You, together with other property experts have recently contradicted the Prime Minister for stating that the rationalisation of boundaries will help reduce property prices. As an expert in the sector, do you envisage further increases in property prices or rather a stabilisation of prices?
Logically you would assume that if there is an increase in the amount of land and in the number of properties for sale, prices would go down but in the property market there is no such thing as logic. The property market exists on supply and demand and in Malta people are always willing to buy land, which is a limited commodity. I feel that property prices, included in the new boundary scheme would not necessarily put prices down and will not necessarily put prices up. In fact, in my opinion property prices should stabilise and remain status quo.
A recent report published by OffshoreInvestment.Com has predicted a further 12.5% increase in property prices, owing to a forecasted increase in demand for property by foreigners who will visit the islands with the event of low-cost airlines. Do you share the same opinion?
Property prices in any country do not go up by the same percentage in all areas. When there is a larger demand property prices increase, when there is a short supply property prices increase. In my personal opinion, low-cost airlines will bring foreign property purchasers to Malta which are in fact needed to absorb a large supply of luxury properties being built. In my opinion, this is very good and a necessary thing. Recently our company sold a very luxurious property to a non-resident of Malta who arrived in Malta with Ryanair. The client stayed at the Hilton Hotel. This hopefully will be an example to show people that passengers on low-cost airlines are not necessarily visitors with low spending power. There is no doubt that selective exclusive properties could increase in value at a slightly higher rate than the average property, but in the ordinary Maltese residential areas, property prices will only increase at a reasonable and acceptable level, of this there is absolutely no doubt in my mind.
Former banker and opinionist John Consiglio said in the local media last week that it is about time that government intervenes to stop the spiralling property prices, and control the lending from banks that has today reached a staggering Lm850 million. What is your opinion about this?
Again, in my opinion, I do not think that government should ever interfere with property prices, as in a free market prices reach their own acceptable level. If they are too high, people will not buy, if they are low or at the correct price, people will buy. If people can afford the properties, they will buy, if they cannot afford them they will not buy. Market prices will go up and down but people will buy what they wish or can afford to pay. Banks are there to lend money to people and to lend in such a way that their customers can afford the repayment without over stretching their budget. Banks themselves should be aware not to go over the top and to ensure their customers can comfortably afford the repayments without undergoing undue stress and inconvenience.
The country is set to see the advent of numerous infrastructural private-owned luxury residential complexes. Is this the way forward? Who will afford them, and would these new properties have an impact on the pricing of normal sized, traditional properties?
The advent of numerous, infrastructural, private owned luxurious residential complex is a good thing for the country. Why? Firstly, most of these new developments will be built on existing built up areas and secondly, this will encourage foreigners to purchase and each of these will bring into our country a tremendous amount of money both as a capital payment and as an ongoing yearly expenditure. Any foreign purchasers whether permanent residents or holiday home purchasers, could be classified as first-class tourists spending huge amounts of money in Malta. All these can be considered tourists, there is nothing wrong with that. In fact they should be encouraged. For example, if a hotel is operating as a hotel, it brings tourists into Malta. What’s wrong if it is demolished and a block of apartments is built on the same footprint, each apartment sold to foreigners and these foreigners bringing foreign currency to Malta? Is this not the same thing? What we are doing is to simply change this type of tourist for another. These new property developments have no impact on the price of normal size traditional properties.
Have you witnessed any shift in demand for locations from prospective property buyers? What are the most sought after localities, are there any over saturated locations, or prospective, upcoming areas that will see a boom in buying?
Our real estate agency has offices all over Malta. Demand appears to be very good and very healthy in all locations in Malta and when I say every location, I mean every town and village. I must say for foreign purchasers the preferred locations would be St Julians, Mellieha, St Paul’s Bay, Marsascala and Gozo. There are none I know of which are over saturated.
You are known to be a critic, however you offer a counter-proposal to what you always criticise. Should I ask you to spell out one thing that is on your mind at the moment, that you wish to criticise, what would that be? And what would you counter for it?
It is true that I am a critic. I like to think I am fair and constructive in my criticism. I was against the 12% capital tax on property sales and I have been proved right in many cases since the law was passed. This is wrong and the seller should have a choice of the 35% tax on profit or 12% tax on the sale price. This should not be restricted to the 5-year period. Another thing is the fact that the authorities have made it more difficult for foreigners to apply for permanent residency. This is wrong. These people bring into our country a massive amount of income; not only should they be encouraged but the process of application should be as smooth and trouble free as possible. We are not in the market to make things difficult. Malta has a superb product, which we should be very proud of as long as we really look after it.
The sector you operate, generates multi-million lira in turnover and profits every year. Hundreds are employed directly or indirectly, however what is interesting to note is that many Maltese involved in manual labour like masons, plasterers and painters are leaving the sector, while many foreigners are entering the market to do these jobs. Is it a good sign? How do you interpret it?
Nobody likes to do hard, dirty work. In many employment sectors manual labour has been substituted by machines. Before, to lay concrete on a roof contractors used 11 men, a hoist and a cement mixer; today it takes 3 men using a small crane and a ready mix lorry. In any civilized country most menial jobs previously done by the locals have been taken over by immigrants, who are allowed to work in that country. This is exactly what is happening in Malta. The building industry is full of people working as plasterers, painters, steelmakers, scaffolders etc. but the local youngsters prefer doing jobs which are less stressful. Certainly, they are not unemployed, therefore what is happening is that different jobs are being undertaken by Maltese youths and previous jobs are being done by foreigners, who do not mind doing such tasks. Malta is no different to any civilized country.
What is your opinion about the latest advertising campaigns, calling Maltese to invest in property in Bulgaria?
There is absolutely nothing wrong with Maltese investing in other countries whether it is Bulgaria, Croatia, Italy or England. We Maltese are as good as other Europeans and if we wish to really feel part of the enlarged community, why on earth should we not purchase in other countries? Purchasing property in Bulgaria is inexpensive, purchasing property in England is very expensive. There are two different types of clients for each of the properties in each country. There is nothing wrong with non-Maltese wanting to purchase very good properties and spending a lot of their money when staying in our country – likewise it is good for us to purchase properties abroad and makes us feel more part of the European Community.
I would also like to mention two other points: something that gives me great pride is that our company won the Bentley International five star award as best real estate agency in Malta. This is an award given by the International Homes Magazine, and it honors the very best organisation or company that deal with real estate in all the countries of the world. I can assure you that our presentation and high standard of business were second to none and we are very, very pleased to be recognized as the best real estate agency in Malta.
The second thing is that a fixed air strip in Gozo, apart from being very good if not vital for the quality tourism industry in Gozo, would be of tremendous benefit to the property market especially the higher level foreigners and this should be one of the most important objectives of the Government regarding the quality tourism in Gozo.