26 Mar 2020 – Malta
The office market has changed little over the past 12 months and, due to Covid-19, it is difficult to predict where it will be in 12 months’ time.
St Julian’s remains the most desirable location for offices on the island. However, organisations with requirements larger than 2,000 square metres struggle to find space and tend to look inland, in areas such as Mriehel and Swatar.
The efforts to transform Mriehel, previously an industrial area, into the island’s Central Business Districts, have continued unabated. The two major developments, Trident Park and The Quad Business Towers (due for completion in 2020 and 2021 respectively) will deliver 62,000 square metres of Grade A office space to Mriehel - accounting for over half of all Grade A offices in the Maltese pipeline.
With regard to the figures, there have been no movements in rental prices over the past 12 months. Grade A office space can still be found for between €20-€30 per sq m/ month but can go higher in areas such as St. Julian’s. Similarly, Grade B office space continues to range from between €15-€20 per sq m/ month.
Subject to covenant strength and contractual terms investors and landlords can expect yields of between 5-7%. St Julian’s and, increasingly, Mriehel are seen as less speculative options and therefore would fall at the lower end of this scale.
Until very recently, deals have been occurring despite Covid-19. Whilst we see no downturn in rental prices as of yet, landlords are certainly being more flexible, most notably in lease terms. Some landlords will accept annual leases – something that was, previously, extremely rare in Malta.