[ANALYSIS] Malta’s building boom: how planning policies triggered a construction explosion

Experts concur that fuelling the current increase in the number of permits issued by the Planning Authority are planning policies, which encourage developers to redevelop existing two-storey dwellings into higher apartment blocks.

The figures indicate that most permits issued are being issued for the demolition of existing houses, “generally terraced houses, and their redevelopment into apartment blocks” according to Tara Cassar, an architect working with Flimkien Ghal Ambjent Ahjar.

She adds that the process has been “aided through piecemeal modifications of planning policies”.

Kamra tal-Periti President, Simone Vella Lenicker, attributes the trend for the re-development of single-unit two-storey terraced houses into five- or six-storey apartments to the Development Control Design Policy approved in 2015.

“Most of our towns and villages are being irreversibly altered as this process of transformation from single to multiple unit dwellings continues.”

But policy changes triggering development in towns and villages pre-date the present administration according to architect Colin Zammit.

“It was not a good idea to bring all village schemes practically to semi-basement, three floors plus penthouse during the PN years”.

He also notes that the present administration has established a 16.8m or 17.5m height, which effectively translates “to four floors plus penthouse from road level”.

“In my opinion, these were mistakes upon mistakes. The villages should have been left alone and demand for units directed towards the north harbour and southern areas closer to the sea where heights of 8 to 10 floors should be permitted, if necessary”.

He also notes that in a reflection of the present administration’s ‘pro business’ and ‘pro investment’ policies the PA immediately updated and finalised several policies, which “were old, out of date or sitting on a shelf for years”. The only documents yet to be finalised are the local plans.

“The government was elected on the ticket of reducing bureaucracy. The PA certainly obliged”.

Foreigners fuelling boom

But this change is also happening in an economic context.

“The financial and tourism sectors have triggered an influx of foreign workers who have settled here. This has made the letting sector very attractive and consequently local developers and buy-to-let individuals have increased investment and the supply of properties,” notes architect Colin Zammit.

As a result of this “rents have gone up in villages from €400 per month to €700 per month. In the north harbour area from €1,000 per month to €1,500 per month”.

But Vella Lenicker points out that the surge in permits could be itself contributing to the rise in prices.

The surge in applications is taking its toll on the construction industry, which according to Vella Lenicker is currently “stretched to its very limit”.

“Players in the field are finding it very difficult to cope with increased demands in terms of qualified human resources, supply of materials and provision of equipment”.

This has also, inevitably, “led to an increase in costs of construction, thus further fuelling the increase in property asking prices”.

Vella Lenicker contends that the current economic growth is a direct result of the large influx of foreign workers and the resultant increase in consumer spending.

“The increase in population brings with it an additional demand for accommodation, particularly rental properties. Planning policies, such as the relaxation of height limitations, assist this process”.

Colin Zammit contends that the economic boom has been triggered “by several little circumstances and not by one move or change in policy only”.

“What is for sure is that this government did in fact reduce bureaucracy… sometimes too much in my opinion, but that’s what local investors and people wanted. This was bound to trigger a movement as a rolling stone gathers no moss…whether positive or not we shall see…. But it is imperative not to leave a concrete jungle behind”.

How townscapes are changing

Vella Lenicker describes the impact of this surge of permits as dramatic.

“Everybody is aware that it can be very remunerative to convert a single unit into multi-units, even small and unsanitary ones, and to rent these out at exorbitant rates. The result is a wholesale transformation of the urban fabric, without a holistic plan, and with little regard to the sensitivity of our urban cores and edge of development bands”.

Architect and FAA activist Tara Cassar notes that the trend is highly visible.

“The resultant scarring blank party walls and dissonant streetscapes that have become the new norm are by the Planning Authority’s standards completely acceptable”.

This is because the Planning Authority does not consider existing proportions and forms when deciding on what is and isn’t admissible.

Instead the Planning Authority bases its decision on the maximum permissible height listed in the Local Plan for that street, creating today's visual scenario where skylines characterised by two to three-storey houses are now broken by five to six-storey apartment blocks.

While averse to development in villages Colin Zammit welcomes the redevelopment of town houses located in coastal areas.

“Although to people who are not in the trade like me, the amount of construction and tower cranes is excessive and disturbing, several areas of Gzira, Sliema, Msida, Pieta, Bugibba and Xemxija still had a lot of 1950/60’s badly-built buildings which allowed for redevelopment once building heights were increased. These areas are prone to redevelopment and above normal heights make sense. This is not the case with regards to inland villages”.
 
Less pressure on the ODZ?

While the PA is approving more dwellings, the percentage of new dwellings approved outside development zones (ODZ) has fallen to just 1.1% of the total, down from 1.5% last year and from 3.8% in 2016. The percentage of ODZ dwellings approved by the PA was the lowest ever since 2000.

“Looking at ODZ dwellings in percentage terms may give the impression of a decrease, but in reality the number of units permitted in 2018 (139) is slightly higher than that in 2017 (136). So the demand has remained constant over the past two years, despite a drop from 2016,” notes Vella Lenicker.

According to Colin Zammit, new dwellings or commercial activities in ODZ are discouraged even by this administration. But he sees room for ODZ development other than dwellings.

“One would prefer large scale hotels or houses for the elderly or large recycling plants to be outside scheme for several reasons”.
Tara Cassar sees one silver lining in the statistics, namely that there is enough space to sustain existing demand without any need to change policies again to accommodate more development.

“By applying the Planning Authority's same logic, it is clear that Malta is nowhere near reaching its full development potential”.

Basically all the houses found along streets where apartment blocks are built can in most cases be redeveloped in the same way.
“This would mean that streets that previously catered for 20 households could now cater for 100 to 120 dwellings”.

While this comes with its own drawbacks, mainly due to increased pressure on infrastructure, it also illustrates “the baselessness of the assumption that the only solution to a housing shortage would be to build upwards (build high-rise developments) or build outwards (build in rural areas)”.

This means that there are thousands of potential units yet to be considered that could provide Malta with the property supply that some are predicting may be needed in the coming years.

“If existing plots along streets already committed physically to five or six-storey apartment blocks are redeveloped sensibly, Malta can continue to grow without compromising the quality and character of its built and natural environment”.

What if all the foreigners leave?

Vella Lenicker notes that statistics point at a very steep rise in the number of units approved between 2015 and 2018, compared to the much more gradual increase between 2002 and 2007, which was followed by a drop in permits following an international recession triggered by the bursting of a global housing bubble.

Statistics also reveal a significant increase in the number of single units converted to multi-unit dwellings, starting slowly in 2013, and exploding in 2018.

But Colin Zammit does not expect any sharp drop in permits in the next years noting that the mega projects that are in the pipeline and the “incredible number of road works in progress and planned” will mean more foreign workers.

“More foreign workers mean more units required to rent. Hence, I do not see an oversupply or slow down for now”.

But Zammit expects problems when most projects are finalised, and several foreigners leave. Another threat can come in the shape of tax advantages for certain industries like gaming. “Then we will have a lot of empty units and rents will get back to those prior to this economic boom.”