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Some experts say that Maltese property can be referred to as a solid investment, and its types give the best ROI. It’s economy is one of the Europe’s fastest growing. It faced rather quick economic growth in 2014 and 2015. It showed as almost about 8% of annual growth till 2016. However, this growth slowed a little bit (to 5%) in 2016.
This is true according the figures from the Central Bank of Malta (CBM) which is now promoting price stability in euro area while actively participating in the preparation and decision-making process of the Eurosystem’s monetary policy.
Malta’s economic state Malta’s recent economic growth surpassed experts’ projection of 4% as its economy had expanded by 3.2% (GDP growth rate) on an annual basis from 2005-2008, then contracted in 2009 by 2.4% and bounced back in 2010, when the GDP growth rate was 3.5%, then in 2011 – it was 1.8%, in 2012 – it was 2.8%, in 2013 – it was 4.5%, and in 2014 – it was 2% as the country’s fiscal deficit narrowed to around 1.4% of GDP in 2015.
The data which can be found about Maltese property market shows that real estate prices surged almost by 14% during the last quarter of 2016. Property prices rose by 7.24% during the fourth quarter of the last year (2016).
Malta labor market Country’s labor market also reflects its economic state as well as its government’s efforts to boost national economy by raising labor market participation. Country’s employment rate in 2016 rose to 66.1% from 63.9% as it was last year. Unemployment rate was very low, about 4.1%. Annual inflation rate in February 2017 was merely low 1.2%.
Real estate market prices by property types In such a way house price rises were experienced by all property types. For example, apartments had a double increase in price during the last quarter of 2016. They were up by 14.99%. Terrace houses experienced price surge of 13.33% the same year. Townhouses, villas and houses of character had not so large price growth of around 1.96% in 2016.
However, the highest price growth was experienced by marionettes which pieces rose by almost 21% over the same year. This was stated by the Individual Investor Program introduced by the government in the frames of its November 2013 budget.
Observations of Malta’s real estate market According to words of RE/MAX Malta’s managing director Kevin Buttigieg, country’s real estate market is quite buoyant, despite the high prices there are all sorts of purchases being made on a daily basis: commercial investments, direct foreign investments, property investments during allocation of residency permits in the framework of IIP Citizenship Scheme etc.
However, there are still many restrictions on real estate ownership in Malta as EU citizens and foreign nationals can usually buy only one property in the country (several in specially designated areas like Chambray, Cottoenra, Manoel Island, Portomaso and Tigne Point).
Maltese real estate market’s past experiences There was a strong growth in 2000-2007 witnessed by the experts as well as by non-professionals in the Maltese property market. The overall house price index rose by 78.9% while there was also a price increase observed of terraced houses – 105.3%, maisonettes – 81.4%, apartments – 83.3%, townhouses and villas – 71.9%.
House prices continued to rise from 2005 till 2007. In 2008 the country was under the influence of global financial crisis of 2008 as it is dependent on tourism and foreign trade. A 2.13% contraction was experienced in 2009 by the country. After the recovery of 2011, real estate prices fell by 2.2% in 2012. This period was followed by Maltese government launching new property-related measures. The prices continued to grow also in the 2014-2016.
Factors influencing property price growth This program targets high net worth individuals. There were several reasons for housing demand such as growth in disposable income, increased number of foreign workers in Malta and low interest rate, leading to higher lending for house purchases.
Malta’s 2017 property bubble However, country’s 2017 budget has rather favorable opportunities to potential property buyers by providing a subsidy of 100,000 euros on expenses related to of immovable property restoration which is located within an Urban Conservation Area. A tax rate of 7% was also imposed on the value of all inherited property transfers by means of a judicial sale by auction.
The lending rate on new mortgages was at 2.77% in January 2017 (before joining the Euro in January 2008, country’s mortgage borrowing rates were from 4-5% and above), housing lending rates surged to 3%. March 2016 Global Property Guide research showed that country’s rental yields are moderate. They range from 4.35% to 4.49%. In accordance with Malta’s National Statistics Office (NSO) the prices were rising from 2012 till 2015 as there were an increasing number of foreign workers in the country, choosing to live in rented places of accommodation.
According to the Malta Environment and Planning Authority (MEPA) the rise in dwelling permits was also seen as they rose up to 67.7%, apartment permits accounted for 35.9%, maisonettes rose by 13.8% and other property types – 17.4%.
Online banking, also known as virtual, internet or e-banking, is an electronic payment system that offers the clients of a bank or other financial institution the ability to handle a wide range of financial transactions by using the bank's website. As online banking is highly dependent on internet access and take-up, the first e-banking services appeared in the early 1980s in New York, when it was known as 'home banking'. Today, bank account management via online banking is in huge demand. Statistics show that 81% of bank clients in the US have used online banking services at least once in the past 12 months. Most banks are able to offer online every service traditionally provided at a local branch, including checking account balances or lists of recent transactions, paying bills or transferring funds to other people.
Mobile banking While e-banking has been around for a while now, mobile banking is a relatively new service offered by financial institutions. Due to the growing popularity of smartphones, more and more banks are developing their own mobile banking applications. In 2015, 90% of bank clients in the US had used mobile banking in the previous 12 months to check their account balance or recent transactions.
Some banks are working intensely to develop new tools in addition to the traditional bank account management services available via their smartphone apps. For example, some banks in the UK now allow you to withdraw funds from an ATM using their mobile app instead of your credit or debit card. Meanwhile, a significant proportion of bank customers choose not to use mobile banking due to trust and security concerns.
Advantages of online banking Convenience is one of the major advantages of online banking. It allows you to perform almost any banking transaction at any time, 24 hours a day, 7 days a week. Not only can you handle your day-to-day account management activities, you can also communicate with your account manager or open new accounts including savings accounts and pension funds. Another major advantage is that you can do all of this while paying smaller or no transaction fees, due to the reduced overhead and other costs for the bank if there are fewer or no physical branches to be maintained. Some banks have gone one step further and declared themselves to be branchless or internet-only institutions.
Disadvantages of online banking While online banking is seen as the most convenient way of managing your bank account, sometimes a customer may prefer to receive consultation about more complex banking issues via a face-to-face conversation with a bank employee. Not having this option might be a major con if you are considering opening an account with a branchless bank. Another disadvantage of using online banking is its complete dependence on internet access. Although nowadays internet connections at home or in the workplace are commonplace, there can be situations where you have no internet access. This problem is even more significant when it comes to mobile banking. For example, if you go on holiday, you may choose not to pay for mobile internet and so the only internet connection available to you could be public Wi-Fi. Furthermore, it is advisable not to log in to your online banking when using a public Wi-Fi connection, as your smartphone or other device is more vulnerable to hacking when connected to an unsecured network.
This leads us to another disadvantage of online and mobile banking. Security issues are seen as the biggest drawback of online banking. Although financial institutions work intensely to prevent any data loss, as it may jeopardise their whole business, bank account information is considered to be one of the main targets for hackers and various computer viruses. Meanwhile, 48% of bank clients in the US choose not to use mobile banking for security reasons.
In Latvia, a residence permit is a document issued by the Office for Citizenship and Migration Affairs to foreigners, granting the right to reside in Latvia either for a specified period of time, usually between six months and five years, or permanently. Residency in Latvia gives you the opportunity to live, work and/or study in the country and use the medical, public and other services available to Latvian citizens. Latvian residency not only offers you the opportunity to travel visa-free to all countries within the Schengen zone, but also facilitates the visa process for other countries, such as the USA and the UK. The main advantages of obtaining a temporary residence permit in Latvia are:
Be able to stay in Latvia without restrictions (according to the conditions of your temporary residence permit) The ability to travel to any country within the Schengen area for a period of up to 90 days within a period of six months After obtaining your residence permit, your family members (husband/wife and any children under the age of 18) are entitled to obtain a residence permit and enjoy the same benefits as Latvian citizens. After five years of temporary residence in Latvia, you can apply for a permanent residence permit, and after ten years, you have the right to apply for Latvian citizenship through the naturalization procedure. Secondary deposit: a ticket for a temporary residence permit One option is to place a subordinated deposit with a credit institution; this is a legal way to obtain a temporary residence permit for a period of five years. In order to apply for such a residence permit, you must make an investment of at least EUR 280,000 in the form of subordinated capital - e.g. subordinated debentures or a subordinated loan — to a credit institution, becoming its partner for a period of time.
Various Latvian credit institutions offer subordinated deposits as a service to non-residents, and each offers individual terms and conditions for subordinated loans. The most common conditions are as follows:
The deposit currency can be either EUR or USD; Some banks accept RUB and other currencies. The minimum deposit is usually EUR 100,000 or USD 150,000, but if you receive the subordinated loan to apply for a temporary residence permit, the investment must be at least EUR 280,000. An additional government fee of EUR 25,000 is required to process your residence permit application, regardless of which bank you invest with. The term offered is typically five, seven or ten years. In contrast to other investments, a subordinated deposit cannot be canceled during this period. Due to the non-cancellability of subordinated deposits, banks can offer significantly higher interest rates compared to other types of deposits.
Procedures and requirements for child deposit requests If you have decided to apply for a temporary residence permit in Latvia through the subordinated deposit route, you must first contact one of the banks that offer this service. After acquiring the subordinated capital of a Latvian credit institution, you can prepare the documents to be submitted to the Office for Citizenship and Migration Affairs in Latvia. The most important documents include:
Proof of sufficient assets and residence in Latvia Criminal record reference letter from your home country Completed questionnaire with attached photos Confirmation of marriage and/or birth of children, if applicable Confirmation that all government fees have been paid After receiving your residence permit, you must obtain medical insurance and a medical certificate issued by a medical institution registered in Latvia. Most banks that offer subordinated deposits to obtain a residence permit have set up extensive advisory and support services to make this process easier for their customers.
Benefits of acquiring subordinated deposits Aside from the residence permit itself, which is of course the main purpose and benefit of investing in the subordinated capital of one of the Latvian credit institutions, another notable benefit is the larger profits that can be made due to the higher deposit rates offered compared to other types of deposits . This is because these deposits are non-callable, meaning you cannot withdraw your money before the agreed maturity date. However, on the Maturity Date you can get back your original balance in addition to the interest paid periodically throughout the investment period. The only non-retrievable payment is the government office fee of EUR 25,000. In addition, banks usually consider subordinated deposits to be the most convenient way to obtain a residency permit.
Once the preliminary steps have been completed and all relevant decisions have been made, it is time to start registering the company. This process varies greatly by jurisdiction, so we can only provide general guidelines here.
First, contact your lawyers and start drafting the necessary documents. Most incorporation documents should be signed in front of a notary public, with signatures notarized (and apostilled if necessary). Document creation usually takes between one and five days. Also remember that the initial deposits into the company's equity must be made before filing the documents with the commercial register. Banks usually open a temporary bank account solely for the purpose of depositing equity.
After all documents are created and signed, they must be filed with the local trade register. The business register examines the documents to determine whether they comply with national laws and regulations and to ensure that the proposed shareholders and directors are free from registered restrictions. Company registration usually takes between three and 14 days, depending on the country.
Today, banking accounts for the largest share of the Luxembourg economy, estimated by net worth and turnover. Already in 2017, according to the data of the Global Financial Centers Index, Luxembourg was ranked as the 18th most competitive financial center in the world and at the same time ranked third in the level of competition among banks in the European Union. Luxembourg has a narrow specialization in the cross-border financial management industry. Since Luxembourg's internal market is quite small, the country's financial center is predominantly internationally oriented.
Today there are a total of 144 banks in Luxembourg. Over 120 of them are actually branches and subsidiaries of international banks. The Luxembourg financial sector is currently one of the largest contributors to the domestic economy. The total net worth of Luxembourg banks is roughly estimated at almost 760 billion euros. Luxembourg is also the second largest global investment hub after the US.
Below is an overview of the top 6 largest commercial banks in Luxembourg.
Deutsche Bank Luxembourg S.A. Total volume of assets in year 2015: ~ €80,023,000,000
Annual total profit in year 2015: ~ €289,000,000
One of the biggest German banks - Deutsche Bank has successfully established a subsidiary bank on the territory of Luxembourg back in year 1970. Back in the days it was one of the first foreign subsidiary banks in the post-World War II period. Deutsche Bank Luxembourg was one of the original financial institutions which were incorporated in the state. Today Deutsche Bank Luxembourg S.A. provides wealth management services to wealthy private individuals and clients, issues international loans as well as provides agency services, corporate and investment related banking services, and retail investment services.
CACEIS Bank Luxembourg Total volume of assets in year 2015: ~ €46,082,000,000
Annual total profit in year 2015: ~ €84,000,000
CACEIS originates from France. It specializes in fund management. CACEIS is a part of Credit Agricole Group - a French banking cooperative comprised of 39 smaller local banks. The bank was established in year 2003 and today one of the biggest financial institutions in the country. CACEIS provides wide range of services, including different kinds of deposits and custody related services, wealth management, transfer agency, as well as institutional and corporate banking services.
Banque et Caisse d'Epargne de l'Etat (BCEE) Total volume of assets in year 2015: ~ €42,797,000,000
Annual total profit in year 2015: ~ €230,000,000
The Banque et Caisse d'Épargne de l'État (also known as BCEE) currently is the biggest domestic financial institution in Luxembourg. Better known as Spuerkeess in local language, it was established in year 1856 and since then is fully owned by the state of Luxembourg. The bank provides wide range of commercial and corporate banking services, including fund management, project investment, and narrow specialized private banking. Bank's long term credit rating according to Moody's is Aa2, which is a high grade.
Société Générale Bank & Trust Total volume of assets in year 2015: ~ €36,399,000,000
Annual total profit in year 2015: ~ €406,000,000
Societe Generale Bank & Trust is one of the oldest international financial institutions based in Luxembourg. It was originally established as a branch bank of Société Générale Alsacienne de Banque (also known as OGENAL). In the past well known as Luxbanque Société Luxembourgeoise de Banque S.A., the bank had changed its name to Société Générale Bank & Trust S.A. back in year 1995. Societe Generale Bank & Trust currently provides a great variety of banking services and products, including wealth management, securities trading and fund management, provision of corporate financing services both in Europe and globally.
BGL BNP Paribas Total volume of assets in year 2015: ~ €32,969,000,000
Annual total profit in year 2015: ~ €152,000,000
Banque Générale du Luxembourg (also known as BGL) was incorporated back in year 1919 as a local bank. In year 2009, BGL became a part of the international BNP Paribas Group. Today Banque Générale du Luxembourg offers banking products mostly in retail banking, individual wealth management, as well as corporate and institutional investment banking and fund management. BGL BNP Paribas' long term credit rating according to Moody's is A1, which is upper medium grade.
UniCredit Luxembourg S.A. Total volume of assets in year 2015: ~ €19,728,000,000
Annual total profit in year 2015: ~ €64,000,000
UniCredit Bank historically was one of the first international financial institutions to operate on the territory Luxembourg. The bank is a part of UniCredit Group, which was established by a merger of several banks from Italy, Germany, and Austria, in addition to acquisitions in Central and Eastern Europe. Currently UniCredit Group runs several branches and subsidiaries in almost 50 countries of the world. The bank provides wealth management and corporate banking services and had been granted a long-term credit rating of A3, upper medium grade, according to Moody's.
In terms of political and civil liberties, Cuba ranks 3rd. Citizens in Cuba experience little to no civil liberties and political rights. Citizens are not free to express themselves and enjoy neither political freedom nor representative government. Countries with this political situation are dangerous for investment as an authoritarian government may have over-control over economic affairs. The companies of Cuba are 5 in terms of economic freedom. Citizens in Cuba are not considered free in their economic decisions. The government prohibits citizens from all economic activities, and some illegal business activities are punishable by imprisonment or even death. Investors should avoid countries that are not economically free as the risks do not justify any potential gain. In terms of journalistic freedom, Cuba's media is in a 5. In Cuba, journalists face a very serious situation. Censorship rules all publications and the government controls most of the media. Journalists who express opinions against the government can be punished with fines, imprisonment or death.
The total population of Hungary is 9,688,847 people. The people of Hungary speak the Hungarian language. The linguistic diversity of Hungary is almost homogeneous according to a fractionation scale, which is 0.0297 for Hungarian. The average age is around 41.1 years. Life expectancy in Hungary is 75. Female birth rate in Hungary is 1.4. About 28% of the Hungarian population is obese. Ethnic diversity is nearly uniform according to a fractionation scale, which is 0.1522 for Hungary. Details of the language, religion, age, gender distribution and advancement of the people of Hungary can be found in the sections below, as well as the section on education in the country.
Population In Hungary, the population density is 106 people per square kilometer (276 per square mile). Based on these statistics, this country is considered densely populated. The total population of Hungary is 9,688,847 people. Hungary has approximately 449,632 foreign immigrants. Immigrants in Hungary make up 0.3 percent of the total number of immigrants worldwide. Immigrants in Hungary make up 4.7 percent of the total number of immigrants worldwide. The ethnic diversity of Hungary is nearly uniform according to a fractionation scale based on ethnicity. Ethnic Fractionation (EF) deals with the number, size, socioeconomic distribution, and geographic location of diverse cultural groups, usually within a state or some other demarcated area. Specific cultural characteristics can refer to language, skin color, religion, ethnicity, customs and traditions, history, or other distinctive criteria, alone or in combination. These characteristics are often used for social exclusion and power monopolization. The index of ethnic fractionation in Hungary is 0.1522. This means that the people living in Hungary come from a narrow group of ethnic groups that are all related to each other. EF is usually measured as 1 minus the Herfindahl concentration index of ethnolinguistic group proportions, which reflects the probability that two randomly drawn individuals from the population belong to different groups. The theoretical maximum of EF of 1 means that each person belongs to a different group. Read below Hungary's statistics on median age and gender distribution at different ages.
Age The average age is around 41.1 years. The average age of men is 39.1 years and the average age of women is 43.5 years.
Gender The sex ratio, or the number of males for every female (estimated at birth) is 1.057. It can be further broken down into the following categories: sex ratio below 15 - 1.06; sex ratio from 15 to 64 - 0.98; sex ratio over 64 - 0.57; Overall sex ratio - 0.91. The overall sex ratio differs from the sex ratio estimated at birth. This is because some newborns are included in the sex ratio estimated at birth, but die within the first few weeks of life and are not included in the overall sex ratio.
Germany is a social market economy with a large capital stock, a highly qualified workforce, a high level of innovation and low levels of corruption. It is the largest economy in Europe and the fourth largest nation in the world in terms of nominal GDP. In addition to the intelligent economy and productive market structure, Germany also offers investment opportunities in its real estate segment.
What influences the German real estate market? The volatility of the real estate market can be explained by numerous macroeconomic and social factors in the country. Due to the zero interest rate policy of the European Central Bank, mortgage interest rates remain at record lows and offer historically favorable financing conditions. In addition, the quantitative easing (QE) policy being pursued by the ECB is leading to higher liquidity, increasing investment pressure as investors seek potential investment opportunities with above-average returns in relatively safe sectors. QE is also weakening the euro, making the German real estate market even more attractive to investors from outside the eurozone.
New projects and construction activities lag far behind the growing demand, which leads to rising property prices. The German Property Index (GPI), which measures the return on all real estate investments in Germany, reached 14.7% in 2016, a record level since German reunification. The demand for high-quality real estate is increasing due to the demographic and overall economic development in Germany – ongoing urbanization and growing metropolitan areas. Germany is experiencing a positive reversal in birth rates and other demographic factors. The birth rate rose from 1.39 to 1.50 per woman between 2011 and 2015. In addition, Germany has a persistent migration surplus, which can partially compensate for the demographic imbalance.
Commercial real estate, especially office space, is also in high demand due to record employment and the low unemployment rate, and is also benefiting from increasing purchasing power and high consumer spending. Logistic and warehouse real estate is crucial for growing businesses and therefore in high demand due to the increase in wholesale and retail trade. Below you will find an overview of the most important sectors of the German real estate market.
Residential real estate The residential real estate market was able to recover from the financial crisis and market stagnation in the years after 2009. Residential property construction projects have risen steadily in recent years, resulting in around 277,000 completed residential units in 2016. 2015 Residential real estate With a total investment of EUR 170 billion, 60% of the total construction volume in Germany went into construction. Despite a significant increase in building permits issued (375,400 permits issued in 2016) and a record level of completed projects, demand still significantly exceeds the volume of completed residential projects.
Future prospects call for applications for new building permits to increase to 272,000 units per year by 2020 and further slow down to 230,000 units per year by 2030. Meanwhile, the number of residential properties could increase to 380,000 units in the short term due to increasing immigration.
However, the demand for residential real estate differs greatly from region to region. In some regions, the gap between demand and supply could close soon, especially in eastern Germany. In some regions, especially in prosperous metropolitan areas, the available housing units will remain very scarce.
Along with the insufficient supply, the asking rents have risen accordingly. In large cities in particular, the trend towards rising rents is quite dynamic. For example, the annual growth rate of residential rents in Germany has been around 1.7% since 2004. In the meantime, rents in Berlin and Munich have risen by 3.9% and 3.5% annually, respectively. Both cities recorded an annual growth in purchase prices of 6% in this real estate sector.
Office properties Similar to residential real estate, the office real estate market is in good and future-oriented shape, mainly due to a positive migration balance and historically low unemployment rates. In 2016, around 3.9 million square meters of office space was let in the top 7 cities in Germany. This indicates a growth of 12% in comparison to the previous period. A particularly dynamic development was observed in Frankfurt, Cologne and Stuttgart with growth rates ranging between 25% and 48.4%. Meanwhile, Hamburg, Dusseldorf, Munich and Berlin have experienced a cool-down in floor-space turnover in comparison to previous years.
The overall vacancy rate of office properties has decreased due to several factors: a dynamic demand, a slow expansion of floor space and high pre-letting rates. Across the top 7 cities mentioned above, the vacancy rate decreased by 0.7% points to 4.9%. In the top 7 real estate locations in Germany, the prime office rents range between 21 EUR/m2 and 37.50 EUR/m2 giving an attractive potential for investment return. This especially applies to Berlin, where rents have increased by more than 17% in comparison to 2015 reaching 28.7 EUR/m2. Currently, the highest office rents are in Frankfurt and Munich (37.50 EUR/m2 and 35 EUR/m2 accordingly).
Local investors retain the dominant market position accounting for around 60% of the total transaction activity in office property market. Meanwhile, foreign investors account for approximately two fifths (or 20.9 billion EUR) of the transaction volume.