by Emma Wells
The Sunday Times, April 22, 2007

For years film-makers have been drawn to Malta with its dramatically imposing fortified Grand Harbour of Valletta, perfectly clear blue waters and ancient hilltop villages – it served as a backdrop for Gladiator in 1999 and Troy in 2003. Yet the place has had trouble shaking off its fusty reputation as a haven for British retirees and a stopping-off point for Saga tours.

However, thanks to its accession to the European Union in 2004, the arrival of low cost airlines such as Ryanair and a new emphasis on cultural tourism, the archipelago – made up of Malta itself its little sister, Gozo, and the virtually uninhabited Comino – is reinventing itself as a holiday – home destination. “Since Ryanair started its daily flights at the end of last year, we have seen a big increase in British people – and younger types – looking for holiday homes and also to buy as an investment,” says Joe Lupi, Managing Director of Frank Salt estate agency “About 60 % of our buyers are British.”

Although the main island measures just 17 miles by 9 – less than the isle of Wight – there is a huge range of properties available. Not surprisingly, overseas buyers often head for the coast ; in the traditionally British heartland of northern Malta, around St Paul’s Bay, flats are still relatively cheap: for instance a three-bedder for £ 95,000. In the more upmarket St Julians, in the northeast a similar-sized property could cost about £ 350,000. You can pick up an unrenovated inland farmhouse or house of character for less than £ 200,000 and a 3 bedroom house in the bustling town of Naxxar.

Prices are not particularly cheap compared to the Costas or Portugal, but if you become a full-time resident of Malta, you will benefit from the flat income-tax rate of 15% ; and there are no council taxes to pay on the island (although there are plenty of potholes).

Non-residents are subject to certain conditions: if you buy a flat, you must pay at least £ 63,000, or £105,000 in the case of a house, and you need a special permit to buy more than 1 property. You may also face restrictions on renting out your properties – except in so – called special – designated areas, the handful of new developments in upmarket districts in which foreigners can purchase as many units as they wish. These include a marina development of about 300 flats at Portomaso in St Julians – an area known for its nightlife, where Gary Neville, the footballer, owns a property – and Tigne Point, near Sliema on the East Coast, another main tourist resort, where 3 bedroom flats start at £ 250,000.

Steve Mills 44, an IT director from Birmingham and his half Maltese wife, Alexandra, 45, bought a three- bedroom flat, five minutes from the water in Sliema , in November 2005,
“We paid Lm81,000 (about £ 125,000) for the flat which included a lock-up garage,” Steve says. “We used to come here on holiday and I loved it - its typically Mediterranean, steeped in history and the people are helpful and friendly. Now, we come here three times a year and wouldn’t consider selling. Without question, I’d recommend buying here.”

So, what are the other benefits of investing in Malta? “There has been a steady capital growth here since the 1960’s,” says Trafford Busuttil, managing director of Propertyline estate agency and vice president of the Federation of Estate Agents of Malta and Gozo. “We have never seen a slump.”

Bill Blevins, the managing director of Blevins Franks International, an independent firm providing tax and investment advice, also thinks the outlook is good. “Malta properties have increased on average by about 9% each year over the past few years,” he says. “A purchase is still a sound investment, as long as ownership is expected to be for several years, to allow for short-term fluctuations. And, once Malta joins the Euro in January 1 next year, I expect to see a rise in prices.”

It’s also a place where you can find the old architectural gem for sale. In Zurrieq, a traditional, quiet inland village in the southeast of the island, about 6 miles from the capital, Bubaqra Tower, built in the 16th century by the Knights of St John as a defence against the marauding Turks, is on sale for about £ 3 million with Savills. Constructed of the same honey- coloured limestone found all over Malta, the dramatic medieval look out has nine bedrooms, 3 bathrooms, a swimming pool and – amazingly when land is at such a premium – 5 acres of olive and orange trees. However, it is not as private as it once was: thanks to the rash of building that has taken place all over the island in the past ten years, it is overlooked on two sides by semi-detached houses. A similar tower, built to a plan by Michelangelo and completely unrenovated, sold in 2005 for about £ 1.5 million.

A great draw for UK buyers is the strong British connection: Malta was part of the empire from 1814 to 1964, when it finally gained independence. Its heroic self-defence during the second world war when it suffered more bombing than London did in the blitz, earned it the George Cross in 1942. Nearly everybody here is bilingual in Maltese and English; and you needn’t worry about driving on the “wrong” side of the road. Relations have been traditionally good, despite a tricky period in the late 1970’s when Dom Mintoff, the then prime minister, cultivated close ties with Muammar Gadaffi, the Libyan leader, and after years of haggling, closed the British military base.

Warm, sunny weather for at least 9 months of the year (though the mercury sometimes hits an uncomfortable 40 degrees in the height of summer), a low crime rate and low cost of living and other bonuses.

The Maltese, like the British, like to buy property and keep it in the family and for this reason it can be difficult to find property in Valletta, the capital. However, in this world heritage city, founded by the Knights of St John in 1530, there are townhouses on the market. They are often to be found on attractive, narrow streets, at the end of which you may catch a glimpse of the sea. Many are decorated with balustrades and baroque flourishes: in fact when the city was being constructed, the Knights stipulated that each building should have a sculpture at every corner, a concept alien to our own town planners. A large, two-bedroom property in the centre of the city is for sale for about £ 315,000 with Propertyline (0871 711 8989 www.propertylinemalta.com)

If you’re looking for nightlife, Valletta definitely isn’t the place to be – and perhaps for that reason, it is not terribly popular with younger British buyers: not much happens after dusk. The beaches often small and rocky, are also a bit of disappointment, although the diving is among the best in Europe.

Culturally, Malta is a fascinating mix – a function of its location in the middle of the Mediterranean, 57 miles of South Sicily and 186 from North Africa. Having passed through the hands of the Phoenicians, Romans, Arabs and Normans – each of whom left their mark – the island has thousands of years of history to explore. There are megalithic temples, the oldest freestanding structures in the world and in the spectacularly ornate St John’s Co-Cathedral – one of more than 300 churches – two paintings by the late – Renaissance master Caravaggio, both considered masterpieces: The Beheading of St John the Baptist and St Jerome Writing.

The citadel of Mdina in central Malta, once the ancient walled capital, offers little for the property buyer, but plenty in the way of escape: so quiet it is known as the silent city.

If peace and quiet are really what you are looking for, then you may prefer Gozo, four miles northwest of Malta and a 15-minute ferry crossing away, where Billy Connolly has a home. You can find the odd unrenovated farmhouse here, or, at Fort Chambray, in the village of Mgarr, there is a special designated area built within an ancient fortification; flats, duplexes and villas are for sale from about £ 120,000.

Although tiny Malta may well run the risk of overdevelopment, and its nightlife hardly makes it the new Ibiza, at least it has not turned into the footballers’ wives territory of the Costas. And British buyers know they will be welcome: “We are very comfortable with the English,” says Lupi, “Many Brits don’t want to live next to other Brits: they want to mix. And they do.”