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03.10.19 5 Issued by Bank of Valle a p.l.c., 58, Triq San Żakkarija, Il-Belt Valle a VLT 1130 Bank of Valle a p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking in terms of the Banking Act (Cap. 371 of the Laws of Malta). DOWNLOAD YOUR SOFTWARE TOKEN Talk to us | 2131 2020 | bov.com BOV INTERNET BANKING B O V Bank of Valletta DAVID HUDSON THE property market has slowed down, according to a KPMG report that warned shoddy works risked giving Malta a rep- utation as a destination for working-class migrants. e report noted that in the high-end property market, the quality of construc- tion and finishing standards often failed to meet the expectations of high net worth individuals. High-end developments were not per- forming as well as expected, the report says. e Construction Industry and Proper- ty Market Report was commissioned by the Malta Developers Association and published during a seminar at e Excel- sior Hotel in Floriana on Wednesday. But the slowdown in the property mar- ket did not seem to worry operators, with several clarifying this was simply the industry returning to normal lev- els of demand after a period of strong- er-than-usual performance. Rents under €1,000 per month in short supply KPMG found that rental properties priced at under €1,000 a month are in short supply and properties at under €600 a month are very limited. "is has led to an increase in property sharing and has also driven some opera- tors to provide lodging for their foreign employees at discounted prices or at no cost," the report reads. Operators who were consulted were of the opinion that there is an excess supply of properties in the mid-range, typical- ly priced between €1,000 and €2,000 a month. "One suggested reason was that many properties were priced at approximately €1,300 per month to meet the require- ments of the Individual Investors Pro- gram," the report says, adding that high- end developments were not performing as well as expected. "From a demand perspective, higher rents feeding into higher-wage pressures on employers negatively impact Malta's attractiveness to foreign investors and workers." According to a 2016 Central Bank of Malta assessment on the Maltese hous- ing market, higher market rental rates only affect approximately 2% of the Mal- tese population. However, if property prices continued to rise at levels outpac- ing increases in income, some segments of society could be priced out of the mar- ket. Some operators told KPMG that the construction and finishing standards ap- plied to the upper end of local proper- ties often fail to meet the expectations of high net worth individuals. Some claimed that Malta is quickly building a reputation as a destination for working-class migrants and tourists as a result of local tendencies to accept com- promised quality as a means of cutting costs. Banks have played a role in stultifying the housing market Industry operators said that local banks too have played a role in stultifying the potential of the housing market since some, they claim, were downright diffi- cult to access. "Industry operators criticised the local banking sector for the bureaucracy and challenges being experienced by non- EU residents when carrying out banking in Malta. Views expressed by the major banks acknowledged that foreign na- tionals may sometimes be subject to due diligence checks that take longer to be processed," the report reads. e report cites other potential reasons for the slowdown, notably the presence of rogue developers and lack of enforce- ment, with construction sites often ex- periencing fatal incidents, and the risk of a housing bubble when house prices are no longer necessarily reflecting econom- ic fundamentals. PM warns against greed In his keynote address, Prime Minister Joseph Muscat said there were three fire- walls that guaranteed that the construc- tion industry remained sustainable. "e first guarantee is the gut feeling of the developer where seasoned busi- nessmen always know the demand and what will work and what won't. e sec- ond firewall is banks — banks would not hand out facilities for a project that they are not convinced of," he insisted. e third firewall is the government policies and decisions where the govern- ment can stall everything if it sees that this is required. "is year alone, we stopped the con- struction industry, a sign of credibility, and the Malta Developers Association and Chamber of Commerce agreed with such a decision," Muscat said. He was referring to a week-long mor- atorium on excavation and demolition on construction sites after two accidents which saw private properties in Pietà and Mellieħa collapse. Malta property market waning, construction industry told Joseph Muscat urged the construction industry to remain sustainable

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