Malta’s success with their newly-launched Individual Investor Program (IIP), which has received 400 applications so far in less than a year since it was started, has driven up the demand for high-end properties in the country.
The investor program that requires applicants to make a minimum investment of least €350,000 in a property or rent a house for a minimum of €16,000 per annum for a period of five years, has already earned the Maltese government €450 million.
According to real estate experts, most buyers start by renting out properties. The main factor behind their decision to make a purchase is the quality of the property rather than its price. Even though the applicants are required to have a rental contract of €16,000 per annum, most IIP applicants have been paying rents up to €40,000. “If they like the property then we talk about prices. We have several who are renting but we also have those who become attracted to Malta’s lifestyle and opt to purchase a property,” says Kevin Deguara of Re/Max.
The high-end locations of Malta are the ones which are most attractive to potential investors. These include properties in Tigne Point, Portomaso and Fort Cambridge. Increasing demand has also been seen for villas and farmhouses in Gozo, an island of the Maltese archipelago known for its rural outlook and scenic hills. Real estate sources suggest that some clients have spent up to €3 million to buy a property in Malta. However, while the country offers great options for purchase, it’s not the same for property rentals of which the options are limited in the “high-end” category.
Most of the demand for Malta’s IIP is coming from nationals of the Middle East, Asia and Eastern Europe, according to Joe Vella Bonnici, CEO of Identity Malta, a government agency that administers the IIP. A large number of investor applicants have also shown interest in starting their own business in Malta.
Michael Frendo, IIP agent and former nationalist minister, says that the program only considers “financially successful” people and the applicants being processed by his firm were people of “immensely high quality”.
“As a firm we ensure that the people we are presenting to Identity Malta have the necessary credibility and integrity. The prerequisites of this program means that individuals need to be extremely wealthy,” says Frendo.
Frendo has received interest from potential investors, several of who are visiting Malta to discover in person what the country has to offer. “Some of them would have never heard about Malta so we try and encourage them to look at investment, commerce or to make use of our financial services. The people who opt for this program are financially successful people who know that part of their investment is retained by the state,” he said.
Stringent checks and verification are an important part of the application process that is followed by Frendo’s firm, which refuses to accept any applications online. “Reputation is very important. It is better to lose a client than the reputation,” says Frendo.
The IIP application procedure requires investors to submit their application to Identity Malta, after which they have to pay passport fees, the due diligence fees, and a deposit of €10,000 as an advance for the required €650,000 investment. In addition, the applicants also need to make timely investments of at least €150,000 in shares or bonds that have been approved by the government of Malta and have to be kept for a minimum of five years.
The IIP is capped at 1,800 applicants and the Maltese government has set up a National Development and Social Fund which will receive the investments from the program, to be “used to improve the quality of life in Malta through social and capital projects”.