Real estate investment in Malta: a practical guide on prices and market features for investors

Despite the limited building perimeters in Malta, the construction industry in the country is very strong. Malta being a tiny island of 316 square kilometres is still never finished. The construction keeps on going: you can see cranes everywhere. That proves there is a supply and a high demand.

Sales market. Generally, property in Malta has had a trend of appreciation. The average property price rise is 10% a year.

How investors can get Malta citizenship

The market has become healthy after Malta joined the EU in 2004. At those times, there was an amnesty: people could bring their undeclared money into Malta, and much money was repatriated into the country. That created the boom Malta particularly needed and allowed starting of projects like Tigne Point.

About 15—20 years ago, a lovely seafront apartment could be bought for €750,000; today, it costs €2—4 million.

As for the cases of price downfalls, there were very few. They could be explained by correction and the market stabilising itself after periods of hype. So, it’s a question of the market occasionally getting overheated, not property prices going down.

The pandemic played its part but did not affect Malta as severely as some other countries. The sales did not increase in value but did not decrease either. Starting in the second quarter of 2022, the property price index has only been increasing, according to the Central Bank of Malta.

Malta’s real estate prices have also been influenced by the rental market substantially increasing.

Rental market prices jumped 7%. There is a lot of demand for rent on the island. In 2022, the number of people signing rental contracts increased by almost a quarter — up to 48 thousand agreements. Half the new contracts with tenants were concluded for over €800 a month, and the third was over €1,000.

The pandemic affected the rental market because people could not come in and out, but it has already recovered. Actually, it has come back with a bang: prices have now surpassed pre-covid and gone up so much that it has become a question of finding availability, not of showing people around to find what they like. Renting housing for below €1,000—1,200 a month is becoming challenging.

Practical Guide

Practical Guide

Essentials on real estate in Malta

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Foreign investments in Malta’s real estate are welcomed. In Malta, there are more than 15 Special Designated Areas (SDAa) where foreigners can buy properties without restrictions and legally rent them out. Such properties are suitable for investors in Malta citizenship, permanent residence or temporary residence permit.

Here is the complete list of the Special Designated Areas.

In St Julians:

• Portomaso Development and Extension 1;

• Pendergardens;

• Mercury Towers.

In Sliema:

• Tigne Point;

• Fort Cambridge Zone.

In Mellieha:

• Tas-Sellum Residence;

• Southridge.

In other places on the island of Malta:

• Smart City in Kalkara;

• Ta’ Monita Residence in Marsascala;

• Quad Business Towers in Mriehel;

• Madliena Village;

• Cottonera Development,

On the island of Gozo:

• Fort Chambray in Ghajnsielem;

• Kempinski Residences in San Lawrenz;

• Vista Point in Marsalforn.

The decisive factors for both sales and rental markets are:

• architecture,

• design and finishes,

• address,

• newness of the property.

Malta has a good climate, so people like to stay outside. The newer buildings tend to have larger terraces or open spaces, and living areas are becoming slightly smaller, on the opposite. Bedrooms in new properties are in line with those in other European countries where they have smaller rooms. Apartments of such layouts are in demand.

Modern designs and finishes are something that many people are now looking for. Therefore, developers are competing in this field, which has led to tremendous improvement in finishing and decorations.

People jump on brand-new property. They prefer it if the bed has never been used, as well as the toilet. If a property is old, it will rent, but not as much and not as fast as if it is brand-new and has modern designs and finishes. And a good address always causes the price to go up even higher.

Five years ago, the situation was like this: if you wanted to rent out a property, you should stick to the North Harbour Area — the towns of Sliema and St Julians. But things have changed.

The demand for rent has grown in many districts. The centre of Malta has boomed in both residential and commercial rentals. The south closer to the airport has also taken a good term. Investors are still a bit sceptical about it because they don’t know its success story but are starting to realise its potential, so prices have started to go up.

If you want the property to rent faster and more expensive, the North Harbour Area probably is the most suitable. If you want good value for money, look out for real estate in the centre of Malta.

The most popular towns among tenants are St Paul’s Bay, with over 7,000 registered rental contracts; Sliema, with over 4,000 contracts; and Msida, with over 3,000.

Other regions with over a thousand active rental contracts are Gzira, San Giljan, Marsaskala, Birkirkara, Swieqi, San Gwann, Mellieha, Mosta, Naxxar, Birzebbuga, and Hamrun.

Sliema, St Julians and Swieqi have shown the highest rental rates. Here most contracts for over €2,000 a month are concluded.

The property’s profitability depends on its:

• type,

• development,

• locality,

• and other factors.

Real estate value grows but at different rates. Considering the last five years, house prices went up by 30% on average, according to Eurostat. Still, there were cases where the prices doubled during this time.

As for the rentals, it shows a similar picture. The rental prices have increased substantially, especially on smaller properties like one- and two-bedroom apartments, but on larger ones like villas and penthouses, too.

Apartments that were rented out for €600 a month about 5 years ago are rented out for €1,000 a month today. So, within half a decade, rent has nearly multiplied by two.

If a villa was rented for €10,000 a month five years ago, it must have been a one-off. And today, it’s a common situation on the market for good modern villas with all the amenities.

Fortress Gardens is a residential complex in Tigne Point, Malta’s most exclusive neighbourhood. Tigne Point borders Sliema and is a 10-minute drive from St Julians and a short ferry ride from Valletta, the capital of Malta.

In the centre of Tigne Point is Pjazza Tigné, a hub of exclusive shops, cafés and restaurants. Nearby is the Centre, a high-end office block, and the Point Shopping Mall. Around these facilities are several premium residential complexes, the Fortress Gardens being the last Tower of Tigne Point. Close to the southern shoreline, there is the open-air residents’ swimming pool.

The residential complex has central heating and enhanced thermal and acoustic insulation between floors. Apartments have seamless ceilings housing concealed air-conditioning, and bathrooms are equipped with underfloor heating. Most condos are with balconies.

A one-bedroom seafront apartment of 87 sqm can be bought for €675,000 to €725,000, while three-bedroom apartments of 188 sqm are on sale for €1,550,000 to €1,700,000. The higher the floor, the more expensive the condo. The prices are expected to grow at 5—10% a year.

Three-bedroom apartments rent can reach €7,500 a month. Many condos are rented for €2—4 thousand per month.

The Shoreline project is located in SmartCity, right on the water’s edge. SmartCity is an SDA close to the town of Kalkara, 1.5 km south of Malta’s capital city of Valletta. The neighbourhood is 10 minutes away from Malta International Airport.

The project includes the shopping mall, which is to open in August and become the largest in Malta. And apartments will start handing over by the end of 2023.

Apartment price range:

• €280,000 to €560,000 for one bedroom;

• €495,000 to €850,000 for two bedrooms;

• €990,000 to €1,900,000 for three bedrooms.

Portomaso SDA is located in St Julians. Portomaso includes a 23-storey Business Tower and the Laguna Project — luxury apartments with direct access to a private yacht marina.

Among the amenities, Portomaso has a spacious underground car park, private swimming pool and gardens, restaurants, spa, fitness centre, shopping complex, supermarket, casino, and conference centre. On the 22nd floor of the Portomaso Tower is “Club 22”, one of Malta’s most fashionable nightspots.

A one-bedroom apartment of 80 sqm can be purchased for €650,000. A three-bedroom apartment of 220 sqm can be bought for €1,800,000 with a car space included in the price.

The rent for two- and three-bedroom apartments can reach €7,000 a month.

The Mercury Towers is another SDA project in St Julians. The neighbourhood is an 11-minute drive from the airport.

The project is a twisting twin tower enjoying sea views. It includes a boutique hotel flanked by two towers of 40 and 25 stories, housing commercial and residential units, and five levels of underground parking. The residential complex has a gym, spa, pools, radio bar, restaurants and a mall.

The project is suitable for short-term investment. Most apartments are sold out, but some units have come back on the market as a ‘resale’. A two-bedroom apartment of 112 sqm on the 30th floor is on sale for €1,800,000.

Entertainment, shopping, and dining facilities are going to open in September 2023. Moving into apartments is planned for the first quarter of 2024.

In Qawra, a zone within St. Paul’s Bay in the Northern Region of Malta, you can invest low-end. These apartments are great for short-term lets as well as for long-term lets as affordable housing. Purchase prices for 2-bedroom apartments of 90 sqm start at €245,000.

Jerma, a hotel project in Marsascala, isn’t officially launched but is already a success: the developers have sold substantial numbers of apartments without putting them on the market. This project will be on the former Jerma Palace Hotel site, which shuttered over 15 years ago.

The project will include two hotels with a total of 140 rooms and 259 serviced apartments, a separate block of 155 apartments as well as seven retail outlets and six restaurants. Jerma will also include an open space, providing a direct link to the sea.

Villas around Malta can be bought starting at €1—1.5 million. However, Malta’s market does not have enough completed villas. Most of them are sold at the planning stage.

As an example, we can present a semi-detached villa in Madliena for €2,750,000. The villa is finished to the highest standards, including marble flooring and Italian furniture.

The property has an entrance hall, fitted kitchen and breakfast area, a study, living room, and dining room, which leads to a spacious patio. There are three bedrooms with en-suite showers, a guest bathroom, a two-car garage, solar panels, and a lift from the basement to the top floor.

Investors can get one of the three statuses in Malta: a temporary residence permit, a permanent residence permit or citizenship. All three require applicants to have a residential address in Malta, so they must rent or buy property there.

The requirements for property differ, depending on the status. To apply for citizenship, you will need to spend the biggest amount of money on real estate.

Malta Global Residence Program offers to obtain a year-long residence permit. To do that, you can rent housing for €8,750 a year in the south of Malta or Gozo or for €9,600 a year in the north or centre of the country.

If you go for buying, the property purchased in the south of Malta or Gozo must cost at least €220,000 and €275,000 in the north or centre of the country.

Other expenses under the program comprise the following: administration fee of at least €5,500, minimum income tax of €15,000 a year, medical insurance, and notary fees.

Malta residence permit holders benefit from visa-free travel to Schengen countries and a special tax regime. Income earned abroad and transferred to Malta is charged at a flat rate of 15%.

Malta Permanent Residence Program offers to obtain a lifelong status. To do that, you can rent housing for €10,000 per annum in the south of Malta or Gozo or €12,000 annually in the north or centre of the country.

Those who opt for purchase must spend at least €300,000 on residential property in the south of Malta or Gozo or €350,000 in the north or centre of the country.

Other conditions of the investor program:

1. Pay the administration fee of €40,000.

2. Pay the contribution fee of €28,000 if buying real estate or €58,000 if renting.

3. Donate €2,000 to charity.

4. Prove ownership of €500,000 assets, of which €150,000 is liquid financial assets.

Investors can include spouses, children, parents, and grandparents in the application, regardless of their age.

Malta citizenship can be obtained by naturalisation — for exceptional services by direct investment. To do that, you can rent housing for €16,000 per year or buy it for at least €700,000.

Besides finding a property, investors contribute at least €600,000 to the state fund and donate €10,000 to charity. But the most essential requirement is to pass the Eligibility Test.

Maltese passport holders can travel to over 180 countries without visas, including the EU, the UK, and the USA.

Localities that are considered to be in the south of Malta and where the lowered investment threshold applies are the following:

1. Birżebbuġa

2. Cospicua

3. Fgura

4. Għaxaq

5. Gudja

6. Kalkara

7. Kirkop

8. Luqa

9. Marsascala

10. Marsaxlokk

11. Mqabba

12. Paola

13. Qrendi

14. Safi

15. Santa Luċija

16. Senglea

17. Siġġiewi

18. Tarxien

19. Vittoriosa

20. Xgħajra

21. Żabbar

22. Żejtun

23. Żurrieq

Purchasing a property in Malta can be a profitable investment, but the buying process can extend obtaining residency for about 4 months. To avoid an increase in terms, you can get a Malta residence permit under the rent option and then switch to the ownership option — it’s allowed. If you stick to the rent option, you will need to lease housing according to the conditions described above for five years.

After five years of ownership or rent, price conditions are removed. You get the right to sell the property if you purchased one.

To maintain your Maltese residency, it remains necessary to have a place to live in Malta. However, you have the flexibility to either rent or purchase a property at any price.

Our partners can assist in managing your property and exiting the investment. Management services can include renting a property out on short- or long-term let, collecting the post, doing the maintenance, and others by agreement. We can also refer you to trusted accountants, tax consultants and legal people if you have such an issue to be solved.

If you want to come to Malta, we are there to help and consult on education, schooling, chartering a yacht, and relocation in general.

When a person buys a property, there is a stamp duty of 5% of the purchase price. If the property is going to be the first and only residence, the buyer can be exempt from the tax for the first €200,000 and pay 5% on the balance.

The average legal fees for buying a property are 1,5%. The amount depends on the searches the notary has to conduct.

In total, the associated costs are 6,5% of the purchase price.

When a person owns a property in an SDA, there is usually a maintenance cost. This is not typically very high, ranging from €300 to €600 annually. If a residential complex has facilities like pools and gardens, maintenance can go up to €3,000 a year, depending on the property size.

Generally, these rates are considered relatively low because these are the only expenses. Malta does not have council taxes or ongoing taxes like the garbage tax people usually pay in other countries.

When a person rents out a property, they pay income tax at 15%. Another 5—15% of the profit may be charged for the management of rentals.

When a person sells the property, the tax is calculated on the selling price, not the profit.

If the property was a primary home for at least 3 years, there is 0% tax. If the property was a secondary home and is sold within the first 5 years after the purchase, the rate is generally 5% of the selling price. If such a property was owned for over 5 years, the rate is 8%.

When a person inherits the property, there are various options. If the inherited real estate was a family home, no duties usually apply. If it were a secondary home, the tax would be calculated.

The Maltese real estate market is customised to what you want. There isn’t one particular project, which is going to fit everybody’s shoes, but we can help you find real estate that suits you most.

Some projects, like Tigne Point, are designed for high-net-worth clients. But not everybody wants to spend €1.3 million on an apartment. Some people like to spend half or even a quarter of that, and it’s not impossible. Even in the Northern Harbour Area of Malta, the most popular district for purchase and rent, you can find both low-end and high-end projects to invest in.

If buying certain properties, you’ll get the opportunity to apply for Malta citizenship or residency.