On the return of investment landlords can expect, during these COVID times, Benji Psaila, a Rental Manager at Dhalia, believes that a four per cent return should make landlords “happy”.
He took part in this afternoon’s episode of The Boardroom on the topic of Malta’s rental market.
Asked by presenter and business writer, Jo Caruana, about what landlords can expect in this climate, Mr Psaila remarked that, of course, it all depends on the value of the property one purchases.
“Before, people were not happy if they did not have a five-to-six per cent [annual] return on their rental investment. Some investors did not recognise the capital appreciation of their property. Having money in the bank, sitting there, does very little.
“Realistically, for the next months to two years, a four per cent return should result in landlords being more than happy”.
Turning his attention to the question of whether property prices will decrease, Mr Psaila was cautious, commenting that at present, some landlords may have to sell, but there will also be good deals.
“In the end, I do not see prices going down. Malta is such a small market, and people really believe in buying to rent. The market will adjust slightly, but the market was getting stagnant, and, the job was getting boring,” he commented.
Due to offices having staff work from home, meaning a return to home countries for some expat workers, Ms Psaila was asked about what Malta can do to attract them back once the situation improves, despite issues the country was having pre COVID with infrastructure, traffic and other quality of life issues.
He explained that one of the industries that was not really impacted throughout COVID, and even saw their revenues increase, was the gaming industry. Expat workers in this industry, therefore, were not severely impacted.
Mr Psaila commented that Dhalia has already seen expats being relocated to Malta to work for gaming companies since the pandemic began.
Foreign workers in other industries, however, such as retail, hospitality, services, restaurants and leisure, experienced job losses and changes to their work conditions.
“I think for this segment of foreign workers, it will take time to see a return to pre-COVID levels,” he remarked.
Overall, he said, confidence that Malta is a safe place to go to and that the situation is under control, is what will speed up a return of foreign workers.
Mr Psaila said that, in his view, once the COVID situation calms down – whenever that may be – the economic situation for Malta will improve quickly.
Having said that, he added, the supply of properties will remain high, in his opinion.
Together with the impacts on the property and rental market stemming from COVID, over the past years the bulk of property purchases were for rental investments. He said that now, these have come to market, and therefore he believes supply will remain high when compared with previous years.
“This is what will cause a downward pressure on the price of rental properties, and what will slow down a return of pre-COVID prices.”
With COVID exacerbating the issues of supply, landlords will have to be more flexible while tenants now have a choice of where to rent.
“Eight months ago, there was nothing to show to clients, there was no choice, because everything was rented.
“Now there is more of a choice and owners have to be more flexible for rent. We were expecting this correction and I think it is here to stay for a while. We are hoping this because it is easier for us. We like giving a choice to our clients,”
Asked about the contentious issue of development in Malta, and whether a focus should now shift to beautification rather than building new properties, Mr Psaila said that until the Government takes steps to incentivize people to either sell their abandoned, empty homes to those who wish to renovate, or take steps to encourage people to renovate their empty homes, the issue of over-development will not improve.