View from the Top with Michael Bonello – Alliance CEO
In this interview with Alliance CEO Michael Bonello, we are looking at the Covid-19 pandemic and its effects on the new Alliance brand launch, as well as the real estate industry in general and the people working in it.
What has been your company’s experience on the ground following the relaxation of the COVID-19 containment measures that practically led to a partial lockdown?
For us at Alliance, the relaxation of the COVID-19 containment measures over Summer, offered us a very small window of opportunity to launch our new brand and award our top performers of 2019. By taking all the necessary safety precautions, we managed to do this very successfully and without any issues whatsoever.
Since then, our staff and property advisors on the ground are following all guidelines and taking all necessary precautions to ensure they protect themselves and their clients and contacts they meet with every day. Of course, we do sometimes see some apprehension when it comes to home viewings, but this is very understandable, and every case is being dealt with as necessary, to ensure everyone is kept safe and comfortable.
Has there been an increase in demand?
Some sectors such as speculative investments, buy-to-let and rental market properties in general, have been very seriously hit and it remains to be seen how these will recover in the longer term.
During July and August, there was a substantial, albeit temporary increase in demand as we started catching up with the backlog of transactions that had stalled during the partial lockdown period, when notaries and banks were not operating as usual. The lowered property tax introduced as part of Malta’s economic stimulus package, has had the desired effect of motivating buyers to conclude purchases sooner rather than later, so that has also increased demand.
Right now, our property advisors are seeing a more buoyant mood amongst both buyers and sellers, with a general feeling being that we have been through the worst shocks of the pandemic crisis and from now onwards, things are bound to continue getting better. Having said that, the increasing numbers of Covid-19 cases now is of some concern and we cannot really forecast where demand will go in the future.
How have property prices been affected?
One major change that we are noticing is that we are getting many more requests for properly considered professional appraisals. Whereas before, some owners would determine prices based on their own hunches, and then bump them up a bit more to make some room for negotiation; now more and more owners are opting for services such as our Alliance Selected package, where a dedicated think-tank of experienced agents appraises properties based on up-to-the-day research and reliable knowledge of similar units, location, etc.
At the same time, we are registering some reductions on properties that have been on the market for far too long. So there definitely is some visible market correction going on, especially where demand is lower than in other areas, or where owner expectations were raised to unrealistic heights. The effects of the wage supplement aid packages and bank moratoriums tapering off in the coming weeks and months, remain to be seen. Motivated sellers may then be forced to reconsider their prices or accept lower offers more than before.
What are the main challenges moving forward?
None of us has ever experienced anything like this before so there are many question marks about the reliability of any future forecasts and assumptions. What we know for certain is that by now, many of us consider this new reality as a new way of life that we just have got to get used to.
As a company we are very fortunate to have launched our new brand at this time, as the partial lockdown up to June gave us more time to focus and develop our brand with a built-in post-Covid-19 mindset. So, for example, prop-tech solutions such as 360 degree scanning of properties and 3D viewing technology that enables clients to tour properties remotely, is now inherently built into our DNA. We have also built a very powerful database system and online presence that we are constantly updating and enhancing, to be able to serve clients more effectively through digital media. I would say the biggest challenge for everyone is overcoming their own fears of the unknown.
Is the recent substantial increase in new Covid-19 cases worrying?
Naturally, everyone is concerned about the rising number of cases of infection, especially those of us who have vulnerable people in our families. We are also seeing similar trends in many other countries around the world, so it seems this is the way things are going right now and not necessarily something that is easily in anyone’s control. However, things are changing every day and there are no past trends to go by. By now we are all resigned to the fact that this is the situation we are living in, and our only very limited control is to protect ourselves and those around us.
Are Government incentives adequate or do they need modifications?
Very substantial and effective incentives have been announced by the Government of Malta, and it would be presumptuous of us to try and evaluate their adequacy for society at large. From our perspective as estate agents, where many of the people working in this industry are self-employed taxpayers, we did not receive any wage supplements or direct support of any kind. The property tax incentives pushed forward by the Malta Developers Association (MDA) and adopted by the Government, gave us some respite as the market flourished, at least up till now.
Considering how badly some industries have been hit, this is relatively good news for us working in real estate. Some people have lost their livelihood, owners have been forced to close down businesses and many are facing a very uncertain future. Eventually, the ripple effects of this economic fallout is bound to effect other industries, perhaps even ours. So, from that standpoint, we can claim that nothing is really adequate, but realistically, we do have so much to be grateful for.