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High prices send Malta soaring in buy-to-rent league

Malta’s soaring rent prices are biting hard at home, but keen observers abroad are watching out for good returns on property buys

matthew_vella
Matthew Vella
13 October 2017, 11:14am
For according to payments company WorldFirst, Malta is now ranking second in a European ‘buy-to-let’ table of the best returns from properties that are rented out.

With Ireland topping the league table for the second year in a row, soaring rents in Malta have now placed it in second position.

The average yield on an Irish property stood at 7.08 per cent in August 2017, up from 6.54 per cent in 2016, and far ahead of the rest of the EU-28.

Malta’s average yield was set at 6.64%, pushing the island up an impressive six rungs from its 2016 eighth-place ranking.

The research used property and rental prices collected by the Numbeo database, which sources data from official statistics agencies as well as private companies. 

2017 Rank2016 RankCountryAverage Rental Yield
11 (-)Ireland7.08%
28 (+6)Malta6.64%
33 (-)Portugal6.43%
42 (-2)Netherlands6.27%
59 (+4)Slovakia6.12%
64 (-2)Belgium5.96%
76 (-1)Turkey5.91%
87 (-1)Bulgaria5.77%
911 (+2)Cyprus5.7%
105 (-5)Hungary5.59%
1110 (-1)Latvia5.44%
1216 (+4)Spain5.39%
1312 (-1)Poland5.34%
1413 (-1)Romania5.17%
1514 (-1)Denmark5.08%
1622 (+6)Slovenia4.59%
1718 (+1)Estonia4.55%
1820 (+2)Finland4.52%
1917 (-2)Czech Republic4.47%
2019 (-1)Greece4.4%
2121 (-)Lithuania4.22%
2224 (+2)Luxembourg4.21%
2328 (+5)Italy4.08%
2423 (-1)Germany4.03%
2515 (-10)UK4%
2625 (-1)Austria3.91%
2727 (-)France3.82%
2826 (-2)Croatia3.82%
2929 (-)Sweden3.03%
Buy-to-let yields are calculated using annual rental income as a percentage of how much a property costs to buy.

Malta has become an attractive destination for foreign workers lured by a host of financial services and gaming companies being set up in Malta, but also by a booming construction industry.

The influx has, in turn, sent rent prices soaring.

A MaltaToday exercise to find out how big the increase in rental prices has been in Sliema, Mosta and Mellieha between 2010 and 2016, using data obtained from classified listings in the Sunday Times of Malta, showed at least an 80% price increase for Sliema alone.

And data from the Central Bank of Malta shows that between 2013 and 2016, under Labour’s first administration, property prices went up by 25% in just three years.

This compares with the slump of 0.2% that took place between 2008 and 2013, during Lawrence Gonzi’s second PN administration, and the 34.6% boost between 2003 and 2008. When Malta joined the EU in 2004 prices skyrocketed by 20% in that year alone.

Altogether, property prices have gone up by a significant 67.2% between 2001 and 2015 and show no sign of slowing down.

High yields make property investment appear very attractive. Construction projects in Malta have now been geared up for massive high-rise projects, while first-time buyers are not required to pay any property tax in a government scheme that has been ongoing since 2013.

In Ireland, the average annual rent for a one bedroom apartment in an Irish city has soared to over €13,590 as of August 2017. This makes it the second most expensive country to rent in the EU after Luxembourg, which costs city renters over €15,855 per year. 

For Malta, the average annual rent for a one-bedroom apartment in the centre was set at €8,367 a year. Portugal, Netherlands and Slovakia also emerge in the survey as the next European hotspots with yields of over six per cent. 

Sweden took last place for the third time due to its tightly controlled rental market.

matthew_vella
Matthew Vella is executive editor at MaltaToday.
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