We’ve just published our first quarter 2019 property outlook, which contains some of the insights from our market research practice. Overall, we are feeling good about Maltese property, and Gozo property especially. The sky isn’t without clouds, but it is mostly blue as far as we can see.
So what makes us feel good about Gozo? In a nutshell: the state of the economy, the population trends, the business activity and the price difference between the North of Malta and Gozo. There’s also Brexit as a wildcard here. Let’s see some of the details.
Malta is in a strange place versus the classic “Goldilocks economy” (not too hot, not too cold) story. In some ways, and definitely judging by the amount of time we spend in traffic behind concrete trucks, the economy is overheated. When we consider that the entire country’s economic output is around EUR 11 billion a year, and a single large real estate agent managed to sell about EUR 1 billion worth of Maltese property in 2018, well, “overheated” does come to mind. However, Malta is but a small piece of the larger EU economy, which is slowing down. Translation: low borrowing rates (thanks to the slow eurozone economy) and hot property market. Sounds good, while it lasts.
[infogram id=”_/MwsoI7tuwCF26of4CIDr” prefix=”W0V” format=”interactive” title=”Malta vs EU GDP 2011 – 2022″]
Construction activity is catching up with Malta
Demand for property in Gozo is growing, and this is reflected in increased construction activity. We can discuss all day about the quality of the inventory being built, but there is no doubt that the demand is there.
[infogram id=”_/c9prdcLW9kNZGsUHaBVW” prefix=”9g0″ format=”interactive” title=”Malta and Gozo full development applications”]
Gozo property is still much cheaper than in the North of Malta
There’s a lot of talk about the new tunnel between Gozo and Malta, which is set to become a reality in the next years. While the locals wait for the current ferry capacity to catch up with the needs of the community, property prices also have some catching up to do with the North of Malta. The graph below is pretty self-explanatory: the same apartment is more than 40% cheaper in Qala (Gozo) than in Mellieha on the other side.
[infogram id=”_/wF2WVnVOY2ujYASNICwn” prefix=”1Ic” format=”interactive” title=”Malta and Gozo apartments price differential”]
Population is growing fast
An undeniable trend in Maltese demographics is fast population growth in a country with very limited buildable land. Our own Gozitan sources tell us of daily inquiries from residents of Malta who find themselves priced out from the larger island. In spite of all the signs of speculative overheating of the property market – apartments selling off-plan two years before completion and changing hands several times among others – there’s nothing to say: more and more people are coming to Malta to work, and they need a roof (if only they could do without a car!).
Brexit: good either way?
Finally, Brexit is the wildcard here. On the one hand, we have seen and heard many times that British buyers have dried up since sterling took the plunge post EU referendum. If Brexit does not happen, or happens in amicable terms, sterling will raise its head and sterling liquidity will make it back to these rocky shores.
If, on the other hand, the UK crashes out of the EU, things become less certain and potentially more interesting for the small island country. Cyprus and Malta will be the only EU countries to feature a special tax regimes for non-doms, that is foreigners, to simplify. That is deeply attractive to foreign retirees, digital nomads and generally wealthy people. Second, if the UK loses access to the EU-wide financial market, we might see a second Viking migration to the archipelago: after the Swedes came in droves to set up gaming companies, some of the displaced UK-based financial companies may make their way to Malta. Is it certain? Certainly not. Possible? Definitely. If so, it will be huge.
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