What property bubble? Economist snubs reports of industry’s pending collapse

Malta is definitely not experiencing a property bubble at this time and, in fact, only 18% of property is vacant, a mere 1% higher than the EU average, economis Grodon Cordina said this morning.

“We do not have a property bubble, and if the figures that are frequently were true, Malta’s property industry would have collapsed ages ago,” he said.

Cordina, who was speaking about the social and economic consideration in land use planning during a one-day seminar organised by the Planning Authority entitled ‘Planning today for tomorrow’, said that that all the fundamental features for a strong property industry were present, with steady growth in property prices and the property vilume index.

“With many tourists now choosing to rent housing units instead of staying in hotels, only 18% of property is vacant,” he said. “Considering that 6,000-plus of those unoccupied dwellings are in need of repair, there is considerable attractive room for growth.”

Cordina said that, under the most optimistic economic forecast models, land demand could grow by 1.5 million sq.m in the next 15 years especially if the country maintains its current rate of growth.

“The win-win solution for Malta is to create and nurture our advantages and turn Malta into the ideal place where to lead a coherent lifestyle, work, study, heal, learn, relax and develop,” he said. “Such an undertaking would require a minimum investment of €10 billion in these specific sectors in the next 10 years.”

Cordina said that a small island economy setting with restricted resources and facing unprecedented growing demands on those resources – like Malta – required stronger reliance on planning rather than on market forces.

He said that the country’s current economic success could face significant risks since, in every major sector contributing to the country’s strong economy, a small number of major key players were easily identifiable.

He insisted that, so far, planning in Malta had been successful in limiting adverse effects of over-development but had not been sufficiently geared to generate positive dividends on the environment, society and the economy.

“The current approach is more about restraining negative actions rather than empowering positive ones,” he said. “It is not preventing land resourced from serving an unduly speculative rather than productive purpose.”

Cordina said market forces should serve as a means to deliver desired outcomes in the most cost-effective and compliant manners.