The good, the bad and the ugly : analysing the relationship between tourism and Malta’s property market in highly touristic areas

Abstract

This study seeks to analyse the relationship between tourism and Malta’s property market through an analysis of four observations: i) the influence of tourism on property value from a rental and a sales point of view ii) the concept of residential tourism by focusing on special designated area projects iii) the emerging trends in relation to tourist accommodation and iv) the concept of sustainability in both industries. While providing a better insight into the relationship between the two industries, this study aims to develop an understanding for policy makers, to address several limitations currently present. To analyse the relationship between the two, existing literature was reviewed, and the four established observations were analysed. To ascertain a justified analysis, a qualitative research method was followed. Interviews with individuals who are considered as professionals within at least one of the industries were held to gather their opinions and arguments. The general findings on the established observations show that i) Tourism influences and contributes to a rise in property value from a rental and sales perspective. ii) Although the potential of residential tourism is recognised, the study suggests that Malta seems to be attracting foreign investors who buy property without usage, leaving it vacant until being re sold. iii) To attract European citizens and third country nationals in becoming residential tourists, Special Designated Area projects are being developed, offering several amenities and a holistic experience. On the other hand, the surrounding areas of these projects are in a poor state concluding that Malta is not living up to its potential. iv) The short-let market has been identified as one of the new emerging trends in relation to tourist accommodation. While it benefits a number of homeowners, it is considered as one of the main drivers leading to an inflation in property prices. v) Another identified tourist accommodation trend were boutique hotels. Being profitable is a challenge however, this trend instilled regeneration and improved the overall experience of certain areas including Valletta. vi) From a sustainability perspective, Malta must seriously consider the potential over-supply of tourist beds. vii) Pre-covid, the growth rate of tourism and Malta’s property market was not sustainable. Now that Malta is recovering from the pandemic, it is suggested that its strategy must be re-considered with the aim of having a realistic and a sustainable growth rate.