Issue link: https://maltatoday.uberflip.com/i/691413
maltatoday, SUNDAY, 12 JUNE 2016 13 all the properties on their website. The development of luxury residential areas is also pushing property prices up across the board. Spiteri Paris acknowl- edged this issue but said he was encour- aged by the ingenuity and entrepreneurial spirit of Malta's younger generation. "Ob- viously," he said, "some people will be left behind. But most are enterprising and will succeed." But what of the future? What is the outlook for real estate devel- opment globally and will Malta follow? Or is Malta too small to be able to sustain the level of development – and rate of growth – we are seeing today? The real estate landscape is changing worldwide and Malta is no exception. Global megatrends will change the real estate landscape considerably in the next five years and beyond. And while many of the trends highlighted are already evident, there's a natural tendency to underesti- mate how much the real estate world will have changed by 2020. In its report 'Real Estate 2020: Build- ing the future', PricewaterhouseCoopers (PwC) identified six key trends it believes will have profound implications for real estate investment and development. One of them is that collaborating with gov- ernments will become more important in order to mitigate risks of schemes that might otherwise be uneconomic. And that competition for prime assets will intensify further with the investment community having to think laterally to earn attractive returns. Even in Malta, the new Labour govern- ment has been eager to accommodate the developers and businessmen seeking to overcome major planning hurdles. The high-rise planning policy is one of them; a new corporation that will coordinate the infrastructural overhaul which St George's Bay will need as development gets under- way is another pledge made by Prime Min- ister Joseph Muscat; his government has actively considered land reclamation, and it is clear that various parcels of public land have been apportioned for private de- velopments by using less onerous methods of public competition. PWC also warn that a broader range of risks will emerge: climate change, accel- erating behavioural change and political risk. Real estate investment organisations will need to make sure they have the right capabilities and qualities. "It's an excit- ing time for the real estate sector. Private capital is in huge demand for development and investment, yet competition for prime assets is intense. Never before have local knowledge, specialist expertise and good government relations been more impor- tant. Looking forward to 2020, it's the real estate managers and investors with the vi- sion to anticipate emerging trends in the medium term and to prepare for them, who will be most successful." Caution on the boom Economist Gordon Cordina warns that unless the community attracted to luxury lifestyle developments and the Maltese population in general find ways to gel to- gether, a social divide could very well de- velop between the two, leading to relative poverty outside these developments. "Malta could become a regional holistic lifestyle destination, offering quality med- ical services, education, entertainment and work opportunities to complement the luxury properties that wealthy for- eigners seek." Cordina said that Malta's obvious voca- tion for economic development is to serve as a lifestyle destination, which over the past years it has sought to exploit through attracting foreign direct investment and tourism, together with offering attractive one-stop shop solutions to new areas such as digital gaming and financial services. "This concept can in future be extended towards a holistic lifestyle proposition where Malta becomes a regional centre where one can lead a healthy life, seek rec- reation and entertainment, obtain quality medical services and education, and of course, work in higher value added ser- vices where physical distances are not an obstacle." This would entail providing quality spaces for Malta to serve as a cosmopoli- tan centre for global and home-grown tal- ent to intermingle and generate economic growth and wealth. If undertaken properly, Cordina said, this vision has great potential for Malta. Some major risks would have to be ad- dressed, he insisted. "One big flaw I see is the insufficient quality in infrastructural services and environmental amenities," he said. "This would nullify the significant expenditures undertaken in individual projects, so per- haps the private sector could itself be in- duced to contribute to infrastructure and the environment." Cordina said the risk of a social divide between the wealthy attracted to the luxu- ry lifestyle developments and the Maltese population in general was quite real. "There could be a specific fund created to enhance social cohesion, including af- fordable housing, through the taxation which government would be obtaining through these projects, which can be a significant amount," he said. He also saw a risk in cramming too much development in a short time, risking bot- tlenecks in development activity at the same time and having supply not being able to meet the demand. Cordina suggested that a specifically- dedicated government agency would be essential to manage and address such is- sues. "It is equally crucial that individual en- trepreneurs are fully aware of how their actions influence others and vice-versa," he said. "These are risks which can be managed through proper policy design and rational business decision-making." pcocks@mediatoday.com.mt News 'The risk of a social divide between the wealthy and the Maltese population in general is quite real' – Gordon Cordina Billionaires, ultra-rich and IIP citizens in Malta Denis O'Brien, 58, Irish citizen worth $5.8 billion Cell phone tycoon owns 94% of Digicel, a mobile phone network provider that operates in Central America, the Caribbean, and the Pacific Islands. O'Brien has been on a deal-making binge in Ireland, snapping up distressed assets on the cheap and turning them around. The son of a political activist, he says he tries to operate on an 80%-business, 20%-philanthropy ethic William Erbey, 66, US citizen who recently acquired Maltese citizenship The Mortgage titan built Ocwen Financial into one of the US's largest nonbank mortgage servicers after big banks retreated from the space during the financial crisis. Forbes reports that authorities allege Ocwen required underwater homeowners to buy a specific type of home insurance policy through a company, Altisource Portfolio Solutions, in which he has a significant stake, allowing it to generate $65 million in fees Oleg Muradyan, Russian citizen who recently acquired Maltese citizenship Muradyan is president of VEB Leasing, a company established with the participation of Rosoboronexport – Russia's export company for military and defence technology – to raise the competitiveness of defence industry and civil engineering enterprises. Marwan Albawardi, recently acquired Maltese citizenship Co-founder of Oasis Ventures, a private investment company. He was formerly vice-president of Goldman Sachs International and Goldman Sachs Monaco. Harvard Law School graduate, he holds degrees in political science, development economics, law and diplomacy, and international monetary theory. Oleg Smirnov, recently acquired Maltese citizenship Head of SNS, one of Russia's main distributors of tobacco. The company distributes British American Tobacco products for Russia, and tonic and carbonated beverages of the GFD AG company. Another important business activity of the Group of Companies is production and distribution of lighters under Delta and Just brands. The St George's Bay peninsula: hotel groups Corinthia and Island Hotels built three hotels on public land that was sold on the cheap in a bid to develop Malta's high-end tourism product. In 2016, Corinthia acquired the Island Hotels group.