The vacant property myth

On Friday, 11 October, the Kamra tal-Periti organised a debate on vacancy in Malta's residential areas under the intriguing title 'Empty Spaces... abandoned places...' Before the participants split into a number of working groups there was a presentation by Michael Pace Ross, Head of the National Statistics Office, in which he gave some interesting and hitherto unknown aspects of the figure of 72,000 vacant dwellings that resulted from the census made two years ago.

It is interesting to note that this figure is being continually touted by environmental groups as enough reason for all development permits to be refused outright with no questions asked; and the number of times I have seen this argument in the comment columns of news portals carrying some news about building permits or other MEPA issues is beyond counting. Everybody, it seems, assumes that there are 72,000 residential units ready for habitation and available for purchase on the market.

Indeed I have often heard the argument that 72,000 units are equivalent to six times the number of family units in Birkirkara and that therefore in Malta we have the equivalent of six Birkirkaras in empty housing supported by infrastructure - roads, drainage, water and electricity - that was constructed and installed in vain and at huge expense to the Maltese exchequer.

I have never believed that the situation is actually like this, even though I knew that the census exercise is carried out professionally and in painstaking detail. My disbelief was supported by three reasons. The first being personal experience: the large figure of 72,000 would surely be reflected in my everyday practice as an architect. I have been practising architecture for 45 years - with the exception of a nine-year stint when I had ministerial responsibilities - and surely such a dramatic upsurge in vacant property would have led to tangible effects in the exercise of my profession. I cannot sense any of the effects that one would expect if these numbers were correct.

Even more telling was the situation in the property market. After an artificial spike in prices as a result of particular circumstances in the period just before Malta became a member of the European Union, the market calmed down and returned to a more sane level - practically a consistent plateau. If the market was really flooded with 72,000 vacant units for sale the property market would have collapsed completely. It did not.

Moreover, there were still people investing in development because they sense that money can be made from such ventures if planned carefully and judiciously. No one is so mad as to spend money in an investment that is doomed to fail. Those who generalise about developers being a greedy lot also believe that they are stupid enough to invest without any chance of recouping their investment, let alone the projected profit. The contradiction is obvious.

Although there have been foolish developers who rushed into ventures at a time when they 'felt' - against all logic - that property prices would keep on appreciating at the galloping rates we were experiencing over 10 years ago, many have learnt their lesson. Those who are venturing in development nowadays do so after realistic marketing studies - rather than recklessly on the hunch that anything sells, as used to happen in the past. This meant that the property market stabilised rather than collapse, as the case would have been if the 72,000 figure represented the actual number of units available for house hunters.

In his presentation - reported in The Times last Wednesday - Mr Pace Ross went into some detail on how the enumerators did their job on the field. Each had a number of units from which to collect the information needed in the census. Moreover, people were asked whether they had a summer residence over and above the house in which they resided. I need not go into the definitions of what constitutes a household for the purposes of the census and other definitions that were mentioned - all important so as to ensure that the collectors of the data act in one consistent manner.

The long and the short of it is that the number of summer residences is practically 50% of the number of vacant properties - some 33,000, in fact. At the same time only half the 72,000 vacant dwellings were listed as in a good state of repair, and this is uncannily almost equal to the number of summer residences!

The enumerators indicated also the state of the vacant buildings from a visual inspection made summarily on the ground. Nine percent were recorded as being in a shell state, that is, units with the masonry and concrete elements only and otherwise still unfinished. Thirty-one per cent of empty houses were indicated as needing minor or moderate repair, while 10% were listed as dilapidated or in need of serious repairs.

What this means is that the real figure of vacant residential units that are ready for habitation and are on the market is around 15,000 - less than 25% of the 72,000 figure so many like to tout.

In other words, the myth of what the number of 'vacant' properties means has imploded.

Besides this there are categories of vacant units that the enumerators could not surmise from a superficial external inspection. The data that was collected from the occupiers of the inhabited houses that the enumerators visited cannot be matched in the case of vacant houses that were only subjected to a simple visual external assessment. From my experience, it results that there are a number of substandard units that are unacceptable for habitation in this day and age.

Just after World War II, 65 years ago, two rooms, a small anteroom used as a kitchen, followed by a WC made up an acceptable residential unit. Many towns such as Gzira and Hamrun are full of such ground-floor tenements with separate units in the overlying floors. These units can be converted into garages or small local shops or merged with the overlying tenements, as today they are considered to be substandard. They can never be sold for habitation on their own.

Other houses are subject to multi-ownership and have been practically abandoned as a result of issues between different heirs owning small fractions of the properties.

A further in-depth study of such vacant houses is needed, so that one can arrive at the sort of categorisation of the different types of vacant residential units that would give a clearer picture of the situation.

This can be done by the NSO by scientifically choosing an adequate sample of vacant houses from those so identified by the census enumerators and following this up with a detailed study of each unit in this sample. The result of this exercise can then be used to extrapolate the real situation overall.

It is important for MEPA and government to know the actual facts about this issue. There is no room for hunches based on emotions. In spite of the good intentions of many who criticise development permits across the board, making assertions based on a misinterpretation of the facts can only serve to depict inaccurately a situation that is at best warped and inexistent at worst.

Michael Falzon is Chairman of the Malta Developers Association and a former Nationalist infrastructure minister