The villa rental market in Malta

The growth of the national economy in Malta is among the fastest in all of Europe, and flourishing of the Malta villa rental market is both a cause, as well as an effect of that remarkable growth. Investments in commercial and residential buy-to-let properties have been quite profitable on the island nation for a long time now and market analysis indicates that it’s only going to continue for the foreseeable future.

Increased Demand

One of the main reasons why the Maltese buy-to-let market is doing so well has a lot to do with the fact that there’s almost an incessant demand for labour and office space. As more office spaces are built and rented out, the need for rented residential properties are also increasing since the employees at all these newly developed workplaces do need a place to stay as well.

Increased Rent

Due to the constant requirement of rentable properties that seem to be growing with each passing year, the rent rates have risen significantly. Consider the fact that in roughly half a decade, the rent for both residential villas and commercial properties has gone up by more than 30%.

The Best Locations in Malta

As far as property values are concerned, the most valuable locations include Sliema, St.Julians, Valetta, Ta Xbiex, Msida and Gzira. Aside from the demand for offices, these locations also have an excellent residential real estate market. Keep in mind that these are only some examples and there are plenty of other towns and villages if you are looking for a quieter place to stay. Neighbourhoods which already have an established community are not uncommon in inland Malta as well and it’s in those locations that the traditional houses and villas see the highest rent rates, in addition to the hotspots already mentioned of course.

What is Causing the Boom?

The Malta Citizenship by Investment Programme has definitely injected millions of Euros in the Maltese economy. Now, it has already been discussed that the buy-to-let market is both a result and a reason for the economic boom which the Maltese economy has been experiencing for the last decade or so, but what exactly is the situation which is leading to the need for all these new offices, apartments and villas? Well, it’s not just one or two businesses really, but a whole eco-system of multiple, interconnected businesses.

A large portion of the business that is being developed on the island has a lot to do with gaming. Being a prime vacation spot for vacationers from all around the world, Malta is slowly gaining international fame for the quickly developing online and offline gambling industry on the island. Although there is no shortage of wealthy tourists on Malta, the relatively cheaper price of everything there also attracts travellers from every circle of life, which essentially opens up the local gaming industry to a very wide range of potential customers.

In addition to the gambling industry, there’s also a solid base for Information Technology, finance, maritime and aviation. It’s all service-based business in Malta, as would be expected of a popular holiday destination. The huge number of employees necessary to make these industries move like they should is therefore one of the main reasons as to why rental properties are filling up fast and the buy-to-let investments are continuing to return such remarkable profit margins, especially in the long run.

Based on the value of the property, the 6% – 7% year-on-year capital appreciation is an added benefit of buying leasable properties here, which complements the 5% – 7% rate of profit per annum on rents, excluding all the expenses and the initial costs. Perhaps the best part about the villa rental market in Malta is the fact that despite things looking quite favourable right now, it’s only going to get better since the island has not even come close to realising its full business potentials yet. Is that shooting up the rent rates there? The answer is yes, but does it make Malta unaffordable? Not by any means, because in spite of everything, property prices and rent rates on the island are cheaper than that of the most other comparable European locations.