The subject of Malta’s property market continues to generate much debate, considering the mammoth rise in demand for both rentals and sales in the years leading up to COVID-19.
With the issue of Malta’s greylisting by the Financial Action Task Force (FATF), the pandemic causing a slump in the local residential and commercial letting market, and issues of quality and overdevelopment continuing to rank high on the agenda, a recently held webinar by The Malta Business Network grouping together key players across the property and construction chain discuss the industry’s most pertinent issues.
RE/MAX Malta’s CEO Jeff Buttigieg, BNF Bank plc’s CCO George Debono, AX Group Director and Malta Developers Association Vice-President Denise Xuereb and Managing Architect of Design Principle and President of the Chamber of Architects (Kamra tal-Periti) Andre Pizzuto took part in the webinar, hosted by KPMG Malta’s Head of Advisory, David Pace.
Here are some of the key takeaways of the hour+ long discussion on the future of Malta’s property market, in the view of the experts.
Will the office, and therefore the commercial letting market, return?
RE/MAX Malta’s CEO Jeff Buttigieg is confident of a swift return to the office.
He acknowledged that the company did experience a slump in commercial letting when the pandemic hit, adding however that since the vaccination programme started picking up steam, a “huge resurgence” of companies wanting to bring back their staff has been observed.
“Staff have chosen to return to their home countries while they work remotely, but now they are being called back in. From the top of my head, I know of around 700 people from different companies who will be coming back to Malta over the next few months, coming from industries like gaming and software”, he commented.
AX Group’s Denise Xuereb, representing the perspective of the development and construction sector, was in full agreement.
“I think we will have to change the type of offices and the way we plan them.”
She said despite the widespread belief that remote working would be retained, people are now realising how “the office dynamic is important”. Ms Xuereb did acknowledge, however, that a higher degree of flexibility and use of hot-desking will be employed relative to pre-pandemic times.
The issue of standards, whether it be standards across the architectural and development space, or the standard of service performed by Malta’s letting and sales agencies were widely and hotly discussed.
On the issue of aesthetic standards, The Design Principle’s Andre Pizzuto remarked that Malta needs to align its standards to those beyond our shores.
“We need to align our standards to the European market. We have international obligations to meet certain standards”, he commented, pointing out that “the industry is dependent on foreign direct investment”.
When considering the “people coming to Malta to work and their culture and way of life”, they are “used to a certain quality of build which they are not likely to find here”, he added.
“Part of being attractive to investment is the quality of properties and the housing market. Part of being competitive and having an attractive economy is to provide quality buildings for the employees and for the companies to operate from. If we have properties that are not flexible and resilient, unable to meet sudden changes in demand and are difficult to adapt, what that means is we have inefficiencies in our property market.”
He acknowledged the effort underway on behalf of authorities to discuss standards in the industry, and that Ms Xuereb and himself had just attended a meeting together to discuss such standards at the Building Industry Consultative Council (BICC), a Government organisation tasked with monitoring the building industry and advisory for policy makers on ways to enhance it as a strong social and economic contributor to improve sustainable development.
For BNF Bank’s George Debono, education is key. “There needs to be a widespread effort to educate the market. The message has to pass on as to why there needs to be certain standards in the industry.
“At times, we are just price focused. If the market is not responding to price, we (the finance industry) need to help the developer or the end user, through incentives possibly,” to make higher-standard builds more attractive.
He said that the market is going through a “flight for quality” and an overall improved product, which is also stemming in part from regulation.
“However, as always, market needs to price this as well. From an exit point of view, banks will always look at how sustainable a project is – and not just from an environmental point of view.”
He said that on this front, the issue needs to be observed in two ways. Firstly, that funds coming from the EU will provide support and relief for higher-quality builds (construction), and that improved quality will be supported by Environmental Social and Governance (ESG) factors from a real-estate point of view (property).
On the issue of standards within the property market, REMAX’S Jeff Buttigieg was passionate about the fact that in order to improve the product of Malta, making it more competitive and attractive, letting agents must bring up their service standards.
He referred to a recently introduced licensing system for local agents, however, he cautioned that it addresses technical knowledge and procedures. On this note, Mr Buttigieg believes that a standard level of service across the board should be introduced.
“Today, letting companies absolutely need to be professionals. In my industry, we cannot just be taxi drivers who ferry people around to see properties. We need to up our game and be ambassadors of standards.”
With the webinar taking place shortly after the news hit of Malta being placed under increased monitoring by the Financial Action Task Force (FATF), known as the so-called greylist, members of the panel weighed in on how this could impact the property and construction sectors.
Employing a determined perspective, Ms Xuereb saying COVID has taught the country that when all stakeholders work together and focus on the task at hand, progress can be made.
“I think Maltese businesses have shown we are very resilient, we are hard workers and I think the secret is going to be working really closely together, all stakeholders, including banks, institutions, authorities and businesses, we can achieve a lot.
“Other than that, I have no idea what is going to happen.”
Mr Pizzuto cautioned that greylisting should be seen as an opportunity to rethink Malta’s economic priorities, and therefore the kind of buildings that are demanded. He warned against falling into the trap of the country believing that now is not the time to raise construction and building standards, since the number one priority should be capital flows during these economically turbulent times.
“During COVID we did not fully grasp this, but we should use this as an opportunity to rethink the industry. We speak of regulation, but we need to look at the planning system and reconsider what we want our built environment to be like over the next 20 years.
“Our tourism model: are we still going to go for the budget tourists or higher-end visitors? We never decided what we want to do.”
Mr Buttigieg said it was too early to discuss the impact of greylisting, pointing out that many different outcomes could come to pass.
“We just need to work together and make sure we get out of this as quickly as possible”, he said.
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