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According to a report by the European Commission which provides an in-depth study of the current state of Malta’s economy, it would appear that the tiny country has shrugged off the financial crisis and progresses into 2014 in very good shape, making it an attractive destination for foreign investors.
With a population of less than 500,000, Malta remains a financially stable economy largely due to the fact that it was dragged into the global financial crisis from a position of relative strength. The housing market boomed from 2000 but had settled down by 2005 without any bubbles bursting on the way and the consequence is that in 2014, the housing market is stable and the risks arising from over-exposure to property are limited, comparing very favourably to other EU countries.
More than 75% of property in Malta is owner-occupied and because the property market has not experienced the same levels of devaluation as seen in other countries, there are few mortgage holders in negative equity. Unemployment remains at one of the lowest levels in the EU at 6.5% and is expected to fall further in 2014 and with inflation at just over 1%, the Eurozone’s smallest economy is rebounding from the financial crisis at a relatively fast pace.
Malta’s financial services industry has grown in recent years and has avoided contagion from the European financial crisis largely because its debt is mostly held domestically and its banks have low exposure to the sovereign debt of peripheral European countries.
Malta reduced its deficit below 3% of GDP, leading the EU to dismiss its official excessive deficit procedure against the country in 2012.
The housing market has been boosted in recent months since the government introduced a scheme allowing non-EU investors to obtain a residency visa when purchasing real estate in a cash transaction of at least €275,000. Of all the European countries introducing the visa scheme, Malta is the only one where renting out a house with a minimum annual income of €10,000 also qualifies for an ‘Investor Visa’.
The climate for foreign investors in Malta is extremely appealing, fast becoming the jurisdiction of choice for a number of multinational companies looking for an ideal hub from which to do business within the EU, Middle-East and North African markets. An efficient workforce, a stable and safe environment, a low-cost and tax-efficient location, highly-qualified workforce, strategic geographical location, English as a business language and a strong legal and fiscal framework are all ingredients which combine to make Malta the ideal place to do business, resulting in the country’s ranking among the top five emerging financial centres in the world in the City of London’s Global Financial Index.
For investors with a small appetite for risk, Malta is the perfect destination for property investment and with economic expansion set to continue together with steadily increasing FDI revenues, the potential for growth certainly warrants further investigation.