Gibraltar Commercial property market update
The Gibraltar commercial property market is tiny compared to large cities, yet it is still intricate. The commercial property market reflects the economy, and in Gibraltar that means the Tee Shirts and the Suits!
On the one hand there are the Tee Shirts who run businesses that serve the local economy, the small local resident community of 34,500 and the lunchtime hoard of 13,000 workers that teem across the boarder every day. But these numbers are dwarfed by the 12,000,0000 tourists that visit the island every year and comprise the lion’s share of the Tee Shirt economy.
The Tee Shirt economy includes the bars, restaurants, shops and entertainment: premises whichare of high value wherever the tourist foot falls, and that space is limited on Gibraltar. For example retail premises on Main Street will command a high premium for the transfer or assignment of the lease. In these popular areas, new leases are normally granted for 6 to 9 years with rent reviews every three years.
The other large sector of the economy looks overseas for its markets. These are the Suits and they include the financial, gaming, insurance and burgeoning cryptocurrency industry. These companies all have one thing in common (they don’t all wear suits): they need office space with state-of-the-art communications.
After a decade in which there was no new commercial development, the market for office space was one of pent up demand. The recent release of the World Trade Centre has done little to alleviate this.
Further Grade A office space released in Midtown Commercial was entirely sold before completion and it looks like this trend will continue as further small developments come onto the market. There is a plan for the World Trade Centre 2 on the horizon – watch this space for news!
There are more vacancy options available in older commercial developments, but occupancy will generally involve some compromise regarding the quality, layout and flexibility of this type of space.
Both Tee Shirts and the Suits sides of the economy are enjoying prosperity tipping the current balance slightly in favour of the seller of property. In Gibraltar this small advantage to the seller is nothing new as property prices have consistently grown over the last two decades without having suffered a bursting bubble as did all around it.
This market of steady growth and economic optimism is not a land for speculators, but it is certainly one for any company looking for safe haven in the turbulent financial seas. An investment in Gibraltar property is a sound move for any company, and banks have confidence in Gibraltar’s companies.
The current bank repossession rate in Gibraltar is 0%. There are none. That single statistic should tell you something about business in Gibraltar… and about the banking sector’s level of confidence!