Issue link: https://maltatoday.uberflip.com/i/1547431
13 maltatoday | SUNDAY • 1 NOVEMBER 2026 NEWS IL-ĠIMGĦA FL-9.45PM FUQ TVM+ cushion falling sales as rents increase converted residential proper- ties from long-term leases to short-term tourist accommo- dation. The report explicitly states that "the conversion of long- let units into short-term ac- commodation during the summer may reduce the avail- ability of rental properties and contribute to higher rents in the long-let segment". Strong activity despite affordability pressures Despite the slowdown in completed sales, construc- tion and real estate remained among the strongest perform- ing sectors in the Central Bank's survey of local non-fi- nancial corporations. Around three in four busi- nesses in the sector reported an expansion in activity dur- ing the third quarter. While 20% reported worsening con- ditions, the net balance of firms reporting an expansion remained positive at 50%, down from 56% in the previ- ous quarter. Demand remained strong across property development, residential accommodation and commercial real estate. Contacts in the office market, in particular, reported good demand, with several prem- ises operating at full capacity. The sector also registered the highest level of business optimism across the Maltese economy, with a net balance of 70% of firms expecting ac- tivity to expand over the com- ing months. Businesses expect strong sales and rental demand to persist, supported by con- tinued shortages in available supply. Rising costs and labour shortages Operating expenses remain a major concern. Higher trans- portation costs and raw mate- rial prices were identified as the main drivers of increases in non-labour expenses. The Central Bank noted that construction and real estate had the highest proportion of businesses across all sectors expecting very significant in- creases in unit costs, with 19% anticipating rises exceeding 5% over the next 12 months. Labour shortages are add- ing to the pressure, with the availability of skilled workers cited as a major operational constraint. Businesses face difficulties recruiting and re- taining staff, fuelling compe- tition for workers and push- ing up wage expectations. Construction firms al- so identified regulatory and bureaucratic constraints as major obstacles to their op- erations. A shortage of large public tenders was another concern for contractors seek- ing opportunities to under- take major projects. Despite rising input costs and weaker sales volumes, the sector demonstrated consid- erable resilience in profita- bility. Construction and real estate was the only sector in which no businesses report- ed a deterioration in profit mark-ups. Investment and employment prospects also remained pos- itive. A net balance of 20% of busi- nesses intend to increase cap- ital expenditure, focusing on property development, busi- ness expansion and IT infra- structure upgrades. Employment expectations were similarly encouraging, with a net 40% of firms plan- ning to increase their work- force, while the remaining businesses expected staffing levels to remain unchanged. sustain overall market revenues Despite rising input costs and weaker sales volumes, the sector demonstrated considerable resilience in profitability. Construction and real estate was the only sector in which no businesses reported a deterioration in profit mark-ups