Malta has one of the EU's best track records for economic stability
South Africa’s GDP forecast for this year predicts a gloomy picture indeed. Analysts see it contracting even further with very little or no demand globally, plus the government’s increasing debt levels are also not helped by bailing out state enterprises repeatedly such as Eskom, Telkom and the now defunct national carrier, South African Airways (SAA). All these endeavours have placed pressure on the country’s credit rating signalling additional risks.
South Africa’s GDP and therefore economy is facing a further shrinking of 8.3% before the end of 2020, before a hesitant but at least optimistic forecast of expanding a few percent in 2021. Figures like this are unheard of in Malta, the latter whose economy has seen unprecedented growth the last few years, especially in the property sector.
Being a high-income country and having an innovation-driven economy, Malta has a very stable financial base with many large infrastructure projects. Malta has an insatiable and resilient domestic demand and emerged from the Euro-Zone crisis far better off than most of its counterparts. Malta’s currency is the Euro (€) and its GDP grew by 4.4% in 2019, one of the most dynamic found in the EU (nordeatrade.com). Another achievement is that over the past few years public finances have been considerably consolidated: Malta’s debt-to-GDP’s ratio fell from above 70% to around 50%. The IMF’s forecast is that this will further reduce to just 35.7% in 2021 (nordeatrade.com). Compared to South Africa, Malta has a very high employment rate of 74% with unemployment standing at only 3.4% for 2019 (TradingEconomics.com 2019 and the IMF).
When it comes to the cost of living, Malta offers value for money: it may be cheaper than Italy and more expensive than Spain, but on average you get a lot for your euro with day-to-day living expenses. For example, when compared to South Africa, the cost of public transport and having a home Wi-Fi connection (even after unfairly converting euros to rands) is cheaper in Malta! In Italy a litre of milk, a loaf of bread, eggs, cheese, chicken and beef are all more expensive than in Malta (numbeo.com), but as said, more expensive than Spain.
For the economists amongst us, Malta’s GDP forecast for 2020 is $22.5 Billion with a 2020 Fitch rating of “A+” and a stable outlook. South Africa’s current rating currently stands at BB with a negative outlook, while France has an AA, Germany AAA and Spain an A- rating.
When it comes to real estate, the Maltese islands offer a good choice of property types: from seaside apartments in cosmopolitan towns to historic farmhouses and rural retreats. On the property-as-investment front, Malta’s property market is very stable and still on the increase, offering steady but excellent capital growth in Euros and for the first quarter of 2019 it saw an incredible growth of just under 11%, outperforming many other traditional investment sectors. This boost was due to low interest rates, more disposable income, and a rise in qualified, well-paid foreign workers. For 2020 the house price index for several EU countries, compared to the same time last year in the first quarter, growth was as follows: Malta 5.6%, France 4.9%, Spain 3.3%, Cyprus 1.1%, Italy 1.7% (ec.europa.eu). South African house prices fell by 1.22% adjusted for inflation during the same period (globalpropertyguide.com).
For South Africans investing in property, Malta is thus one of the best markets to see considerable growth on investment but when it comes to size and value for money, South Africans may find that they will have to scale down on their hopes of having the same large gardens, swimming pools and acres of land they are used to. Malta has one of the highest population densities in the EU, so space is an absolute luxury. If you want space, it comes at a price.
Care to find out more?
Frank Salt Real Estate is hosting its next seminar series MOVE TO MALTA – investment, residency, and relocation, this time in the form of a webinar. Registration to the virtual seminars is free of charge, with a limited number of participants.
The 1-hr webinar will consist of a few short presentations, with the option of also booking a virtual one-on-one session with key speakers and their support teams, as well as Frank Salt partner agents in South Africa. The individual sessions are highly recommended as they offer an opportunity to gather exact information related to property investment, taxation, or residency.