6 months into 2015

…….over 200 off-plan units sold, near 26,000sqm of offices launched, a new bank, a new university and from the sounds of it, a great deal more to come!

It’s only when talking to newcomers to the Rock that you realise the extent to which Gibraltar is viewed as, “on a roll”. Believe me I’m getting seriously bored with having to write up news of growth, building, rising prices and a general feel good factor......”where’s the feckin downturn” I’m hearing  you all yell at me – well, actually……

As much as one likes to pretend to know all there is to know about property, and believe me Estate Agents have a habit of this,(some more than others and some, who really go the extra mile ….. avoid these please); the fact is that it’s you, the market, buyers, vendors that dictate where we head to next. Yes, agents will influence and will steer, but it will be the confidence in the market, in you, that drives the property agenda.

We are incredibly fortunate in Gibraltar to have had a period of economic growth that has lasted for nearly 20 years!! This is almost unprecedented and clearly not the norm, we’ve all heard of economic cycles; economists try to predict them and invariably get it horribly wrong; so I’m not about to start making any predictions, I’m no economist , but it’s fair to say that our recent 5 year property bubble isn’t looking like it’s about to get pricked anytime soon.

April this year saw some rates per sqm reach close to a peak of £7,000; this unless otherwise informed is the highest rate achieved to date in Gibraltar and once again continues to support the view that the high value market which we have spoken about on various occasions, is very much here to stay. This is further supported by recent High Value clients relocating to the Rock and the fact that some are not just using Gibraltar as their residency, but rather looking at the possibilities of investing sizeable funds into a jurisdiction they believe has a great deal of mileage.

Some of the clients that we have been dealing with over the past few months and their confidence and interest in Gib, really do underpin our thoughts, on the fact that the market drives the market. In particular the substantial external influence from high value international buyers relocating to what is in fact, a relatively small market ………..the effects therefore can sometimes be difficult to accept from a local perspective. I believe the term I’m alluding to is “thinking from outside of the box”. In my view, if one was going to make predictions (dangerous I know) they should be supported by some evidence; so here’s another quote for you “the proof is in the pudding”. Prices aren’t being made up; they are a reflection of a demand that is fuelled by new sources and an economy in continued growth…….!

Oddly enough, a great part of what prompted me to write the above was a conversation I had with a young up and coming lawyer (no names mentioned) who was, in part, shocked at the levels prices had reached in Gibraltar and the recent success of high value off-plan sales in Midtown. His concern was centred on the alienation of local first time buyers unable to meet the pricing levels reached. To be fair he is right to take issue, an average first time buyer would need to seek lending almost 12 times their salary, in order to purchase within some of our mid-end/ high-end schemes.

Question: is Gibraltar moving into territory where applicants with limited means are not being catered for, or where the mid and high level markets are driving prices to the extent that even the lower sector is being adversely affected? I will answer with trepidation and at the risk of being ostracized from the community…………..NO! Unlike most other high value jurisdictions, Gibraltar has consistently catered for its own, we have done so for over twenty years in the form of affordable housing. This very model is why I believe Gibraltar is successful as a great place for people from all walks of life to relocate to.

Whilst one continues to be mined numbingly annoying with outbursts of positivity and bullishness, I can’t but help to also consider the threats that our property sector and more specifically our economy may face. It would be fair to say that although our politics with Spain are not seeing the most fruitful moments, it is also true to say that regardless of our status quo, we have never really suffered, whatever their mood. A bigger concern might be the prospect of a U.K wanting to leave the E.U… I can just hear the palpitations of the financial services community, most of whom might be spending more time in the cloak room than ever before. From an objective point of view, the chances of the U.K leaving are low….the prospect of the Germans and the French actually allowing the Brits to actually go is akin to that famous John McEnroe  quote “ you cannot be serious!”.Nevertheless, this is in my view the greatest concern and just the idea of it will hang a light cloud over heads for a while.

On a final note I’d like to thank the Gibraltar International Bank who have kindly agreed to feature and support our magazine and I take the opportunity to wish the Directors and staff the very best on this new journey. Thank also to our contributors and partners who continue to support our property magazine, now in its 12^th year of print.

Until the next quarter.

Sincerely

Louis C. Montegriffo
Managing Director