Malta's Poor Infrastrucure May Deter Investors Despite Property Boom

by Robert Lee, Tax-News.com, London

30 August 2006

Despite the island's booming property market, spoiled beaches, poor roads and a bad infrastructure could be costing Malta's economy millions in lost revenue, according to a travel guide for the island.

"The lack of investment in Malta tourism and the island's infrastructure is turning investors and tourists away to other destinations," claims the guide.

"At a time when many Mediterranean islands are seeing an increase in visitor numbers, Malta has seen a drop of over 2% in the first six months of 2006 compared to 2005, and unless there's a sharp turnaround in Malta's fortunes as a holiday destination the overall figures for the year as a whole could be even worse," it went on to warn.

Property prices in Malta have risen sharply in recent years, partly spurred on by Malta joining the EU in 2004, while recent government figures showed a 16% rise in the year to March 2006.

One Malta property company however reports that the demand for property in Malta remains buoyant from the UK, US, Australian and European mainland markets, and predicts a further 10% rise in the coming year.

"We normally see a drop off in enquiries a few months before any price levelling," explained a spokesman for Tribune Property.

"But demand for Malta this year is every bit as strong as 2005 and at the moment we can only see prices going one way in the short term at least - and that's up," added the spokesman.

The Malta government is expected to allow developers to utilise more land for building, but some property companies see this as a negative rather than a positive move.

"Malta is an island with a finite amount of land, and while the Malta government view releasing more land for building, and more properties as the answer to increasing property prices, we believe this is the wrong approach", say Tribune, "and in the end more developments could have an adverse impact on Malta's economy."

"Tourism is an important industry for Malta, and tourists aren't impressed by cranes and construction work while they're trying to relax or go to see Malta's historical sights, and if it's a first visit to the island there's an increased chance that it will be their last, losing the Malta holidays industry repeat business," the company added.

News that visitor numbers are falling will be welcomed by islanders struggling to get onto the housing ladder. However, there has been speculation for some time that low cost airlines will soon begin flying into Malta. Such a development could lead to a boost in visitor numbers, putting more pressure on the island's limited housing stock.

According to Tribune, while British tourists and investors have been the dominant foreign presence in Malta, last year saw a record number of visitors from Italy.

The company also said that increased enquiries have been received at estate agents across the island from France, Scandinavia, Holland, and Belgium, helping to increase the demand for Malta properties.

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