Small but very attractive Alpine settlements in Europe
In modern geography, there is the concept of "microstates." They are smaller in area than Luxembourg (about 2,600 km²). Often, a population of no more than one million is also used as a criterion. In any case, seven universally recognized European states meet these criteria: Luxembourg (2,600 km²), Andorra (468 km²), Malta (316 km²), Liechtenstein (157 km²), San Marino (61 km²), Monaco (1.95 km²), and Vatican City (0.44 km²).
Buying real estate in the "small" countries of Europe, and the most expensive ones at that, is more of an image-driven decision than a practical one. So think seven times before selling your property with the hope of settling down somewhere in Liechtenstein. Of course, the invested money won't disappear – that's understandable. But you won't be able to earn much there either.
Malta: New Construction Slowed Down Prices
The capital of the Republic of Malta is Valletta. The Grand Master of the Order of Malta, Jean de la Valette, founded the city in 1566 and gave it his name. Malta covers an area of 316 km², and its population is 402,000 people.
The development in Malta is one of the oldest. Residential houses there were designed by Italian architects such as Francesco Laparelli in the 15th-17th centuries. The city has preserved its medieval layout, and neighbors in many houses can shake hands across the street, each standing on their own balcony. Modern houses maintain a stylistic continuity with the old ones, and over time, a certain oriental flavor has been added to Maltese architecture. As in former times, three- to four-story houses prevail, outwardly somewhat resembling Roman insulae.
The government of Malta, in recent years actively seeking to attract foreign capital to its economy, has created attractive tax benefits for international investors and entrepreneurs. Despite the high standard of living in Malta, the cost of living here is generally lower than in Europe.
By law, a person wishing to purchase real estate in Malta does not have to be a permanent resident of the state. However, the cost of the purchased property must be above $72,000 for an apartment and $119,000 for a house. Real estate in Malta is in steady demand and always holds its value. The average apartment costs €770,000, and the average villa costs one and a half million. The price per square meter here averages €3,500.
According to Edward Godoni, a representative of the company Polaris-Malta, the yield on Maltese real estate was 13.73% in 2004, 10.5% in 2005. In 2006 it fell to 6.3%, and in 2007 to 3.7%, although at the end of 2006 analysts had predicted a 12.5% increase. In Edward Godoni's opinion, the growth in prices for Maltese real estate slowed down due to the expansion of extensive construction, including multi-story buildings. Traditionally high demand is now offset by sufficient supply.
Luxembourg: Apartments Are Affordable
Translated from Old German, its name means "small castle." The country's economy is based on a developed service sector, primarily financial. Ranking 176th in the world in area and 171st in population, this country ranks first in the world in GDP per capita – $81,511. Therefore, it is not surprising that Luxembourg has the most expensive real estate in Europe.
The Alzette River, which together with its tributaries forms a deep valley with beautiful green parks, divides the capital into two parts - the Upper City and the Lower City. These parts are connected by the Adolf Bridge, which was once the largest stone bridge in the world, and the Grand Duchess Charlotte Bridge. The main architectural monuments are located in the Upper City: the ruins of a Roman watchtower, the rock chapel of St. Quirin (6th and 15th centuries), the Gothic church of St. Michael (16th century), the Palace of Justice (16th century), the Notre-Dame Cathedral (17th century, Baroque), as well as the town hall built in the Classicist style in the 19th century. The Lower City houses banks, company headquarters, and numerous breweries.
However, Luxembourg with a population of 76,420 people is not the only city in the country. In addition to it, the Grand Duchy has cities such as Esch-sur-Alzette (24,000 people), Differdange (15,700), Dudelange (14,700), and Sanem (11,500).
Extensive residential and industrial construction took place in the country in the 19th and early 20th centuries. At that time, workers' settlements were built near the cities of Esch-sur-Alzette and Dudelange. Since then, house construction has not been large-scale, and most houses are built to individual designs.
So how much does Luxembourg housing cost? The average price per square meter in Luxembourg City is about €4,000 or $5,900 per m². An average apartment costs about €260,000. For this money, you can buy a one-bedroom, one-bathroom apartment with a large balcony and garage in the prestigious Limpertsberg district in the northwestern part of the capital.
According to Nadezhda Velyo, owner of the agency Immo-Reflex, a standard apartment in Luxembourg is considered to be 65 square meters. This type of apartment is the most common here and is in the greatest demand.
And if we decide to sell a two-room apartment in a panel building in a residential area of our capital for €200,000 (this is our peculiar "indicator" that we use for clarity in reviews of foreign real estate), then we will get a 58-square-meter one-bedroom apartment, roughly equivalent in comfort to a capital two-room apartment. But plus – a view not of a railroad fenced off with a green fence, but of a beautiful landscape of Gothic houses against the backdrop of fir-covered mountains.
However, the majority of Luxembourg's residents, both Luxembourgers and immigrants (who make up 37% of the country's population), prefer renting over buying housing. The lower bound of rental prices is €1,000 per month. Analysts estimate the yield of the most expensive real estate in the world at 7-7.3%, but it should be noted that this indicator may decline, as price growth in Europe has slowed over the past year.
Liechtenstein: Hard to Be a Foreigner
The Principality of Liechtenstein ranks 189th in the world by territory and 187th by population (35,000 residents, more than a third of whom are foreigners). The capital of the country is Vaduz, with a population of five thousand. Besides it, there are 11 villages in the country, two of which – Schaan (2,500 residents) and Balzers (2,000 residents) – are considered cities by Liechtensteiners themselves.
Out of the principality's 160 square kilometers of territory, 40.4 km² (25.2%) are currently built up. There remain 20.6 km² (12.9%) of land suitable for development. However, most residential buildings are in the Gothic style and were built in the distant times of the late Middle Ages. It is not surprising that the real estate market of the Principality of Liechtenstein is perhaps the most conservative in Europe. Moreover, it is the most closed to foreigners – without a residence permit, you will not be sold anything in most of its territory, even for a great deal of money.
The country is not part of either the European Union or the Schengen Area, and therefore it is not obligated to open its borders to the free movement of capital. According to the law on the sale of real estate to foreigners in Liechtenstein and Switzerland, which has been in effect since 1985, visitors without a residence permit can only claim to purchase real estate in strictly defined locations designated by the authorities.
The only condition for acquisition is passing a federal check based on a questionnaire filled out by the applicant. Then he/she enters into a real estate purchase agreement, certified by a local lawyer. The presence of a lawyer on the buyer's side is also welcome. The subject of this agreement is either the acquisition of existing real estate or the construction of a new house.
Transactions, by the way, are concluded in stages: upon signing the contract, upon registration of property rights, and upon transfer of keys. Meanwhile, from signing the contract to handing over the keys, as a rule, a year passes. And even with our Moscow two-room apartment, there is nothing to do in Liechtenstein — houses are practically never sold by apartment; here, basically, they buy either mansions or entire apartment buildings.
According to Alexander Weber, a representative of the Berlin agency Volkswohnung, the yield of Liechtenstein real estate has remained as low as it was in previous years. It ranges from 2.2% to 3.4%. Liechtenstein real estate does not particularly rise in price; it is already on average more expensive than in Europe.
Lease agreements for real estate in Liechtenstein are concluded for a fixed period – at least six months. In the event of an intention to move out, the tenant is obliged to give two to three months' notice. True, the landlord also does not have the right to raise the rent more often than once every two years. Rental rates for apartments range from €600 to €3,500 per month, but expensive rentals are encountered much more often than cheap ones.
Some residents of the principality rent housing from the same landlord from generation to generation. Therefore, if you want to invest money specifically in Liechtenstein, buy a rental property and engage in leasing, because according to §§1090-1125 of the standard Liechtenstein rental law of 1975, the landlord is always right.