21st CEO Survey: Key findings from the Real Estate industry
Real Estate CEOs adapt to the future industry changes.
The real estate sector has historically been one of the key business drivers and an overall economic indicator of Malta’s economic health.
The real estate sector has historically been one of the key business drivers and an overall economic indicator of Malta’s economic health. In recent years, Malta has experienced intensive construction activity, especially in the residential and commercial property sector followed by a remarkable rise in property prices. The real estate boom experienced in recent years primarily resulting from increased demand generated from foreign businesses and expatriates settling in Malta has significantly contributed to the country’s economic growth. Real estate in Malta continues to be a preferred investment option, more so as investors nowadays intensify their search for safe haven opportunities.
In today’s dynamic and ever-changing world, rapid and unexpected changes in international market conditions, regulations, taxes and other considerations render the business environment more complex. These additional risks and concerns require specialised knowledge to evaluate investment opportunities in the real estate sector.
At PwC Malta you have a partner that may assist you in assessing and achieving all your business and financial goals. Using an integrated approach, our real estate professionals (from our advisory, tax, legal and assurance lines of service) can respond to your specific needs and guide you through each phase of the real estate cycle and across a broad spectrum of services.
Real estate valuation
The value of a property depends on the possibilities for its future use. Interdisciplinary PwC teams are on hand to determine real estate values and valuation processes, giving their support to organisations on all real estate issues.
A more exacting competitive climate, concentration on core business areas, and quantitative and qualitative changes in business locations all have an influence on the value of properties.
Geared to the demands of the market
The valuation expert teams at PwC have been adapted and specialised to meet the demands of the market. They will draw up or evaluate valuations for various purposes including but not limited to the following:
Innovative solutions for advice on real estate transactions
The importance and complexity of real estate transactions has increased with globalisation – returns are increasingly becoming the dominant factor. Selected strategies for real estate investments and sales are crucial for increasing value - and that is where PwC can help.
Real estate transactions are extremely complex due to an increasingly competitive climate, frequent changes in conditions of use and the need to optimise financing.
Such a demanding environment also makes proper due diligence solutions necessary to reduce uncertainty for both buyer and seller, identify hidden risks and speed up the closing of deals.
PwC has developed flexible solutions to give investors competitive advantages in the market and make real estate transactions easier:
Advice on transactions needs to be extremely efficient and swiftly give clients solutions and a basis for decision making. PwC offers businesses tailor-made concepts for transactions and sets high internal quality standards. Its specialists are there to support clients during transactions and ensure all processes are transparent. Their goal is to help clients make the right decisions for the future.
Whether it's a question of optimising your property portfolio, building new production or administration blocks or finding a new location, PwC can advise you on all the economic and technical issues.
The PwC real estate team provides these support services to organisations and private individuals in developing and constructing property.
Investments in construction carry economic risks, which is why conceptual preparation and planning is so important. The PwC team supports its clients in all the phases of project development: it advises on site selection, analyses the opportunities and risks of projects and carries out due diligence checks on technical and real estate management.
Optimisation of real estate values
Real estate represents a significant cost and value added factor even for companies not involved in its trade. In light of different production processes, seldom used production areas or because of Basel II and IAS/IFRS, organisations are commissioning checks on both the usefulness and commercial value of their business premises. Optimising and in some cases transferring real estate can bring in additional sources of liquidity. PwC's specialists can support their clients in this strategy and suggest solutions.
PwC provides a location development strategy service for its clients that optimises both production and administrative procedures and the exploitation of real estate assets. This has the further advantage that organisations gain transparency on the cost and income structures of their real estate and receive instruments that allow them to use their real estate resources efficiently over the long term.
Construction projects and building management are complex processes, and can often progress in an inefficient and uneconomical manner.
As part of its internal audits PwC examines project development and construction measures as well as facility management to check that they are carried out properly and economically. PwC offers preventive audits during construction as well as special audits.
Crisis and conflict management
Crisis situations and conflicts between the parties involved are a frequent feature of complex construction projects. The problem is that conflicts not only tie up customers' and contractors' financial and human resources, but can hinder the development of an entire project.
PwC's experts support their clients in both preventing and resolving conflicts, for example through identifying defects, fact finding and documenting, damage/claims assessment and expert reports.
Financial advice for real estate
Tighter conditions on the money market, turbulence on the capital market and changes to general statutory conditions mean that a well-balanced financing structure has become an important factor for the success of real estate companies. PwC can help you lever potential into financing and in this way increase the success of your company.
Loan defaults in the US subprime segment have caused a loss in confidence and considerably restricted the possibilities of attractive refinancing on the capital market by securitization. In the case of traditional loans, banks have reacted with increased equity demands, higher lending rates and a generally more restrictive lending policy.
In the sector of real estate financing, PwC advises real estate companies on all aspects of acquisition financing, financial restructuring and refinancing.
The main areas of our advisory services include:
For these tasks, PwC provides interdisciplinary teams of specialists from the sectors of real estate industry, banking, financing, corporate finance and tax consulting. PwC responds to individual project and customer requirements with optimum project team selection and tailor-made solutions.
Auditing in the real estate sector
Auditing is more than just the legally required audit certificate for annual financial statements. Irrespective as to the audit of annual and/or consolidated financial statements or special audit services and certifications, an objective opinion by external auditors increases the reliability of the information for all decision-makers.
Our PwC real estate experts possess competency, integrity and industry expertise as well as many years of audit experience. They are able to draw on an international real estate network and still ensure that clients’ needs are addressed on an individual and local approach.
For international real estate investors, property developers and real estate service providers, tax issues are often incremental in their decision-making process. These tax issues always need to be addressed within the context of real estate transactions, the legal framework, regulatory requirements and the financial structure. With our comprehensive knowledge of real estate business operations, PwC Real Estate Tax supports you in finding appropriate tax solutions.
Today, real estate clients’ needs go beyond professional statements and opinions. In fact they seek thought leaders and innovative advisors who solve problems, who can reliably guide them through the entire real estate investment cycle and who can assist in identifying business opportunities or any risks at an early stage. Your Real Estate Tax team at PwC uses its international know-how to deliver solutions of the highest quality.
Regardless of whether you are fund initiators, institutional investors, property holders, private equity investors, our inter-disciplinary team delivers tailor-made solutions. Our tax team comprises staff members who have a long track record in advising in the real estate industry. Our consultancy practice, our legal advisory team and the audit practice are ready to support if required.
(i) Transaction advice
Whether by asset deal or share deal, real estate transactions often take place in a highly competitive environment within tight time frames. Therefore, multiple tasks need to be tackled and coordinated among the various teams within a short time period.
Our tax team is at your disposal with sound tax structuring experience and tax due diligence know how. Our industry knowledge will feed into your transactions to ensure an effective implementation, whilst sticking closely to content and time guidelines.
Our team together with our international tax network allows us to provide high-profiled and reliable advice on large portfolio investments, even within ambitious time constraints. In doing so we cooperate closely with our PwC transaction advisory team.
Range of services provided:
(ii) Ongoing tax consulting
During the holding period of a real estate investment or during developments, a number of tax-related tasks need to be considered, such as tax compliance or tax audits. This is covered by our service delivery as well. Moreover, restructuring needs and refinancing projects attract tax implications during the holding periods, for which we provide the necessary advice.
Range of services provided:
Real Estate CEOs adapt to the future industry changes.
Emerging Trends in Real Estate® - the global outlook by PwC and the Urban Land Institute examines key trends impacting the real estate sector.
Emerging Trends in Real Estate® Europe is a joint survey by PwC and the Urban Land Institute.