Top 10 Reasons Why Foreign Investors are Investing in Properties in Malta
- Author:by Nick Galea
Category: Real Estate Investing
Foreign investors continually scour global property markets, looking for the best places to invest their money. Although they may diversify the makeup of their portfolios (as any smart investor would), they have found that property has been a mainstay for decades as one of the best places to realize above-average returns.
One of the most popular markets — and a firm favorite of many investors — is the property investment market in Malta.
Below are some of the factors that have propelled Malta’s real estate market to the forefront on the international investment stage.
Table of Contents:
- 1. Profitable Rentals Market
- 2. Capital Appreciation of Property
- 3. Excellent Safety Ratings
- 4. Close proximity to other EU Countries
- 5. A Strong Economy
- 6. Malta and Covid-19: Impeccable Resilience and Leadership
- 7. Residence and Investment Programs
- 8. Taxation Benefits
- 9. Better Quality of Life
- 10. High Proportion of English Speakers
1. Profitable Rentals Market
Whether for long-term or short-term lets, the demand for Malta’s real estate continues to grow. With millions of tourists visiting Malta annually, the short-stay and long-term rentals market is big business.
This past year has also seen an unprecedented increase in demand for rental properties from locals looking for a place to stay during weekend getaways.
Furthermore, Malta has more than 40 international language schools attended by students from all over Europe, increasing the demand for nearby accommodations.
Highly skilled foreign workers who come to Malta for a year or more also propel the popularity of the rentals market, providing good returns and a stable income for the owners of perfectly located properties.
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2. Capital Appreciation of Property
Just taking the last year into account, we saw the price of houses for sale in Malta increasing by 2.3% year-over-year for March 2021. This was preceded by a 5% increase for the previous quarter.
Figures for year-over-year prices are updated at four-month intervals, and these statistics go all the way back to March 2001. If we look at the overall average appreciation of property from the time these records began, we see a growth of over 5.1% annually.
Some time periods are better than others, with, for example, June 2004 seeing an unbelievable increase of 36.7%. This is unheard of in any market, from precious metals to natural resources, but it happened to be true for Malta’s real estate market for that particular time.
The choice of property on the islands is truly staggering. In Malta you will find some of the cheapest properties in Europe, such as tiny efficiencies. You will also find some of the most expensive, such as duplex penthouses in tower blocks overlooking picture-perfect azure bays and palatial estates and historic “palazzos” reminiscent of a glamorous bygone era.
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3. Excellent Safety Ratings
Malta has the honor of being crowned the safest country in Europe and the second safest country in the world for women, according to the AfrAsia Bank Global Wealth Migration Review 2019.
Malta’s safe environment extends beyond its very low crime statistics. It also rates highly in such criteria as the growth of wealth, overall economic growth, the safety of women and children, the freedom of the press, and protection from natural disasters such as rising seas, flooding and hurricanes.
In terms of the free movement of the world’s wealthy and where they feel the least exposed to risk when investing their assets, this tiny island nation outperforms many global superpowers and heavyweight financial centers such as London, New York and Paris.
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4. Close proximity to other EU Countries
Not only is Malta the perfect gateway to the rest of Europe, but it is also ideally situated to provide access to the markets of the Middle East and Africa.
Malta finds itself on some of the world’s busiest shipping routes, and Malta’s Freeport has experienced unprecedented success and growth in the last few years. The port has been modernized and deepened to provide easy access and mooring to some of the world’s largest ships, whether they be commercial vessels or cruise liners.
Malta International Airport in Luqa is well-connected to all other major business centers in Europe, with most of them no farther than a two- to three-hour flight away.
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5. A Strong Economy
The Maltese economy is considered “advanced” by the International Monetary Fund. In addition, Malta is seen as a high-income country by the World Bank.
The local economy is innovation-driven, with Malta marketing itself as the world’s first “Blockchain Island.” Tourism is a mainstay of the economy, with finance, iGaming and manufacturing also making up a big share of Malta’s GDP. Overall, the country’s economic landscape has been described as decidedly industrialized and service-based.
The country’s buoyant building industry is a big player in the economy, delivering thousands of apartments and houses to eager buyers. This has also fueled a booming ancillary services landscape.
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6. Malta and Covid-19: Impeccable Resilience and Leadership
Malta, as a small country, has been remarkable at combating Covid-19 and has been described by some, such as IMIDaily, as being “one of the best.” With various ways of measuring the effectiveness in which it handled the outbreak, its spread, subsequent containment and launching its own successful national vaccination program, Malta has been praised for the way in which it handled the situation.
At one stage, only three other countries in the world (with much smaller populations than Malta) tested more of their inhabitants. In addition to this, Malta only reported one death for every ten thousand people who were tested. This was described as a “great achievement.”
Many countries described Malta as a leading example of how it should be done. This is great praise indeed and undoubtedly a reflection of the country’s outstanding leadership making the right decisions during a time of crisis.
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7. Residence and Investment Programs
Malta has been on the forefront of promoting residence and investment programs for many years. Some of these programs date back as far as the 1960’s.
The aim of the programs is to promote the relocation potential and the benefits that the country has to offer—especially to global nomads, investors, entrepreneurs, retirees, highly skilled individuals and consultants, or simply to anyone who finds that Malta suits their lifestyle and tax requirements.
Being the recipient of a Maltese passport provides the lucky individual with visa-free travel to more than 160 countries. Those who acquire legal residency status in Malta have visa-free access to the entire Schengen Area as well as EEA countries, such as Iceland, Liechtenstein, and Norway.
The most popular residence options are the Malta Permanent Residence Program and the Malta Citizenship by Direct Investment Program.
- The Malta Permanent Residence Program (MPRP) is offered to investors on the principle of making a contribution to Malta—buying or investing in real estate plus bequeathing a donation to an approved charity organization.
The Maltese Citizenship by Direct Investment Program offers safe EU relocation possibilities by means of quick and straightforward residency acquisition for an entire family.
Maltese passports are usually issued after one year if you choose the expedited and more expensive option; otherwise, it takes three years making use of the standard and more affordable option. Residency in Malta is required for both options.
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8. Taxation Benefits
Tax rates in Malta are extremely attractive to individuals, investors and companies alike. For instance, standard corporate tax rate in Malta is levied at 35%.
Qualifying High Net Worth Individuals are subject to Maltese tax at a very favorable reduced rate of 15% tax on foreign income (excluding capital gains) that is received in Malta.
Malta also provides Double Taxation Relief, Unilateral Relief, Flat Rate Foreign Tax Credit (FRFTC) and even Commonwealth Relief, although the latter is not very often applied for or used.
Couple this with the option for company re-domiciliation and it is no wonder that Malta is on everyone’s lips when the word “tax relief” is mentioned.
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9. Better Quality of Life
Globally, Malta has consistently scored extremely high on the “quality of life” index. The country is described as having a low cost of living and a high quality of life, and for those who are considering Malta’s property investment options, homes are very affordable, depending on your preferences and budget.
If you are after a small holiday home near the sea, you can still find some of the cheapest properties in Europe in certain areas of Malta.
Malta offers exceptional weather, averaging more than 300 days of sunshine per year, with a temperate climate even in the winter and some of the cleanest seas in the whole of the Mediterranean. According to the European Environment Agency, Malta’s beaches earn an “excellent” grade.
Malta may be a bit more expensive than Spain, but cheaper than Italy, and with day-to-day living expenses most people find that it is very affordable.
Annual premiums for insurance are cheap for vehicles and homes, while medical insurance is also extremely affordable. The quality of Malta’s healthcare is also regarded as among the best globally.
If you are working and contributing to national insurance and social security, medical care is free, and if you have a European Health Insurance Card (EHIC) you also qualify for free medical care.
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10. High Proportion of English Speakers
Malta’s two official languages are Maltese and English. Malta boasts a very special affiliation with the UK, as it was occupied by the British for more than 150 years, and this legacy is evident everywhere.
The heritage of the English is entrenched in law, the school system and how business is done. With more than 88% of Maltese fluent in English, you will not have any difficulty getting around or getting on with the locals.
Malta also has a very big expat community, not only from the UK, but from many other countries that are still part of the Commonwealth.
Everything English is evident everywhere, including driving on the same side of the road as in the UK.
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It would take a lot to beat Malta when it comes to living the good life. It has everything on its side: good weather, language, fantastic Malta property investment opportunities, a beneficial tax system, residency and visa options for anyone interested in making this small Mediterranean country their home and, above all, safety and security.
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