Total value of land increased from €4.7 billion in 1995 to €88.3 billion in 2024 – NSO

The total value of land in Malta increased substantially from €4.7 billion in 1995 to €88.3 billion in 2024, a paper by the National Statistics Office (NSO) reads.

In its paper, the NSO applies the residual method to estimate the value of land underlying dwellings in Malta from 1995 to 2024. “The residual approach is widely employed by many countries as a method for estimating the value of land underlying dwellings, primarily due to the high accessibility and availability of data derived from real estate transactions.”

The NSO said that this method offers a practical solution where direct land valuations are not separately recorded or are otherwise difficult to obtain.

“In essence, the residual approach involves determining the total market value of a property, the combined value of the land and the dwelling constructed upon it, and subsequently deducting the estimated value of the dwelling itself, based on the net capital stock of constructions, which excludes land at current prices, adjusted for depreciation and other relevant factors. The remaining value, after this deduction, is attributed to the underlying land at time.”

Dwelling prices from 2015 onwards were based on property transactions established on final deeds of sale and promise of sale agreements registered with the tax authority. Dwelling price data for the period from 1995 to 2014 were extrapolated using the Property Prices Index published by the Central Bank of Malta, which was based on advertised property prices, it said.  Published census results were used to estimate the required information on the dwelling stock.

The full explanation in terms of how the data was formulated is available on the National Statistics Office website.

The paper reads that townhouses consistently contributed the highest total dwelling value from 1995 up to 2019. “This reflects their deep-rooted presence in the Maltese housing stock, particularly in central and urban localities, and their strong demand among both local buyers and foreign investors seeking traditional or character properties. From 1995 to 2008, townhouses saw steady growth, briefly plateauing during the global financial crisis, from 2009 to 2012. Following this, values resumed an upward trend, albeit more modestly, until around 2019, when the rate of growth began to be outpaced by apartments and penthouses. This suggests that while townhouses retained high value, their relative market share began to diminish in the face of expanding apartment development and shifting demand toward more readily available housing formats.”

It reads that apartments and penthouses have shown a remarkably strong and accelerating growth, especially since 2013, overtaking townhouses in total value around 2019, reflecting a change in the composition of the dwelling stock. “The continued increase through the COVID-19 period (2020-2021) demonstrates the resilience of this sector, which benefited from sustained investment activity, housing incentives, and the evolution of the short-term rental market. By 2024, apartments and penthouses dominate with the highest total value, reflecting both high development volume and increased price per SQM.”

It also said that Maisonettes have maintained a steady upward trajectory throughout the period. While their total contribution to dwelling value is lower compared to townhouses and apartments, they have experienced consistent growth, particularly post-2014, it said. “On the other hand, villas, farmhouses, and bungalows are the smallest contributor in terms of total value throughout the period.”

The paper read that construction costs also grew steadily, rising from €3 billion to over €14 billion, largely influenced by inflation, regulatory changes, and increased building activity.

“Key ratios underscore the growing prominence of land in property value. The land-to-construction cost ratio rose from 155% to 504%, while the land-to-total value ratio peaked at 86% in 2021. Conversely, the share of construction costs in total dwelling value declined from 39% to 17%. These trends highlight land’s increasing dominance as the main driver of property value in Malta’s constrained geographical context. Despite data limitations and the need for interpolations, the residual approach provided a replicable and insightful framework for land valuation, supporting both statistical analysis and policy planning.”

“In the ESA 2010 transmission program, Member States are obliged to compile Land as part of the Balance sheets for non-financial assets for the Household and Non-Profit Institutions Serving Households. The derivation of land valuation underlying dwellings was the first step. The office will focus on the valuation of land related to agricultural holdings and other land owned by households in their function as employers and own-account workers.”