PwC Malta has worked in conjunction with JLL and Archi+, to include Malta in JLL’s Global Real Estate Transparency Index (GRETI) for the first time. Through the GRETI, JLL has been mapping the evolution of real estate transparency across the globe since 1999. The 2022 JLL GRETI features 94 participant countries and territories. The JLL GRETI is based on a combination of quantitative market data and survey results. The Index scores property markets on a one (Highly Transparent) to five (Opaque) transparency scale.
Introduction
As investors become increasingly exposed to real estate, investing and doing business in a transparent and sustainable manner is key. The JLL GRETI, published on a biennial basis, acts as an essential guide for companies operating in foreign markets and a unique benchmark of real estate market transparency. PwC Malta has led the compilation of survey results for Malta in the 2022 JLL GRETI edition, through consultations with key stakeholders within the public and private sector.
Explore key findings
Malta has been attributed a score of 3.64 in the Index, thereby falling within the Low Transparency category, along with countries such as Morocco, Egypt and Sri Lanka. Albeit scoring well on fronts such as governance of listed vehicles, regulatory and legal aspects, as well as the transaction process, areas such as sustainability, technology and digitisation, and availability of data merit considerable improvement.
- Real Estate Valuations
- Availability of Data
- Governance of Listed Vehicles
- Regulatory and Legal
- The Transaction Process
- Facilities, Project and Property Management
- Technology and Digitisation
- Sustainability
Real Estate Valuations
Malta achieved a relatively good score within the field of real estate valuations. Results indicated that independent, external third party valuers are typically engaged at least in one-third of those instances where a valuation is performed. Market-based approaches to valuations are also used, albeit availability of data on transactions is limited. There is also a sufficient degree of competition in the market for the provision of valuation services.
Availability of Data
Ensuring that contracted data is collated, recorded, analysed, digitised and disclosed to the public could help improve Malta’s score in terms of availability of data and technology and digitisation. Aggregate time series of data including contracted rents, contracted property prices, vacancy rates, and gross capitalisation rates, would prove beneficial for investors, Government and other stakeholders. Publication of contracted data would also boost investor confidence. Contracted information could be particularly beneficial for the preparation of market-based real estate valuations, thereby improving the credibility of such valuations.
Governance of Listed Vehicles
Malta ranked highly within the governance of listed vehicles stream, in light of listed companies’ adherence to international principles of corporate governance, adoption of consistent financial reporting frameworks and use of the English language in financial statements, among others.
Regulatory and Legal
Malta boasts a predictable legal and fiscal environment for investors, both local and international, with real estate tax rates being clear, generally stable and predictable. There is also consistency in the enforcement of real estate taxation among investors. Other areas within this stream were rated moderate or moderate to good, including predictability of change in land use, enforcement of land use planning, enforceability of contracts and contract law, the legal process, and the existence and enforcement of AML legislation.
The Transaction Process
Although the costs of investing in real estate assets are considered to be high in comparison with other countries, the bidding and negotiation process is considered to be relatively fair and transparent. Moreover, respondents indicated that high quality presale information is considered to be available c. 30% to 60% of the time when investing in real estate assets, which helped improve Malta’s score within this pillar.
Facilities, Project and Property Management
In Malta, facilities, project and property management companies are considered to be fairly available, with providers of such services, as well as the services themselves typically being made known to occupiers. Facilities, project and property management services are considered to be fairly good-value and generally provide reliable services. Moreover, a reconciliation exercise of service charges between occupiers and landlords is typically done for commercial properties, at least once annually. Such reports are considered to be fairly accurate, including a good level of detail.
Technology and Digitisation
From a technology standpoint, the proptech sector is still at its inception. Furthermore, technologies that could lead to improvements in the way properties and facilities are managed, or the manner in which real estate data is collated, cleaned and analysed, are currently not used or being used by very few industry participants, leading Malta to achieving a low score on this front.
Sustainability
Malta lags behind on the Index in the field of sustainability. Investors may need to start justifying their real estate investments, particularly if these have an impact on their carbon footprint. Owing to increased regulation and stakeholder pressure, companies including those involved in real estate will need to start taking into consideration sustainability when reporting their performance in the near future, particularly in view of the Taxonomy Regulation and the proposed Corporate Sustainability Reporting Directive (CSRD). Moreover, Europe and Malta will not be able to meet their ambitious targets unless financial investments are directed towards sustainable projects and activities.
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