The troublesome issue of trade deals loomed large during President Trump’s recent visit to the UK. Yet as Brexit negotiations between Britain and Brussels limps forward, the future of Gibraltar hangs in the balance.
The modern, service-based economy of this little British overseas territory off southern Spain has benefited handsomely from the EU’s principles of free movement of people, capital and services, and it is the first jurisdiction in the world to introduce a regulatory framework for cryptocurrencies.
The chief minister of Gibraltar, Fabian Picardo, is fiercely opposing any moves by the Spanish government to use Britain’s departure from the EU as a means to gain more control over the territory in a centuries-old dispute over its ownership, and has stated “we will be no victim of Brexit”.
Although Theresa May has bigger fish to fry right now, any worries that the three mile-long rocky peninsula might end up outside any EU-UK trade deal is not harming the lively buy-to-let market. A growing workforce — dominated by financial tech, e-gaming and block chain-based start-ups — is putting pressure on the supply of housing, which is pushing up property prices. For the past ten years prices have been rising between 2 and 5 per cent a year.
“There is a shortage of homes for sale and a chronic shortage of rental properties for the army of more than 12,000 workers who traipse across the border each day, many of whom would much rather live in Gibraltar if the right property at the right price was available,” says Mike Nicholls, the managing director of Chesterton Gibraltar, an estate agency. “Unemployment in La Linea, on the Spanish side, is at 35 per cent, but only 1 per cent here.”
Prices at The Hub, a 15-storey block of 143 studio apartments close to the runway of the airport in the industrial eastern side, sold well to local buy-to-let investors: 99 of the 24 sq m studios, with pull-down beds, sold off plan in the first week of their release.
“This is a new concept for Gibraltar, in a functional part of town that I see developing like London’s Isle of Dogs 30 years ago,” Nicholls says. “Buying one of these, from £119,500, or renting one for £750 a month is the only way that workers earning £20,000 a year can afford to live in Gibraltar.”
Properties are also selling fast at Bentley Investments Group’s Eurocity, an £80 million scheme of 366 apartments in three blocks, in the central business district. All of the flats — mostly studio apartments — in the first block were sold off plan. The second block, which will become Gibraltar’s highest tower at 22 storeys when it is finished in three years, is on sale, with prices starting from £200,000 for a 30 sq m studio apartment with a terrace. There are two floors of shops, restaurants and offices, but also attractive communal areas with landscaped gardens, a swimming pool, gym and concierge service.
Sales in Bentley’s adjacent West One scheme were rapid — 96 apartments sold in four days — with local buy-to-let investors being followed by owner-occupiers, a trend it expects to see at Eurocity. “With minimum gross yields of 6 per cent and price growth of 3 to 4 per cent a year, buy-to-let here is more attractive than in the UK after the changes to tax relief there,” says Ian Dawson, a sales negotiator at Chesterton. “The retail space and serviced apartment aspect make it unique for Gibraltar and even occupiers of the cheapest units can step out into the same high-level environment as the owner of the penthouse.”
Buyers with bigger budgets may also look at resale apartments within the waterside marina developments of Ordnance Wharf, Ocean Village or Queensway Quay Marina. In the former there’s a five-bedroom townhouse for sale at £1.895 million, which would rent for £5,500 a month. At Ocean Village — one of the older developments, but which is only ten minutes from the airport — there’s a four-bedroom apartment for £1.35 million.
Britons traditionally come to Gibraltar because they have military connections, or to retire in an Anglo-friendly home-from-home, with easy access to Spain. The tax regime is enticing too. There’s a top rate of tax of 25 per cent, plus no capital gains, wealth or inheritance taxes — and it has a better climate than other tax-friendly locales, such as the Isle of Man and the Channel Islands.
It certainly doesn’t have the glamour of Monaco (think Morrisons and Marks & Spencer rather than Gucci and Chanel), but the bright lights or designer shopping of Marbella are only 40 minutes away in Spain. As Nicholls admits, “the hip side of life has not reached Gib” yet, although it is evolving. Since 2015 the University of Gibraltar and an outpost of Prior Park, a British independent school, have opened.
The top end of the property market in Gibraltar is somewhat slower than the buy-to-let sector, but is picking up, according to Sammy Armstrong, the director at Savills. “Historically there has been constant turnover in the £300,000 to £600,000 (one to two-bedroom apartments) range, but in the past four months we have had more interest in the £1 million-plus properties,” she says. “High-end homes can stick for years.”
At the Sanctuary, a development of five luxury 1,200 sq m villas high on the Rock, priced from £8.5 million, only one home has sold. The six-bedroom properties come with pools, sunken-seating chill-out zones, entertainment, spa rooms, wine cellars and a gym.
“These offer the most spectacular quality, space and views on Gibraltar — it’s the most complete product on offer,” Armstrong says. But the slow take-up prompts the question: is Gibraltar the complete product for buyers with £10 million?