Issue link: https://maltatoday.uberflip.com/i/1272935
maltatoday | SUNDAY • 26 JULY 2020 10 NEWS Long lets make comeback during COVID lockdown PAUL COCKS A number of unexpected developments helped keep the rental property market afloat and in the black during the COV- ID-19 pandemic, in defiance of predic- tions forecasting a market shutdown. Although industry players have report- ed a downturn in business during the lockdown, the consensus amongst some companies is that momentum was kept in most cases, with some even reporting a surge in business. Robert Spiteri Paris of Perry Real Es- tate says his company's rental executives kept up normal hours and business lev- els, albeit working from home during the lockdown. And while they reported a de- cline in the number of traditional prop- erty rentals and renewals, the business was boosted by a couple of new develop- ments. "We saw many landlords shift their properties from the short-let to the long- let category," Spiteri Paris said. Short lets were in fact the most affected during the pandemic, with restrictions on move- ment and contact resulting in a lot of lost business. "This shift to the long-let market re- sulted in an increase in supply, leading to a drop in rent prices," Spiteri Paris said. "These favourable and attractive prices, in turn, pushed up demand to an extent that the rental division saw an increase in business, despite the restrictions im- posed during the pandemic." He said many landlords had for years shunned long-lets, often out of fear that the lessees would not move out of the property at the end of their lease, or because they feared that their property would not be looked after as well. But many seemed to have overcome these fears in the few months affected by COVID-19, which saw the short-let mar- ket come to a virtual standstill. The exodus of foreign workers, many of them employed in the gaming industry who returned to their home countries to work from home, provided further im- petus to landlords previously opposed to long lets. "Another new development we saw in the past months is a huge increase in the number of Maltese seeking local properties for long-lets," Spiteri Paris. "As many families started feeling walled in during the lockdown, many signed long-let agreements on villas and other large properties, often with large outdoor areas." He said that it was usually foreigners who signed long leases – six months up to a year, even two – but this time around, during the pandemic, it was the Maltese who were booking long-let properties. The drop in rental prices made these properties suddenly accessible to a much wider demographic, fuelled by the desire of many to enjoy some outdoor space while still under lockdown. Spiteri Paris said this new phenomenon led to a minor revolution of its own – as many landlords had to overcome their previous aversion to renting to locals. "It is true that some landlords still choose to rent to foreigners only, but with the huge demand by locals for large properties on long let, many came around and quickly acceded to renting to Maltese, knowing full well there was no guarantee other- wise of them leasing the properties in the usual channels." Spiteri Paris said that his company even had many cases of families pooling re- sources to rent a single property togeth- er, another first for the market. Families grabbed up properties that would usually have been beyond their financial budgets, pooled resources with other families, often extended members of the same family, and sealed long-let agreements on numerous villas and other large properties. One factor that remained constant dur- ing the pandemic was location. Coast- al towns and villages remained the top choice for property rental, especially since many of the properties leased dur- ing these months are what are considered holiday properties, even those sought for long lets. Many properties located inland did not garner any increased attention, despite also having to drop prices to keep up with the heavy competition. The same thing happened in Valletta. Valletta misses out Many properties in Valletta are cur- rently empty, having – for the past few years – depended on foreigners living in Malta to secure rolling month-on-month leases. The manager of an agency specialising in Valletta property sales and rental told MaltaToday that the COVID-19 pan- demic and subsequent lockdown had seen many foreigners going back to their home countries. "This affected both residential as well as commercial rentals," he said. "In fact we had quite a few cases where the clients chose to pay the penalties in order to end their long let contracts, rather than keep making monthly payments on a property they could not use, as in the case of res- taurants." Quite a number of small commercial properties had been leased to foreigners, including Italians, but also Asians and Eastern Europeans who operated restau- rants, cafés and trattorias. Once these had to close down due to measures im- posed during the pandemic, many sought to end their lease, often paying the equiv- alent of two months' rent as a penalty. As happened elsewhere, landowners lowered prices in a bid to attract new business, some even offering a month or two of moratorium on payments. But with Valletta a virtual ghost city due to the closures of practically all retail outlets, very few landlords concluded any new business on Valletta property the past few months. As for residential properties, these too failed to attract new tenants, since many of new tenants were looking for larger properties with extensive outdoor areas – definitely not a trademark of properties within the capital. Seafront or seaview, please Victor Camenzuli, an independent es- tate broker, confirmed that new rentals in Valletta dropped to almost zero be- tween March and June. "It is mostly foreigners who rent prop- erty in Valletta nowadays, especially since many of these houses and apartments are priced too high for anyone but these for- eign executives," he said. Camenzuli said that, contrary to Val- letta, business in the northern harbour area remained brisk, as many landlords brought their prices down, some by up to 30% and 40%. He too recognised how more Maltese than usual had rented properties in the past months, and how they seemed to flock to seafront or seaview locations. "We Maltese seem to have this notion that a holiday home should be next to the sea, so even this recent surge of Mal- tese tenants for the most part sought out apartments, houses and villas on the sea- front or as close to the sea as possible," he said. The more successful areas were the whole stretch of the Sliema front, from the ferries to Balluta and Spinola bays, as well as Qawra and Mellieha. "With landlords forced to reduce prices if they wanted to attract potential tenants, many people secured very favourable deals on their leases, leaving both parts satisfied," Camenzuli said. "It will be interesting to see – and it's still to early to see – if this trend will continue in the long term." Property agents say the COVID-19 lockdown killed the Valletta rental property market, but created demand for long lets in villas and seaside properties Robert Spiteri Paris