mediterranean islands to invest

Several property market buyers put off investing in the Mediterranean islands because they think it will not give them the best yields. Contrary to what most know, living in the Mediterranean is not expensive. For several years, the property prices in the area are competitive, if not discounted. Rental yields are also exceptional in the Mediterranean, as they are popular vacation spots for most Europeans. 

Best Mediterranean Islands to Invest In


The Republic of Malta has small groups of islands in the Mediterranean. Nestled south of Sicily, Malta is becoming a popular destination for foreigners for several reasons. The country uses English as their official language, it has a rich history, it has a great climate, it has a low cost of living, and more importantly, it has low property taxes. 

If you have a property in Malta, you can rent out your property for residential purposes. The rental market of Malta has yields of as much as 4.4%, with the areas of Attard, Balzan, and Lija with the highest yields. It is best to stay away from Valletta and Tigne Point since they have poor returns. 

Note that you have to pay a property lease tax even if you are not a resident of Malta. A special tax scheme for rental income without deductions has a rate of 15%.

Additionally, Malta levies taxes on the sale of properties at a rate of 8%. They charge this flat tax rate regardless if there is profit or none. The owner may reduce this sales tax if the property undergoes a transfer within five years from its date of acquisition, in which the sales tax will only amount to 5%. 

Crete, Greece

Properties in Greece is gaining momentum after more than five years of falling house prices. Thanks to improved economic conditions, Greece house prices rose by 2.51% from the third quarter of 2018. Compared with many of the major cities in the US, the cost of living in Greece is lower. Utilities are also much cheaper compared with most European countries. 

In the centre of Athens, properties have gross rental yields of about 4.2% for bigger apartments. Smaller apartments have better returns of 5.7%. The elite area of Kolonaki, with its posh and ritzy cafes, have a gross rental yield of 6.3%. 

One area in Greece with impressive growth is Crete. This is one of the best Mediterranean islands to invest in as apartments and villas in the area only cost €1,400 per square metre. While yields (3%) are lower compared with Athens, Crete has a thriving buy-to-let market. Most expats make good money by renting out their property to tourists via Airbnb. 

In general, rental income in Greece follows progressive tax rates from 11% to 33%. 

Sicily, Italy

Sicily is the largest Mediterranean island. Still, this island maintains its traditional and authentic feel to it that most tourists love. In terms of investment opportunities, Sicily is a thriving property market. Investors can make the most money through rental properties. All year long, the city receives throngs of holidaymakers, making short term rentals a lucrative business as no room ever gets unoccupied. Property owners in Sicily could earn between €1,800 to €3,000 monthly. 

The Mediterranean is becoming a hotspot for investors because of high returns and growing popularity as a tax haven. Investors who want to make good money from rental income should seriously consider properties in these areas. 

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