Capital markets have “facilitated growth and promoted better transparency and sustainable practices” in the real estate sector, experts agreed at a panel discussion on Monday.

The panel, held at the Malta Stock Exchange and organised by the Malta Business Network, honed in on how the equity and bonds market has contributed to Malta’s real estate boom in recent years.

Panellists included Charles Xuereb, CEO of Trident Estates plc, Matthew Xuereb, Director of Financial Advisory at Deloitte, Simon Zammit, CEO of the Malta Stock Exchange, and Vincent Rizzo, Director at Rizzo Farrugia. Additionally, lawyer and Partner at Camilleri Preziosi, Malcolm Falzon, moderated the discussion.

It agreed that real estate bonds and equities offer unique investment opportunities and can serve as a crucial financing mechanism for real estate developers and investors.

During the discussion, Mr Rizzo argued that issuers’ communication with the market “has come a long way in recent years, as have investor relations and transparency.”

However, he stressed the importance of utilising the market as a long-term relationship with investors, rather than a short-term financing vehicle.

“This shouldn’t be just about one project necessarily, but about building a long-term relationship that can be about so much more than just one project. The backbone of all this communication,” he continued.

Matthew Xuereb argued that the minimum requirements in place for communication through the capital markets sets a good minimum, but the “best practice” is to be as open and transparent with investors as possible.

“Personally, I would advice that being open is the best policy,” he said.

Asked about the role property evaluations play in the market, Charles Xuereb said that while the value given to real estate holding plays a major role in a company’s balance sheet, valuations are subjective.

“It’s up to directors to decide whether they feel the value given by evaluators reflects the true market value,” he said.

The real market value will remain that figure that buyers or tenants are willing to pay, Mr Xuereb added.

Panellists disagreed over whether the stock exchange should incentivise sustainable developments.

While Matthew Xuereb argued that it out to be up to the central government to promote sustainable building practices with national policies, Mr Zammit disagreed, arguing that there are grounds for an exchange to incentivise sustainable projects when these go to market.

Earlier during the event, guest speaker Josef Cutajar, took a deep dive into the role of real estate in both the bonds and equity markets.

A financial analyst at M. Z. Investment Services Limited, Mr Cutajar said that a total of 89 local users, 42 are from the real estate sector.

On the capital markets, the real estate market has a value of €2.27 billion, he said.

Bonds, he continued, are mostly used for refinancings, while equity is mostly used for the development and redevelopment of projects.

The Malta Business Network organises monthly panel discussions that zero in on specific sectors, bringing the leading experts, policymakers, and regulators together for insightful discussions.

In October, it will hold a panel discussion on the voluntary pensions landscape in Malta.