the Drydocks, Malta International airport and Mid Med bank was purchased by HSBC. This capitalist shift changed the mentality and the appetite for property investments as there was a demand from the British living here or for a holiday home, Russian and Libyan nationals.

In 2004 joined EU which shifted demand to the next level with unprecedented demand due to foreign direct investment reaching over 1 billion euros per year. Non-EU nationals and companies and EU nationals opted for Malta. With its low bureaucracy levels, English speaking nation, low cost of labour, low taxes and a passport to Europe ticked all the boxes. Besides the stability of the Euro and Malta s proximity to Africa, one hour to Milan we are the heart of the Mediterranean. Even Lufthansa set up hangars and Ryan air set up a base here besides most of the luxury aviation companies and superyachts are registered here.

This created demand for warehousing, office space, several Italians moved here and opened restaurants, coffee shops and languages schools. These are required commercial spaces which are in limited supply.

Mainly increase in demand was due to low corporation tax for international companies of 5 per cent is one massive factor, also we have some of lowest taxes in the world for renting, buying and selling property which allows you to make a generous profit. We also offer residence programme which is nearly sold out due to the above factors whilst we are one of the leading Internet Gaming hubs of the world, and more recently Europe s marijuana manufacturing home.

Purchasing a property or even two is part of our DNA with property transactions of 10,000 in 2018. This dynamic industry is very fast and strategic with a good upside. Selling a property in Malta is also about waiting for the right moment to maximise your returns specifically with regard to taxes and tax reliefs and regulations.  The Maltese government every year is trying to participate in the market mainly through tax discounts to incentivise the market in certain areas like Gozo to get it going. Some of these regulations apply in particular if you’re buying a property in Malta as a foreigner.

To ensure you get the best expertise on the islands please contact Jerome Estate Agency by selecting from our multilingual and accredited consultants from the rate our agent page.

Type of Property mix

At the time when Malta got its independence, all the properties in Malta and Gozo were built at the beginning of the century or earlier. These were composed of houses of character, palazzos, farms which were converted into dwellings known as farmhouses and Townhouses. 

As Malta s population started to increase as many families were having 10 children on average the need for housing began to go up. The developers began building three-storey terraced houses and large villas to fill the demand. In the 1970s there was an influx of British, Libyan and even Russian communities. These large families began having grandchildren who also needed a home. This was the start of the apartment complexes with the very popular maisonettes and penthouses that came with them. Since Malta is a very hot climate these properties have outdoor areas which offer an added value. 

In 2001 Malta built its first high rise called the Portomaso Business Tower in the centre of St.Julians and along Malta s promenade. This started the evolution of Malta into an international hub of foreign investors by offering a 5-star luxury product. Due to its overwhelming success since then, there have many other high rise buildings and Siema, St.Julians, Gzira and Mriehel fall within the high rise zones.

Pricing Trends

The historic data of Malta real estate prices have been on the increase since the data collection started. Over the last 10 years, the prices have almost doubled in Malta due to the above reasons. Property prices for sale and to let are open to the individual are not enforced as it is an open market. The only new regulations are regarding extending property leases whereby you can only increase by a maximum of 5 per cent year on year unless you decide to change tenant.

During the first quarter of 2017, the Property Price Index increased by 4.8 per cent when compared to the corresponding quarter of the previous year. The Property Volume Index rose by 11.1 per cent in the first quarter of 2017 when compared to the same quarter of the previous year. The majority of properties considered for the compilation of both PPI and PVI in 2016 were apartments with 75.6 per cent, followed by maisonettes with 20.0 per cent and terraced houses with 4.4 per cent respectively. https://nso.gov.mt/en/News_Releases/View_by_Unit/Unit_A5/Price_Statistics/Documents/2019/News2019_109.pdf

During the first quarter of 2018, the Property Price Index stood at 111.11, a rise of 5.2 per cent when compared to the corresponding quarter of 2017.  Provisional figures indicate that the main driver of the increase was the Apartments price index, although the Maisonettes price index also went up.

 During the first quarter of 2019, the Property Price Index increased by 6.5 per cent when compared to the corresponding quarter of the previous year.  Provisional figures indicate that the main driver of the increase was the Apartments, although the Maisonettes price index also went up.  In the first quarter of 2018, the PPI registered a rise of 5.3 per cent when compared to the same quarter of the preceding year.

NSO Report 2019

The average rental rate of return for residential is 5 per cent with a possibility of higher rates for holiday homes. Whist for commercial real estate the investor seeks a return of a minimum of 8 per cent rising to 10 per cent. This means on average as a minimum the return is 10 per cent total whilst loan repayments interest are 3 per cent. Whilst for commercial a minimum of 13 per cent rise to a maximum of 18 per cent with interest rates at 5 per cent.

The increase of prices combined with Malta fair tax system and low bureaucratic measures make it a very appealing market for the investor.

 Development of Areas

In Malta something which is very particular is that the capital of Malta Valletta until 2010 was a low-class area. There were and are still many government housing projects.  Since Valletta had been built after the war broke out  thusands of people were left homeless. The government changed the law and forced the landlords to allow these people to live in their dwellings for little or no charge in the 1960 s and 1970s. The law did not enable the owner to remove the tenants and protected them. In 2015 the law was changed in favour of the owners who are now repossessing their properties.

Malta most top areas were Sliema, St.Julians, Ta Xbiex, Mellieha Santa Marija Estate and Wardija. This is still the case till today but also include Madliena and Valletta in terms of the price per square metre. Sliema and St.Julians are the touristic capital of Malta sharing the same adjoining seafront promenade. Locals can enjoy the benefits of all the best hotels in Malta, the best restaurants, cinema, bowling, cafes, shopping complexes make them very popular with the ex-pats and tourists. The majority of the new build office buildings are situated here so one can work, live and play in the same square mile with the need for a car or public transport. This is one of Malta s main competitive advantage.

Mellieha’s Santa Marija Estate in Malta s version of Hollywood with approximately 50 stunning villas generally starting at 500 square metre plots situated in the hillside of Mellieha surrounded by countryside and overlooking the gorgeous Mediterranean sea. Wardija is perched at the top of a hill in the north of Malta, it is home to 20 villas and palazzos surrounded by the countryside. Ta Xbiex is in between Sliema and Valletta in the port of Malta in front of the marina. Luxury mansions line the street home to many of the embassies and many of Malta’s top companies. In 2010 Valletta started to gain in popularity as the government commissioned Architect Renzo Piano who restored the entrance, Parliament an ancient opera house. The local investors came on board and began restoring it to its former glory making it one of the most expensive areas in Malta.

Over the last 5 years, Gira and Mriehel have begun to grow in stature. Gzira is excellently located in between Sliema and Ta Xbiex promenade. Several of the ex-pats started renting office space as it was cheaper in that area and their staff needed property also to live in. Being 10 minutes by walk to Sliema centre. Mriehel is Malta s version of Canary Wharf, known as our commercial district. It is home to the largest department stores in Malta. It has lately been granted a high rise status and many high-quality office spaces are being built.

The future

Malta and Gozo are very small islands so the supply will always be limited. There is a focus on the environment and pressure groups which are not allowing the government to add land to the development zones. There are also several ancient towns which cannot be touched, only restored such as Birgu, Valletta, and Mdina.

The demand in Malta is constantly on the rise with an International Monetary Fund Report for  2021 at 7.5 per cent economic growth. Malta population continues to rise annually whether from professionals working in our thriving finance industry, labourers for the construction industry or high profile investors opening a business in Malta. These are the cherry on the cake as the locals have an appetite for the property they view it as a very safe investment with a rental return of 5 per cent above the  5 per cent capital appreciation.

Luxury lifestyle developments are a tremendous success and will continue to do so. As people have less and less time off work they expect all the benefits of a luxury lifestyle.  The portfolio is part of the Hilton complex and all its relative services that come with that. The fact there all EU and non-EU nationals can buy, rent or sell any number of units with no paperwork gives the owners of such properties in Malta or Gozo an advantage over properties.

Therefore purchasing a property in Malta is a wise investment and a long term investment. In times of economic downturns you hold onto your investment and there are opportunities to buy as the price is low with a massive capital appreciation potential.

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