Quite a bullish comment I thought, but it is only referring to “Land” and not “property” as such, and even so, drop a political bombshell anywhere in the world and yes, even land will drop in value and no I am not necessarily referring to Brexit or Donald Trump.

For the past 18 months I have cautiously remained on the fence with respect to market opinions (it’s a safe place to be in times like these….:), I’ve done so purposely, but with a watchful eye in the hope of reaching some clarity and a degree of certainty, one that at the very least allows us mere mortals (yes estate agents are human too) to try to forecast, guide and advise our clients. Am I any closer today in offering you a stab at guidance and forecast??? ……….errmm, well let’s just say that Donald Rumsfeld nailed it with:

“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”

In short, the answer is we haven’t got a clue, much like Donald….. (Rumsfeld I mean); the uncertainties will continue because, let’s face it, at this stage no one knows….;)

But what do we know when we look at the Gibraltar position and our property market / economy?

Well, concerns remain, but less so by the day, confidence had been affected, but judging by the performance of the market (I’ll get on to that later) and the numerous new corporate entrants into the Gaming / Financial Services and the new FinTech sectors, one can safely say that confidence no longer seems to be an issue. There are other very evident factors supporting confidence on the Rock such as an increase in Cat 2 applicants, but more importantly the fact that existing Cat 2 clients remain with us and even more importantly are swapping from letting to purchasing and are investing into the long term with us. What strikes me as an interesting fact is that it’s our international clients who are showing us the way when it comes to confidence in our future….this bodes well with me and tallies well with our motto in the office – ”let the market drive the market”

A great indicator from our perspective is also volume of sales and range. Late last year and early this, we had seen that volumes of sales were solid, but our range in terms of price markets was limited to £300,000 to £700,000, save for our sale at The Sanctuary which was not the norm. In short, our concern was whether we would see an impact at the upper level (fourth tier + £1.75m) of the market, which had previously and over the past few years emerged as a real new high value sector almost exclusively driven by owner occupiers choosing Gibraltar as the safe, sensible, low key jurisdiction to relocate to and make “home”. The last 6 months have seen the range widen once again with +£1m sales more active than ever in areas such as Ragged Staff Wharf, Buena Vista Park, Admirals Place, and Penthouse re-sales at Quay 29 and Midtown. These are all solid indicators which we take as hugely positive and as a reflection of a regenerated confident market.

Re-sales in off-plan developments are also great indicators of market position and provide good forecasts of demand as well as underpinning growth, or not, as the case may be. Over the past 12 months we have resold properties in Ocean Spa, West one, Quay 29 and Midtown to name a few; worthy of note has been the volume of re-sales and in particular the growth (profit margin) seen in the higher value properties at Midtown and once again to high value owner occupiers. Growth in Midtown over the past 36 months has reached up to 15% from original prices with approx. 7% in Quay 29 over 18 months. Although in both these developments, the number of speculators was negligible, the driving force for selling was clearly the capital appreciation and the fact that the return on the initial instalments was in the region of 40%-50%......not bad going for those invested.

In so far as the Lettings Market - how’s it fairing?

The words / phrases most used in the office by our lettings director and manager over the past 24 months is “help”, “for the love of God”, “you cannot be serious” and “I resign” – no joke, but all in jest of course. There is no question that demand continues to completely outstrip supply and some of the demands imposed on our lettings department are tough to meet. The reality is that we take pride in servicing all our applicants and clients, stressful as it is of course.

Facts are that yields continue to be strong and our guidance over the past few years remains the same; an average gross yield of 5%. Supply will increase as Developments like Midtown and the last phases of Kings Wharf and Ocean Village are rolled out, but the delivery dates on all these projects are sporadic and far apart thereby not concerning with regard to any softening in this sector due to oversupply, as was the case in 2008. In fact, the major difference today from the last dip is not just driven by spaced out delivery dates and higher demand, but rather the fact that today we are rolling out a similar number of units as in 2008 with an economy worth nearly double the size.

The Market in General:

I’m sure by now you get the fact that we are optimistic so far. From our perspective and based on our own sales and figures we have seen a further 5%-7.5% increase in property values (generally) across the board this year, similar to that in 2016, but we will provide further updates on this in our annual Market analysis early in 2018.

We are clearly encouraged by continued Cat 2 and high value entrants as mentioned above as well as new business in almost all sectors – there is a clear consensus in the sector that Gibraltar PLC is busy with good activity; this will all add value to the property sector moving forward and yes we of course remain concerned about the “unknowns”, but less so now than in recent months and with all the evidence to support that position. Its been a good third quarter and a good year so far!

Finally, l leave you with a rather interesting story born from a drinks afternoon out with a client, whom has recently relocated from Hong Kong to Gibraltar. In short, a real character who chose to leave a safe high powered position and relocate to a new, smaller, less known jurisdiction and into a riskier role but with potentially greater rewards. The carrot or should I say the clincher in the move happened to be life style, security, stability, bringing up a family, schooling, language and all the things we enjoy, but sometimes take for granted – oh and his wife was going to leave him if he didn’t take the job in Gib. Of particular interest however and after a few too many glasses of some “blush” Rose, we discussed market values comparably to other jurisdictions including HK – what struck me as odd, was that it was my client arguing that values would grow far more than I could envisage, in fact, (and I suggest you sit down if you are reading this standing) his thoughts suggested that our property market could / would double in value over the next 5-10 years (are you laughing yet, possibly a smirk?). As a sensible estate agent I dismissed his forecast we laughed and quite frankly got hammered – it was a great evening….but wait for it though, here’s the punch line. I recalled our conversation the next day and called him to re-confirm that in my inebriated state, I had indeed heard his views on Gibraltar’s Brave New World correctly: the answer was an unquestionable “yes”, I laughed again... and here’s the punchline; In writing this piece (late as usual) I’ve done some research and prepared some information; in doing so I had the chance of looking at prices on our chart from 1999 to 2006……………... where the market grew by just over 350%!

I cannot stress enough the fact that I am NOT suggesting that this will be the case over the coming years, but it was a story too good not to at least mention and yes, it’s always good to end on a perfect note…. it was after all a perfect night!

I hope our thoughts and commentary will at the very least be of interest or provide some insight on Gibraltar’s property sector…….or even help if you’re struggling to sleep.


Louis C. Montegriffo
Managing Director.