Garages may not be the most acclaimed of investments, but for those who bought into the market a few years back, the returns have been nothing short of phenomenal.

Despite the superlatives, this is not really a surprise. The same can be said for anyone who invested in property some years ago, at the start of Malta’s real estate boom.

Today, property investment remains as popular as ever, with real estate seen as a trusted store of value amidst a burgeoning population and Malta’s naturally limited space for new construction.

When it comes to garages, though, doubts are increasing as to whether those buying into the market today can hope to see a reasonable return on their investment.

BusinessNow.mt reached out to investors and property stakeholders to find out more about this little-explored sub-sector in the broader Maltese property market, and to find out whether garages still represent an opportunity, or if they have become a trap.

For cash-rich professionals and other workers who want to invest in property but are debt-shy, garages present a tantalising opportunity to dabble in the property market without taking on any loans.

One woman, a professional who asked not to be named, has purchased three garages as an investment over the last few years, and says the return has been “remarkable”.

Garages also typically involve far less maintenance, and most do not have running water and electricity, further reducing potential trouble.

As she puts it: “I collect my rent every six months and otherwise forget about it.”

Sources in the construction industry add that garages are sometimes exchanged as part payment for finishing works, like plastering, plumbing and electrical work.

“They present an additional tool in the arsenal of developers. Exchanging an apartment may not always make sense – if the value of work done is of, say, €30,000, the contractor would need to cough up a very substantial amount to make up the difference. But the same contractor could very happily accept a garage, since they might not need to fork out a single extra cent.”

A review of garages for sale or rent on Facebook Marketplace show there is a bustling trade going on, even for parking spaces without the security or privacy of a lock-up.

On the other hand, garages deep in underground complexes, which one would expect to be available at a discount rate, still command respectable prices – a “one-car garage+storage” garage in Qormi, in basement level -2, can be bought for not less than €40,000.

However, real estate consultants seem far less enthused about the value of garages as an investment opportunity.

Justin Camilleri, founder and CEO of Real Agents, tells BusinessNow.mt that he does not believe buying a garage to rent is worth it.

“A one car garage can set you back €40,000 or €50,000. But the rent is probably between €80 and €120 a month or €900 to €1,500 a year – that is not an attractive rate of return.”

Of course, rent is only one part of the equation. The appreciation seen in garage prices has matched and in some cases outstripped that seen for residences.

“Garages prices have skyrocketed as the price for excavation and dumping of material increased,” continued Mr Camilleri. “To that increase in the basic cost of construction, add the higher demand from the ever-increasing number of cars and the introduction of hybrid and plug-in vehicles. These need charging, and the amount of public chargers is not close to enough to cater to them, driving demand for garages.”

Despite these upward pressures, Mr Camilleri believes that, on the whole, the garage market has peaked, and is unlikely to see the rapid price increase seen over the last years.

“The prices being thrown around today are a bit crazy. I’ve seen €65,000 for a one-car garage – how many people are prepared to pay that? And if they do, will they see their investment appreciate substantially? I don’t think so. And if you make your calculations on rent alone, you will see that you are better off putting your money elsewhere.”

Steve Mercieca, co-founder and CEO of QLZH, tells this newsroom that he has seen little evidence of any particular drive to buy garages for rent, nor for storage space or as entertainment areas.

“It boils down to the fact that there are 35 new cars added to Malta’s roads every day, coupled with an old-school mentality where residential property buyers want a garage with their unit, even if it’s a buy-to-let.”

Mr Mercieca says he often tells potential buyers that garages are not always needed – “How many expats living in Gzira drive?” – but they insist they need one “for the property to hold resale value”.

This mentality, he says, is antiquated: “The value of a buy-to-let goes up in parallel with rental income. It has nothing to do with garages.”

The picture painted, it seems, is a complex one. Garages are undoubtedly being bought, sold, and rented, but these transactions seem to largely be bypassing real estate agents.

Unlike residential real estate, where a property’s residual cash flow is an important part of the investment equation, those investing in garages seem to be far more dependent on their appreciation – which has been substantial.

However, questions as to much higher garage prices can go are pertinent. Real estate prices typically rely on how much buyers can afford to pay, and as Mr Camilleri puts it, “garages seem to have reached a limit”.

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