Is Malta part of the Mediteranean Property Market ?

Malta is not the only property destination in the Mediterranean. Geographically Malta is in the centre of the Mediterranean but definitely it’s not the centre of the Mediterranean property market.

We are talking of an extremely competitive market with a number of countries vying to attract the largest number of overseas investors, knowing that this creates a multiplier effect.

A clear indication of this may be obtained from data concerning purchases of real estate abroad by UK citizens complied by the Association of International Property Professionals (AIPP). In 2007 UK citizens invested in 242,000 properties overseas worth €32.8 billion. The table below shows the distribution of these purchases by country.

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Seven out of the top ten favoured property destinations are Mediterranean countries or have a coastline on the Mediterranean, attracting 143,990 transactions, valued at €19.6 billion, with Malta barely snatching 500 transactions annually, valued at €68 million or 0.36%. Some might argue that the €68 million we are attracting is sufficient for a small island like ours, but my question is what is Cyprus doing to attract 7,018 transactions valued at approximately € 954 million?

What do these destinations have to offer that we don’t? Do they have a nicer country? Is their sun brighter than that in Malta? Are their people more hospitable? Are they more English speaking? Are their medical facilities better than the ones found locally? Or is it the case that their tax legislation is designed to entice overseas investment?


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The table above clearly spells out the reason why overseas investors seek pastures greener. In general, capital gains taxation on real estate in Malta is less attractive compared to that of other countries, due to its coverage, tax rate and the incentive to retain property as described above. In Italy for example, all real estate sold after a period of five years of ownership is exempt from capital gains tax, with normal rates of income tax being otherwise applicable.

The need to reform the system of capital gains taxation in Malta, to render our market a more attractive destination for international real estate business, it is fairly obvious from even a casual examination of the comparative table assembled higher up. Such reform could take the shape of a flat 15% capital gains tax on realized profits emanating from real estate transactions, if Malta is to be rendered competitive with other countries around the Mediterranean littoral.

A measure of this nature would stimulate activity in the property sector and enhance affordability for both local and international buyers. As with other sectors of the economy, competitiveness is the name of the game.

The figures in the comparative table state their own case and Malta must shrug off its insular mentality when it comes to property. This industry must be rendered competitive if it is to succeed and thrive, and it must be rendered competitive here and now, if one reckons that some three million British nationals are likely to be tempted to invest in property overseas within the next two years as economic conditions in the United Kingdom make strong returns from domestic investments less plausible, according to recent research conducted by Carter Allen Private Bank, a subsidiary of Banco Santander.

Trafford Busuttil
Chairman of the Real Estate Trade Section – Malta Chamber of Commerce
President of the Federation of Estate Agents
Managing Director of Propertyline International