Malta real estate investments: conditions and requirements for non-residents

1. Residency and citizenship opportunities. Investing in property can lead to eligibility for residency under specific investment programs. Besides, it is one of the conditions for obtaining citizenship under the specific naturalisation procedure for investors.

Getting the status of a resident provides additional benefits such as the right to live, work, and study in Malta​​.

How to get Malta citizenship for exceptional services by direct investment

2. Prospects for price growth. Malta’s residential property prices continue to grow, despite a temporary slowdown in demand. According to the Central Bank of Malta, in Q1 2023, property prices were 10,51% higher than in Q1 2022. During the year to Q2 2023, the nationwide property price index increased by 8,3%.

3. Solid investment. Real estate in Malta is considered a secure and tangible asset. The country’s small size and growing population drive high demand for property, which supports the increase in property prices.

4. Getting a rental income. Real estate investors can rent out their properties. Malta’s buoyant rental market, driven by a steady influx of expatriates and tourists, provides opportunities for stable rental income throughout the year.

According to the study by the Housing Authority of Malta published in March 2024, the average gross rental income in the country is €12,000 per year.

5. Lifestyle and location. Malta’s Mediterranean climate, rich history, and vibrant culture make it a desirable living location. The island also boasts a low crime rate and a high living standard, attractive to investors and residents.

Malta is recognised as the third most relaxed country in Europe, after Iceland and Ireland. The country’s relaxation score is 7.8 out of 10, which is significantly higher than those of Norway, Denmark, Switzerland, and Finland. Factors contributing to Malta’s high score include the number of hiking trails, spas, yoga or pilates centres, and national parks per 100,000 people.

Despite its small size, Malta boasts a robust and well-developed construction industry, with ongoing projects especially concentrated in the northern region. Tens of thousands of square metres of new housing enter the market every six months, and properties are offered for sale in new large residential complexes.

Property prices have shown a stable increase over the years, with downfalls being very rare and usually due to market corrections rather than a decline in property values.

The COVID‑19 pandemic affected the entire real estate market of Malta, but not as severely as in some other countries. During this period, the total value of sales remained relatively stable. Starting in the second quarter of 2022, the property price index in Malta has been increasing.

The rental market experienced a decrease but recovered quickly, with rental prices now surpassing pre-COVID values.

Several main reasons contributing to Malta’s high real estate prices include the following:

• a lack of new space due to Malta’s limited land resources;

• interest from foreign investors acquiring Malta citizenship by naturalisation for exceptional services by direct investment and purchasing or renting housing in the country;

• the huge popularity of Malta among British pensioners who consider the island as a suitable place to own a holiday home.

The cost of purchasing real estate in Malta depends heavily on location, with significant differences between areas such as Sliema and Gozo.

The average cost per square metre in the central business and tourist areas is about €6,500, while in other areas, it is €4,500.

Demand for real estate is supported by year-round tourism: up to 3 million tourists visit Malta annually, which is approximately six times more than the country’s population. As a result, real estate in Malta is being quickly sold, and property prices are increasing by 5 to 7% per annum.

While Sliema and Valletta represent the higher end of the market with its luxurious apartments and vibrant lifestyle, Gozo and St Julian’s offer more affordable options with a quieter and more relaxed living environment. These variations highlight the diverse investment opportunities and lifestyles available across the Maltese islands.

The country’s growing tourism and expatriate community bolster Malta’s vibrant rental market. Properties are highly sought after for short-term holiday lets and long-term leases, serving a diverse clientele that includes tourists, professionals, and retirees.

Malta’s real estate market offers various investment opportunities, from modern apartments to traditional Maltese townhouses and luxury villas, catering to different investment scales and preferences​​.

Rental yields typically range from 5 to 10% annually, with popular areas like St Julian’s and Sliema potentially offering up to 15% due to their proximity to amenities and tourist attractions.

Over the next four years, the Malta rental market is anticipated to grow at an annual rate of 3,94%, reaching a total volume of $456.90 million by 2028. This growth is primarily driven by Malta’s thriving tourism sector and appealing tax benefits for international investors.

Buying property in Malta: a complete guide for investors

Apartments are the most common type of property in Malta. More significant new buildings often feature terraces to enhance comfort and light. Apartments are usually located on one floor, but duplexes and triplexes exist.

Apartments share common elements like an entrance, staircase, and elevator. Maintenance and cleaning costs for these common areas are shared among the building’s apartment owners.

Maisonettes are similar to apartments. The key difference is that the main entrance leads directly outdoors rather than to a common hallway. Maisonettes tend to be smaller than apartment buildings.

Duplex maisonettes consist of two stacked units; the lower unit often includes a small garden or courtyard, while the upper unit may utilise part of the roof. Single maisonettes frequently exist within larger buildings, typically with garages situated on the ground floor.

Townhouses or detached dwellings are located in the older parts of cities or villages. Townhouses with a double frontage have a more expansive frontage or face two streets. Distinctive features of townhouses include original wooden openings, patterned shingles, and a small back garden or a courtyard.

Farmhouses. Traditional Maltese farmhouses, located in old villages or on the outskirts of towns, once belonged to Maltese farmers. These buildings, which can be up to 500 years old, have been modernised to include contemporary amenities while preserving their historic charm.

Character houses are similar to farmhouses but are often located in urban settings. They may have multiple stories and showcase traditional architectural features, such as stone arches, traditional Maltese patterned tiles, and large windows. Like farmhouses, they can also be centuries old.

Terraced houses are usually two-storied. Such houses may include a porch, a modest garden, a patio, or a garage. Many terraced houses were built between the 1960s and 1980s.

Villas are detached homes with extensive grounds, swimming pools, and comfortable outdoor and indoor living spaces. Villas are frequently found in affluent areas such as Santa Maria Estate in Mellieha or High Ridge and Madliena in Swieqi.

Penthouses are built on top of apartment buildings and encompass all living space on a single level. Duplex penthouses are spread over two levels, connected by an internal staircase, and the topmost floors often feature amenities like terraces, barbecue areas, or swimming pools.

Examples of properties in Malta

Malta, Kalkara

€300,000 — €1,900,000

Apartments in a large-scale residential project on the first coastline

71 m² — 310 m²

1—3

1—3

Malta, Sliema

€920,000 — €1,300,000

Apartments in a new residential high-rise project near the sea

176 m² — 211 m²

2—3

2

Malta, Valletta

€1,510,000 — €3,370,000

Modern apartments not far from sea in Valetta

123 m² — 281 m²

1—3

1—3

The ideal location to buy real estate in Malta varies based on personal preferences, lifestyle, and investment goals. Urban areas like Valletta, Sliema, and St Julian’s offer vibrant city living with strong rental markets, while places like Mdina, Rabat, and Gozo provide a more tranquil and historical setting.

Valletta is the capital city of historical significance and has a vibrant culture. It boasts a robust rental market driven by tourism and business travellers. It has a high potential for property appreciation, making it attractive to investors seeking high rental yields and cultural enthusiasts.

Sliema is a popular residential and commercial area with modern amenities, excellent waterfront properties, and shopping districts. Its strong expatriate community appeals to families, professionals, and investors desiring a dynamic urban environment.

St Julian’s is renowned for its nightlife, dining, and entertainment options. Home to luxury developments and high-end properties, this area is ideal for investors focusing on rental income and for individuals who enjoy an active social scene.

Mdina and Rabat offer historic and tranquil settings with charming, character-filled properties and rich cultural heritage. Their scenic views and lower density attract those seeking a quieter lifestyle amidst historical allure.

Gozo’s rural and relaxed atmosphere contrasts with mainland Malta. It features stunning landscapes and traditional properties, and it is increasingly popular among expatriates, retirees, and those looking for a peaceful retreat or holiday home.

Each area offers distinct advantages, making Malta a diverse and appealing destination for real estate investment.

Restrictions on the purchase of real estate. As a general rule, citizens of other countries, including the European Union, can buy only one property in Malta. Unrestricted property purchases are available only to Maltese citizens and EU citizens who have lived in Malta for a minimum of five years.

Such restrictions help prevent foreigners' unlimited acquisition of real estate and mitigate the risk of distorting local property prices.

Obtaining a permit for property purchase. To buy a property in Malta, a foreigner must obtain an Immovable Property Permit, AIP, at the AIP section of the Capital Transfer Duty Department.

The permit process typically takes 35 days. The fee for issuing the permit is €233, irrespective of the property’s value.

To obtain an AIP permit, the buyer selects the property, fills out an AIP application form, and submits a copy of the promise of sale or a preliminary contract if already in place.

To be granted an AIP permit, applicants must meet several conditions:

1. The property will be used exclusively for residential purposes and, therefore, cannot be rented.

2. After publication, a copy of the final notary deed must be submitted to the AIP department.

3. The property may not be subdivided or sold as multiple dwelling units.

No permit is needed if the property in Malta is located in Specially Designated Areas, known as SDAs. In such areas, luxury residential complexes have security, closed yards, swimming pools, gyms, and other recreational facilities.

Special Designated Areas in Malta, or SDAs, are specific zones designated by the Maltese government where foreign nationals can purchase property without the usual restrictions applied to non-Maltese buyers. These areas are intended to attract foreign investment in real estate and promote economic growth.

Individuals and companies can buy real estate in an SDA, and the sale transaction can be completed in two months instead of four or six months. Demand for housing in SDAs is steadily increasing, with prices rapidly rising even during construction.

There are 14 SDAs in Malta and Gozo. Of these, two SDA complexes are under construction, and two are planned, according to the data released for 2024.

The list of SDA regions in which foreign investors can purchase apartments, penthouses, and villas under a simplified procedure is as follows:

1. Portomaso Development plus Extension I, St Julian’s, Malta.

2. Cottonera Development, Malta.

3. Tas-Sellum Residence, Mellieha, Malta.

4. Madliena Village Complex, Malta.

5. Smart City, Malta.

6. Fort Cambridge Zone, Sliema, Malta.

7. Ta' Monita Residence, Marsaskala, Malta.

8. Pender Place and Mercury House Site, plus Extensions I, II, III, IV, and V, St Julian’s, Malta.

9. Quad Business Towers, Mriehel, Malta.

10. Southridge, Mellieha, Malta.

11. Mistra Heights, Mellieha, Malta.

12. Fort Chambray, Mellieha, Gozo.

13. Kempinski Residences, San Lawrenz, Gozo.

14. Vista Point, Marsalforn, Gozo.

SDA complexes are planned to combine the convenience of urban and resort life. They are located on or near the coast and close to historical areas.

SDA residential property benefits include the following:

• no need to obtain permission from the authorities of Malta to purchase housing, which reduces the purchasing process to 2—3 months and saves the buyer time and money;

• the opportunity to buy multiple properties at the same time;

• higher return on investment due to the right to hold and rent out several properties;

• a prospect of selling the property with an income in future due to dynamic growth of real estate prices in SDAs: the price of an SDA property bought at the construction stage often increases by 8—10% per annum compared to price growth of 3—5% per annum for residential real estate in Malta outside SDAs;

• an opportunity to obtain temporary or permanent residency in Malta.

The investment amount does not depend on the family composition. Investors can sell the property and recoup their investment if they relinquish their Malta residence permit.

Additional requirements include

• paying the administration fee of €5,500+,

• annual taxes of at least €15,000, and

• purchasing medical insurance.

To apply for the Malta Permanent Residence Programme, property buyers must acquire a property worth at least €300,000 in the south of Malta and on the island of Gozo or at least €350,000 if located in other parts of the country.

Applicants can also rent real estate. In this case, the minimum rental price is €10,000 or €12,000, depending on the property location.

Other investment conditions include paying government fees, making donations, and confirming assets of at least €500,000, of which €150,000 are liquid financial assets. All these requirements are mandatory.

Property investors cannot obtain Malta citizenship directly. Instead, they can apply for citizenship by naturalisation for exceptional services by direct investment and get Malta passports in one or three years of residency in the country.

To qualify, the purchased property must meet the following two conditions:

1. As indicated in the purchase and sales contract, the cost of the property cannot be less than €700,000.

2. For the first 5 years of ownership, the property can only be used as the investor’s residence and cannot be rented or sold.

Another option is to rent real estate for at least €16,000 per year.

Other mandatory conditions for getting Malta citizenship by naturalisation for exceptional services are as follows:

• contribute to the National Development and Social Fund of €600,000+;

• make a charitable donation of €10,000;

• pass a strict Due Diligence check.

Investors first obtain Malta residency and maintain it for 1 or 3 years, depending on the chosen investment amount. After the specified time, they become eligible to apply for citizenship.

1. Non-EU citizens can purchase property in Malta and qualify for citizenship or residency. This offers benefits such as the right to live, work, and study in Malta.

2. Maltese real estate has shown consistent price growth over the years, making it a solid investment. The limited availability of land and high demand from international investors contribute to this upward trend.

3. The buoyant rental market in Malta, driven by a steady influx of expatriates and tourists, provides lucrative rental income opportunities. Areas like Sliema and St Julian’s offer particularly high rental yields.

4. Real estate prices vary significantly by location, with central areas like Valletta and Sliema being more expensive than regions like Gozo. Purchasing real estate involves additional expenses, including stamp duty, notary fees, and transaction costs.

5. Buying property in Malta involves selecting the property, hiring a notary, signing a preliminary agreement, paying a deposit and stamp duty, and signing the purchase agreement. The transaction typically takes a few weeks to three months.