In December 2017, we launched 99 studio apartments in a development called The Hub on the East side of Gibraltar, at an average price of £132,000 each. All the units were reserved within a week using our social media and email database channels only. This demonstrates the confidence in the property marketplace and the power of online marketing when used effectively.
I believe that there are two broad reasons for this strong property demand.
Firstly, the number of jobs in Gibraltar continues to increase year on year and imported labour is required to fulfil most of these new jobs as there is close to full employment in Gibraltar. Some 13,000 Gibraltar employees live in Spain and some of these would prefer to live in Gibraltar if suitable properties were available at affordable prices. Whether owner occupiers or residential tenants, the demand is there for vacant property.
Secondly, investors seek returns on their investments and off-plan property in Gibraltar has been and remains a popular choice. Investors effectively provide the mezzanine finance in any property development as their 25%-30% purchaser deposits are used during the construction to add to the bank’s 55% (say) and developer’s 20% (for example). On completion, investors can usually sell at a profit or rent at a 6% yield.
The impact of this financing methodology is that the positive cycle of off-plan property launches and subsequent occupancy by end users should continue. This cycle is put under pressure either if the job market slows (which it is not showing any signs of doing, indeed, the opposite is currently true) or when a developer sells units and then does not proceed with the development expeditiously. This has the impact of holding onto investor money thus imposing a drag on the investment cycle, storing up investor finance which could be used in developments seeking commencement. If this can be avoided, then the off-plan property cycle should continue as there are certainly enough occupiers for the completed product.
The much awaited Eurocity development, from the same developer as the successful West One development (completing March 2018 we believe) will launch in 2018 together with, most likely, other developments in Devils Tower Road, Marina Bay, Europa Road and the town centre. Chestertons is at the forefront of the off-plan property market and prides itself on its independence, having no shareholder or director relationship with any property developer in Gibraltar. Readers of Gibraltar Property News will be kept up to date of launch dates.
Contributed by Mike Nicholls
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