As property sales start picking up after a few difficult weeks, the emergence of a new market has been observed, with prospective buyers demanding outdoor space, with gardens and pools, inclining towards houses, rather than apartments.
This was verified by Benjamin Tabone Grech, Chief Executive Officer of Engel & Völkers, who, however, stressed that the real problems faced by the market were not caused by the pandemic, though it did give rise to some issues.
Instead, the lack of adequate building regulations, unspecified minimum standards and a lot of corners being cut – in other words, the development of an inferior product – were more problematic.
Another issue, the CEO noted, was that rents in Malta are higher than in some countries in Europe. In this regard, he argued that if the market is to be more successful and attract foreign investment, a better product is a must.
He, therefore, stressed the need for a change in attitude and a considerable drop in prices. “The building industry must realise that, in order to be competitive on the international market, it must raise standards.
Fair prices and values have been a long time coming,” he asserted. He noted that the slowdown in the market has been felt since the end of 2019: there have been fewer sales and minimal reductions in prices, although this was nothing out of the ordinary.
In his view, the measures announced by the Government last month with regard to lower stamp duty and tax on property helped to stimulate the market and give more confidence to people.
Moreover, Mr Tabone Grech expects to see some changes in the property market between September and November. The supply of property will continue to grow, he predicted, especially if some businesses continue to not do well, leading them to realise that the real estate they had invested in is not rendering the sort of return they expected.
In this case, they could decide to put the property back on the market, Mr Tabone Grech asserted, and if that happens, prices will, in his view, fall, so properties would begin to “fly off the shelf”. Predicting that preference for converted houses will grow, he noted that the demand for residential units has changed.
Space, natural light and decent housing are what people look for now, Mr Tabone Grech explained, adding that, over the past three or four months, he also noticed a preference shift towards houses rather than apartments. In addition, in the past months, there was an influx of about 6,000 properties in the long-let market, which contributed to the average rental price dropping to €900 and it can fall further, the CEO remarked.
Owners, of course, prefer short lets because the revenue is higher. However, they are now having to accept long lets, he maintained. As ports reopen, visitors will return and, hence, there will be some demand for short lets, although it would be wrong to think the numbers would return to what they used to be, he commented. As a result of these issues, and the pandemic, the general feeling within the industry is one of anticipation for change, Mr Tabone Grech said.
The real desire is not for some massive growth in the market but, rather, a better service and professionalism, he remarked.
“As I look to the future, I hope that prices will come down, that they reflect the quality of the building, and that merit prevails, even in our industry. We must make changes now to reap the benefits in the future.
“I see a more stabilised market in 12 months’ time, hopefully, with prices really reflecting the type of real estate on offer, and with beautiful converted houses retaining their value, though the standard apartment will suffer somewhat in terms of price,” Mr Tabone Grech asserted.
This is an extract of an article first carried in the June edition of The Malta Business Observer