Rental prices are stable, lettings market leader says

One of Malta’s market leaders in the rental market is insisting there is no property bubble, saying rental prices in 2017 and 2018 have remained stable.

Steve Mercieca, co-founder and partner at QuickLets, told MaltaToday that rental prices have only increased in the last years as they started reflecting the real value of property in high demand.

Mercieca was reacting to a report last Sunday that showed Maltese households had seen their income from rentals boosted by over 132% over three years, to €85 million in 2017.

“For many years rent values were very low when compared to what Maltese localities had to offer. As demand rose and more rental properties were made available, the prices started rising, plateauing at the end of 2017 and remaining stable since then,” Mercieca said.

“Back in 2013, you could rent a one-bedroom apartment in Sliema for €350 per month, an attractive rate for the tenant but one that did not reflect the true market value. As Malta’s image and economy improved, rental prices started to go up to their actual value. Since the end of 2017 and all through 2018, rental rates have not continued to rise. Is this the sign of a bubble? I don’t believe so.”

Data released by the National Statistics Office has revealed that households made €85.8 million by renting out property in 2017, a 132% increase over 2014, when only €36.9 million was registered as income from rent.

The statistics do not give a breakdown on the number of households that are benefitting from the accelerating rental market but economist Philip von Brockdorff said the figures suggested the increase was also due to more people renting out their own property. “Rents have increased, which contributes to the larger amount recorded by the NSO but there is also a phenomenon of more people renting out idle property they owned, such as summer homes, and others who have bought apartments to rent them out,” Brockdorff said.

Mercieca agreed, saying that for many years property owners had not bothered to list their vacant properties for rent, since the income was so low.

Things have changed indeed.

“Malta has created an image that has attracted many people from all over the world, even through the likes of Instagram, AirBnB, Facebook as well as portals like Booking.com. With social media favourites like LAD Bible or Nas Daily making multiple videos on Malta, each receiving up to 1.3 million views, many foreigners had come to learn about and appreciate Malta for the first time,” Mercieca says.

And that also includes attractive tax rates and opportunities for foreigners to live and work in Malta – factors Mercieca says have “turbo-charged” the Maltese economy.

Even property veteran Francis Spiteri Paris of Perry Real Estate says that there was never a time like this that Maltese homeowners were putting up their property for rent in such numbers.

“That is because demand for rental properties remains high, but also because property owners are coming to realise it is now worth it to put their properties up for rent, since prices are now reflecting their true market value,” he said.

Spiteri Paris said new owners renting out property included those with only one or two properties to let. “We are also seeing a marked increase in the number of people who are buying property with the sole intent of renting it out for additional income,” he said.

Mercieca says that only a handful of investors own a couple of hundred of properties while the rest of the market is now small players who invested in one rental investment back in 2015 and are now looking at a second investment. “To put some figures in numbers, over the past five years our team has managed to put together a database of 11,000 owners, who together own 28,000 properties.”

Mercieca says the buy-to-rent phenomenon now constitutes over 50% of QuickLets’ business. And finding the right property to list, one that would be rented out quickly, was not as easy as some people think.

“Most of our team and Zanzi Homes focus on finding bargains. That’s how they are trained and that’s what they are great at,” he said. “They spend countless hours every week calling hundreds of people and seeing a minimum of 90 properties per month. From those 90, they pick five which normally sell within a week.”

And the age of the typical homeowner is also slowly changing.

“While many of the owners with more properties tended to be older, people buying property to rent out today tended to be in their 30s,” Mercieca said. “I would put the average age of property owners at 45.”