Most factories are leased from MDC (now Malta Enterprise) at Lm14 per sq.m. per annum.
Warehousing is obtained on the market at prices ranging from Lm12.50 per sq metre to Lm24 per sq.m. European average industrial price is Lm37.50 per sq.m..
2. Office space
Malta: From Lm25 per sq.m. to Lm100 per sq.m..
London: Lm650 per sq.m.
Paris: Lm350 per sq.m.
Frankfurt, Athens: Lm25 per sq.m.
Dublin, Lisbon, Milan: Lm190 per sq.m.
Brussels: Lm120 per sq.m.;
Warsaw: Lm155 per sq.m.
Prague, Budapest: Lm110 per sq.m.;
Singapore: Lm145 per sq.m.
Hong Kong: Lm175 per sq.m.
Reading: Lm200 per sq.m.
Birmingham, Bristol: Lm175 per sq.m.
Leicester, Newcastle: Lm100 per sq.m.
Hull, Wrexham: Lm60 per sq.m.
3. Shops
Malta
High Street shops’ rents vary from Lm1.50 a day to Lm35 per day for a front retail unit with a 4m frontage and 9m depth. Outlets at first floor pay one-fourth of those at ground level. Prime seaside kiosks are leased out at Lm32.50 per day. Rates in outlets in shopping malls vary from Lm175 per sq.m. down to Lm30 per sq.m..
Europe
London: Lm2275 per sq.m.
Paris, Frankfurt, Dublin: Lm1500 per sq.m.
Athens, Brussels, Vienna: Lm750 per sq.m.
Amsterdam, Milan, Stockholm: Lm400 per sq.m..
There are over 6,400 convenience and comparison goods retail businesses in Malta and Gozo (Planning Authority figures): 170 shops per 10,000 persons.
This is comparable to Greece, followed closely by other Mediterranean countries. But it is five times the level provided for in the UK.
Non-shop retail, such as market stalls, hawkers, etc amount to 7.5 per cent of consumer retail expenditure, high compared to the European average of five per cent.
Retail spending per capita in Malta stands at Lm623 for convenience goods and Lm508 for comparison goods. This is 68 per cent of UK per capita spending on convenience goods and 45 per cent of the UK per capita spend on comparison goods.
The turnover estimate works out at Lm1694 per sq.m. for all shops, Lm232 per sq.m. for convenience shops and Lm1330 for comparison goods shops.
These figures are at three per cent of turnover obtained in UK convenience shops and at 44 per cent of turnover obtained at UK comparison goods shops.
A fair annual rental value for convenience shops works out at five per cent of turnover, that is at Lm116 per sq.m. while for comparison goods it is taken at eight per cent of turnover, that is at Lm106 per sq.m..
Compare now these figures with the range of rental values quoted above as varying from Lm30 per sq.m. to Lm175 per sq.m. for an indication of the sustainability.
Vacant property
The 1995 Census gives the figure for vacant property as 35,723 out of a total of 155,202 dwellings: ie 23 per cent of the total.
Of these, 12,967 are used as holiday homes, therefore only 2,756 or 15 per cent are permanently vacant.
For the proper functioning of a property market a vacant stock of not more than five per cent is deemed necessary.
Thus 10 per cent (15,520) of the property market is lying idle.
Studies have confirmed that one half of this amount – ie 7,760 dwellings – are waiting to be released on the property market given the right climate. This includes confidence in the rental market and real incentives, such as reduction in Capital Gains due.
The remaining vacant dwellings are tied down due to inheritance rights or litigation or idle for future use.
The recent 2003 government budget which re-introduced succession duty on property did not provide the right climate to see a release of vacant properties, but has the effect of doing the opposite.
Of the vacant property, 75 per cent are newly constructed or in a good state of repair, with more than one half being apartments. 18.5 per cent require maintenance and 6.5 per cent are in a dilapidated condition of which 55 per cent are in the inner and outer harbour regions.
This, in the two regions where 75 per cent of rented accommodation is found, reinforces the view that landlords prefer to leave their premises vacant, even falling into disrepair, in the hope that the future may hold a brighter investment than the present restrictive rental scenario.
Home ownership
Home ownership in Malta has increased from 23.1 per cent in 1948 to 68 per cent in 1995 and to 70.1 per cent in 2002. The EU’s average for 1995 stood at 56 per cent.
Home ownership is higher in Ireland, Italy, Greece and Spain where they tend towards the 80 per cent levels.
The lowest home-ownership rates in western Europe is Germany at 38 per cent and Switzerland at 31 per cent. These countries have the highest GDP per capita in western Europe.
Bicc’s recommendations
1. Government’s intervention in the property should be minimal, occurring only to be directed at addressing inefficiencies in the market mechanism. Currently, it is recommended that due to the healthy state of the construction/property industry no measures are introduced that could halt the smooth running of the property market development. Furthermore, it is recommended that particular attention be given to ensure that the property market be at a level playing field compared to other forms of investment.
2. Government, through the BICC, together with Mepa as an interested organisation, is looking at the possibility of setting up a centralised research unit which monitors the functioning of the property markets. This should not be limited only to residential property markets but should also focus on commercial property.
3. Government should maximise returns from this sub-sector to be used to help other sub-markets. The high amenity areas necessary for such developments are to be ensured by the Mepa to enhance their market value. Site coverage areas are to be increased where they are less than 50 per cent, thus reducing the villa site size, hence reducing its environmental impact on the Maltese Islands.
4. The efficiency of the terraced house market is to be encouraged, with the upgrading/finishing of vacant properties on condition that such properties be released on the market within a specific timeframe. Furthermore, the more efficient use of these properties, by splitting up into more than one unit is to be encouraged, hence preventing further degradation of the environment by reducing the further land take-up. Where height relaxation on density grounds is to be granted, the parking policy for the additional storeys is to be relaxed.
5. In order to encourage the provision of smaller apartments in lines with present and projected household size, the government should offer incentives, while property developers should be made aware of the necessity of smaller properties. This however should not be at the expense of reducing the living sanitary standards together with the attached amenities. Again, where additional storeys are to be granted, the parking policy is to be relaxed.
6. Rehabilitation of property in Urban Conservation Areas should be encouraged. Government entities should promote such rehabilitation by focusing their policy on positive discrimination in favour of such rehabilitation. This should apply to most government entities, from the Tax Department, to the Malta Environment and Planning Authority, to Enemalta Corporation, and so on, in order to encourage the true regeneration of the entire area through an increase in market demand.
7. Land hoarding together with the high percentage of vacant premises should be discouraged, with measures introduced to encourage the phased release of land and vacant property on the market, with infill sites being considered a priority. Other recommendations encouraging the use of vacant property and land combined with positive measures should also be considered.
8. Once the Planning Authority approves local plans, the government should ensure that road access is guaranteed. The Land Acquisition and Land Disposal Acts should be redefined and updated to today’s needs.
9. Legal conditions for the transfer of ownership of existing Joint Office properties, together with restrictions on the permitted use of land could make it difficult to include such land and properties on property markets, resulting in possible unnecessary restriction in supply. However, the government may, through transfer of Joint Office property, safeguard the environment and the development of agriculture, whilst also meeting the country’s pressing social requirements, such as social housing, homelessness, public utilities, educational and cultural purposes.
10. Government should offer incentives to multiple owners of land and property in scheme to release such property onto the market, mainly through improvements in legal provisions and procedures.
11. The immediate and comprehensive identification of all land and property in the Maltese islands should be a priority for the government, as such a cadastre will facilitate the efficiency of the market mechanism.
12. Where after adequate research, it is established that the owners of properties are still unknown, the government’s intervention is necessary for the supply of the market not to be restricted.
13. Government should not be a direct player in the property market, but should assume the responsibility to better monitor such market so as to address its inefficiencies, including housing provision for the real social cases, while buffering any increases in the affordable residential market.
14. In formulating policy which affects foreign buyers, as opposed to EU nationals, the government should be sensitive enough to differentiate between the respective residential property markets. In those areas where injection is needed, due to present low local investment, foreign purchasers should be given the same conditions, as in designated areas, together with property values not pegged to any level. For up market properties, indirect positive government intervention, such as facilitating overseas
marketing campaigns, is
recommended.
15. The present rent legislation should be comprehensively reviewed with the aim of establishing a true residential property rental market, with legislation being acceptable to both sides of the House of Representatives. It is being accepted by Maltese society that inheritance of a lease is an unjust measure and should be abolished forthwith. Regulated rents still running should have the 1930 rental value immediately updated to the 2002 level according to the index of inflation, updated regularly on a five-yearly period.
16. Government should encourage the adoption of the PPP principle in most of its projects, applied via public sector agencies, including local councils, government departments and parastatal corporations.
17. If the affordable property market is catered for, and in order not to affect the purchasing power of the Maltese to acquire their own home, then the acquisition of Maltese property by EU nationals may be beneficial to the social and economic fabric of the Maltese Islands.
18. For the property market to be on a level playing field with other forms of investment, the initial purchase stamp duty is to be at a much lower level tending towards one per cent, as in the UK. For this to be achieved, the collection of Capital Gains on property has to be totally rethought, giving no leeway for the developer to coerce the buyer into declaring a lower purchase price.
19. Buyers have to be made aware of the possible future pitfalls of the present low interest rate mortgage market.
20. The property market is to consider a greater reliance on renewable sources of energy production, as presently it is imposing a great strain on power generation, with future exponential growth expected. New developments are to consider future installation of such renewable sources in their constructions with planning gains being given to developments proposing to be fuel sufficient.
The housing affordability index
The Housing Affordability Index (HAI) has been calculated for the period 1982 – 2002.
For a three-bedroom median apartment the HAI is presently at the same level as at 1982, whence it had dipped down to 65 in 1997.
For a two-bedroom median apartment the HAI increased from 110 up to 116.
Due to the present 15 per cent affordable property price increase for 2003, is this going to translate into a worsening of the HAI for the Maltese?
A HAI of 100 signifies that a family earning the median household income just qualifies for a median residence, whilst with a HAI of less than 100 signifies that the median family has to do away with other necessities.
The HAI values are to be compared to France’s which stood at 100 in 1992, increasing to 150 by the year 2000.
Bigger… and emptier
Malta’s apartment accommodation area, at 135 sq m for a three-bedroom and 90 sq m for a two-bedroom appears oversized compared to other countries, except for the US.
UK 89
Germany 99
Netherlands 101
France 105
USA 149
Malta’s rooms per dwelling in 1995 averaged 5.73 compared to the EU range in the same p4eriod from 3.7 to 5.0.
Social housing in Germany provides for:
One person 45 sq m
Two persons 60 sq m
Three persons 75 sq m
Four persons 90 sq m
And 15 sq m for additional persons.
The minimum apartment size except in villa development, as per Policy and Design Guidance 2000, is currently at 36 sq m for a one-bedroomed 56 sq m for a two-bedroom and 76 sq m for a three-bedroom.
The total number of rooms in the NSO Living Space Survey (2002) is quoted as 10.3 for a terraced house, 7.5 for flats, and 7.7 for maisonettes.
Households were housed at a rate of 1.3 persons per room in 1957 compared with just 1.1 persons per room in 1967, 0.8 persons per room in 1985 and 0.54 persons per room in 1995.
The occupancy ratio in the EU for 1995 averaged 0.65 persons per room.
The dwellings per household for Malta stood at 1.3 in 1995, compared to an average of 1.13 in the EU countries for the same period,
At a household size for Malta in 1995 at 3.12 persons, compared to the EU for the same period at 2.1 – 3.3, the dwellings per 1000 population in Malta in 1995 stood at 416 compared to the EU range of 286 to 475 for the same period.