Investing in Real Estate in Malta for Foreign Buyers

If you are thinking of buying a property or renting a home in Malta, you have probably already done some research or have been informed about a few reasons why you should consider our Sunny Islands of Malta and Gozo as your primary residence or a second home.
 

Recent News

 
Malta has recently been in the International news for our Global Residence Programme, the new Residence Programme for EU Citizens and the IIP Scheme namely, Citizenship by Investment which is targeted to Non-Europeans.  These systems form part of the Maltese Economic strategy and have been put in place to attract direct foreign Investment into Malta.  In the event that you are not aware of these Programmes and Schemes please click on the links below for brief summaries.
 
 
The above mentioned schemes have attracted many individuals from different nationalities to relocate to Malta.  One of the criteria’s to apply for such schemes is to purchase or rent a property in Malta.  In fact, this is the reason that we are writing about this topic.
 

Infrastructure and Foreign Investment

 
Since Malta is a small archipelago and does not have the natural resources that other European countries may surely boast, the Maltese Government has had to apply their business acumen in finding ways to attract investment.  The previous Government as well as today’s administration have worked endlessly over the last fifteen to twenty years and have invested sensibly into the country’s infrastructure to overcome this challenge.  Today the population of Malta should be proud that we offer an excellent stage for young Millennial couples, retirees and those reigning from Generation X where they may enjoy a comfortable lifestyle.   The cost of living is affordable, investment opportunities are ample, and the country speaks fluent English and Italian not to mention our native language of Maltese, which is also an official EU language.
 

Real estate in Malta

 
The real estate market in Malta is that of a buoyant market.  Over 8000 property sales transactions are completed annually and the property price index continues to rise, whereas on the other side of the coin the property rental market is growing exponentially to the extent that demand for real estate to let and the supply is often skin-tight, depending on the geographical criteria one is searching.  These outstanding results are a result of Malta being positioned as a hub for business as well as a primary residence and this have provided a consistent boost to the real estate market in Malta.
 
There are little limitations to what a foreigner may purchase in Malta accept certain conditions that may apply should one be buying a second home.  In certain cases a foreigner has to apply for an Acquisition of Immovable Property (AIP) permit unless this home is located in what we call a “Special Designated Area”.  An AIP permit is generally a formality that has been put in place to understand that the future owner is financially fit to keep up with the maintenance cost of the property.   A Special Designated Areas are locations or a specific development that encompasses all imaginable amenities within a condominium style development thus classifying it as a high profile or Luxury real estate development.  A foreigner may purchase a property within these areas with the same rights as a Maltese citizen, thus allowing the purchaser to buy as many units as they would like to without any restriction.
 
Properties within the Special Designated areas are also very good rental investments.  One may earn a return on investment of between 5% and 7% should they finish and furnish the home to the expected standard of top executives that are consistently looking to rent a home in Malta for long or even short term.
 

Special Designated Areas

 
The special Designated areas are the following:
 
  1. Portomaso Development, St. Julians, Malta;
  2. Portomaso Extension I, St Julians, Malta;
  3. Cottonera Development, Cottonera, Malta;
  4. Tigne Point, Sliema, Malta;
  5. Tas-Sellum Residence, Mellieha, Malta;
  6. Madliena Village Complex, Malta;
  7. SmartCity, Malta;
  8. Fort Cambridge Zone, Sliema, Malta;
  9. Ta’ Monita Residence, Marsascala, Malta;
  10. Pender Place, St. Julians, Malta;
  11. Metropolis Plaza, Gzira, Malta;
  12. Fort Chambray, Ghajnsielem, Gozo;
  13. Kempinski Residences, San Lawrenz, Gozo.

Investments

 
There are a number of different options for investment that are sought after in Malta and Gozo.  Often, Foreign buyers opt to choose somewhere away from the major developments and would prefer a seafront or inland apartment in Sliema area, Central area or thereabouts. Indeed, these properties, if bought well may also be a lucrative investment.  Property prices in the Sliema and Surroundings have been reported by local websites to have the highest rate of appreciation as well as best return on rental investment.  Of course, the properties in these sought after areas are pricier that other areas.  According to quarterly reports by the Central Bank of Malta prices have consistently increased by a median of 3% - 5% between 2012 and 2014 making Malta one of the strongest European real estate markets.  It is always recommended to speak to an estate agent that is specialised in the area of expertise, who may provide you the relevant research and market knowledge.
 

Global Residence Programme & Residence Programme Rules 2014

 
In Summary, these two programmes are practically identical, one of which is targeting the Non-European nationals and the other targeting EU/EEA/SWISS Nationals.  Both programmes require a application process where individuals may also apply for dependents.  Applicants must hold a proper recognised health insurance as well as prove that are fit and proper.  The major benefit being that the accepted applicant may take advantage of a special tax status whereby they will pay 15% on income declared from outside of Malta into the country. A minimum amount of tax payment is that of €15, 000 per year.  For further details it is recommended to speak to an appointed Registered Mandatory.
 

Citizenship by Investment

 
In Summary, the Citizenship by Investment is exactly what it sounds like.  An applicant will apply for Maltese citizenship whereby they will have to follow due diligence, certain investment criteria one of which is to purchase a property.  Applicants must apply for residence for twelve months whilst the application process is being completed. 

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