The summer of 2020 marked a surge in demand for Maltese real estate. In July, 1,600 reservation agreements were registered for a value of approximately €330 million. In June-August, the total number of contracts with a promise of redemption was 4,088.
The Prime Minister of Malta, Robert Abela, said that buying property under such contracts would bring the country €860 million. This is 100 million euros more than the income for the same period in 2019.
Interestingly, the average transaction value rose in June and August. This indicates that customer demand was steady and not random.
Average transaction value
|Month 2020||Cost of the agreement|
|June||193 602 €|
|July||206 250 €|
|August||230 770 €|
May confidently speak about 2 reasons for high demand:
- temporary tax relief for property buyers;
- increased minimum value requirements for real estate under the citizenship programme.
Reduced tax rates
The Malta Developers’ Association (MDA) links record demand growth with existing tax benefits. These have been introduced as part of an economic stimulus package following the pandemic.
For example, from June 2020, when buying residential property worth from € 400,000, the seller and buyer will pay stamp duty at reduced rates. They are valid until the end of March 2021. MDA has already asked the government to extend the benefits until the end of next year.
Changing the citizenship programme
On the other side, the surge in interest in real estate is due to the relaunching of the Malta Citizenship for Investment programme. It is planned that the new participation conditions will come into effect in September 2020.
One of the points in the updated citizenship for investment programme concerns the purchase of real estate. The threshold amount for participation in the programme has been significantly increased from € 350,000 to € 700,000.
In our experience, most investors who participate in the Malta Citizenship Programme choose to buy property. For them, entering into the summer reservation agreement 一 is a logical step that will enable them to obtain EU citizenship at a lower cost.
Earlier we said that the revision of Malta’s citizenship programme was prompted by EU criticisms of current conditions. The Maltese Government has listened to the recommendations to improve procedures.
It is also expected that the new conditions will increase investment flows to Malta by creating stronger ties with the country.