1 October 2003

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Property leaders

Frank Salt Real Estate Managing Director Joseph Lupi speaks to MATTHEW VELLA on the firm’s performance over the last 12 months and how they are reaching beyond Maltese shores

Frank Salt, one of the leading players in the real estate sector, has been dealing in the sale and letting of property to foreign nationals since it was established back in 1969. The recent increase in interest by foreign nationals has now seen the organisation geared up to meet this demand.
However the firm has also been active on the local market, by far. That is the majority of Frank Salt’s activity, covering all aspects of this business, dealing with first-time buyers, lower-end buyers and high-end buyers who look for both residential or commercial activity. Through their regional network of offices in Malta and Gozo, Frank Salt can offer a specialised service according to the locality in question.
Joseph Lupi says that competition on the international market is, obviously, intense. "All you have to do is attend an overseas exhibition to know how much competition there is," Frank Salt’s managing director says. "This is why it is important that we do not outprice ourselves in the market and we continue to provide a good selection of property particularly new developments."
EU accession has now borne a new reality on the development of the firm, and this has been certainly manifest in the firm’s drive to attract more interest from foreigners as well as providing their service beyond Maltese shores.
"Interest in property by foreign nationals has increase over the past 12 months. This has resulted in an increase in sales to foreigners. However, during the same period a number of new developments have come on the market to meet the increase in demand. Property prices have recently increased at a higher rate than normal in view of the accession. Unfortunately, property owners think that foreigners will pay any price. A foreign client is like any other client and he will buy after having seen other countries. It is not the first time that a client has viewed a selection of property in Malta and eventually bought in Spain or Cyprus where property is cheaper. We have to be very careful that we do not outprice ourselves. I cannot see property buyers flocking to our shores simply because we are joining the EU."
Joseph Lupi says that excluding any form of new legislation, in the long term EU accession will mean substantial overseas investment being channelled into property: "A higher standard of living and a growing economy will attract residents and business concerns. This will generate more demand in sales and letting of residential and commercial property."
Over the last 12 months, Frank Salt intensified its marketing activities and diversified its marketing strategies to target specific markets. This year the firm has participated in about eight overseas exhibitions held in London, Ireland, Switzerland, Germany and Moscow, four of which are schedule for the coming month.
"In addition, we have strengthened our ties with our overseas associates," Joseph Lupi says. "They regularly send their clients over. We have also employed a marketing executive in London who is regularly sending journalists over to feature articles on Malta, Gozo and our company. Some of these are due to come out during the next few weeks. Our plans include extending our operations overseas with a view to sell property in other countries. Developers of overseas properties have already approached us to sell property in London, Cyprus, Tunisia and Portugal."
Joseph Lupi says that the property business in Malta is difficult to quantify, except for the fact that investment-wise this is the safest option for everybody. "I have always known the property business to be very active." In terms of the people it employs, Joseph Lupi says that when one considers the auxiliary activity the real estate sector generates, such as aluminium, tiling, sanitary ware, etc, the number will go into thousands. "In fact contractors always complain about a shortage of labour and some of them employ foreign workers."
This non-stop activity has seen property prices increase in the region of eight to ten per cent every year now, considering factors such as location and property type. "Recently, the rate has gone up to 15 per cent in certain locations," Mr Lupi says. I ask him what have been the factors which have contributed to this never-ending increase.
"There are a number of factors which contribute to this increase. Primarily prices are regulated by demand and supply. One of the biggest contributions to price increase are the high price of land, together with the increasing costs to build and finish buildings, as well as delays in the issuing of development permits. All of these factors add up to a substantial increase in the end product. I do not believe that foreign buyers really affect the price of property. It is more the wrong perception of local owners that foreign buyers will pay any price that affects the prices."
This has in fact been an overwhelming factor in what has been perceived by some as the artificial boom of recent. EU accession prompted both the fears of a rush by foreigners into the Maltese property market as well as a bid to increase prices as confidence amongst buyers increase following the EU referendum.
The key factor at Frank Salt is however the client, and the company’s own service enables clients of all aspects to have the best service possible when it comes to the delicate matter of choosing a property:
"Our staff themselves are trained to deal with clients on a very personalised basis. To us the client comes first. Our staff pass through a rigorous selection process. We employee well-educated, professional workers who are capable of representing our company. We make sure we have a good supply of properties for them to choose from and guide them through the whole system of buying property. We have one of the biggest databases of property in Malta and Gozo. People come to us to offer properties on a regular basis, and we are always on the lookout for properties. We provide legal and financial information on the matter. In fact, our excellent relations with Maltese banking allows us to have special arrangements with banks. For example, banking representatives actually come to our office to meet our client and tailor-make their loan for them. We give our clients priority."
Joseph Lupi says that in order to have a healthier market situation when it comes to the property business, more effective use of land could aid the sector:
"The market has to be free to regulate itself. However, it is important to introduce measures which will help to increase the supply of houses and consequently reduce excessive prices. Local buyers should get used to living in less space, hence a developer will be able to build two units in the space of one they are building today. This should reduce the price considerably. The government should start giving this example through social housing.
"High-rise extensions wins space, so permits for higher floors where possible should be favourably considered. Processing of development permits should be made more expedient as well, whilst incentives should be given to owners to place on the market their empty dwellings, which are often an eyesore and are left in a derelict state. However I don’t think that these should be taxed. I assure you that any tax on property will end up to be the liability of the buyer and will definitively increase prices. On the other hand, an incentive may be given to the owners of inherited property to entice them to put that property on the market.
"Government being the owner of large portions of prime land situated in areas which could be developed. Government should go into partnership with private developers with a view to develop these sites for commercial purposes, not social housing. Alternatively, these sites could be transferred for development such as the ones happening in Tigne, Manoel Island and Cottonera."

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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