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Rock property supply lags behind demand, driving prices up - Chestertons

Photos by Johnny Bugeja

The average number of properties for sale via estate agents in Gibraltar is at its lowest since 2010, according to research by Chestertons, which also reported a knock-on rise in prices due to low availability.

At the end of August this year, the top eight estate agents on the Rock had some 72 properties each for sale, compared to 114 a year ago and 145 in 2019.

Chestertons, which has been monitoring the local market closely for the past decade, said the last time the number of properties offered by each business had dropped below 100 was for a five-month period about six years ago, although the average was still higher at 94.

There was a similar trend in the rental market, which is at its lowest in terms of availability since August 2018, with just 16 properties on offer on average at each of the estate agents.

The research by Chestertons indicated prices were rising because supply was not keeping up with demand.

But valuers were also finding it difficult to put a price on properties, with disparities of up to 20% on the same property depending on who was asked, impacting on the amount a purchaser can borrow against the price they need to pay to buy a property.

“We think property prices have increased close to 10% in this calendar year alone,” said Mike Nicholls, the chief executive of Chestertons.

“Rental prices follow this albeit perhaps rents are up 5% to 6% as investors accept slightly lower yields.”

“With inflation increasing in major economies across the world, including Gibraltar at 2.4% - up from 1.4% in April and 1% in January - property is proving to be a solid store of value.”

“Gibraltar property remains good value for those seeking to relocate from central London and other major cities.”

In analysis published yesterday Chestertons, Mr Nicholls said the construction industry could provide an important boost to the economy after the Covid-19 pandemic.

He said the sector offered “the best positive ripple” across the wider economy, generating income ranging from import duty on materials to stamp duty on purchases, and creating activity for architects, surveyors, engineers, lawyers, accountants, tradespeople and areas of the retail sector.

“Building our way out of this current deficit is quite possible with demand levels as they are now,” Mr Nicholls said.

“The challenge is to maintain an infrastructure that can cope with the ever-increasing number of properties and people - schools, hospital, sewage, roads, amenities etc - as well as finding a way for new construction sites not only not to spoil the aesthetics or lifestyle we enjoy in Gibraltar, but to enhance them.”

“Encouraging more modern construction methods such as off-site, more carbon neutral materials [to produce] less pollution), more empathetic design standards [and] not just dull blocks and more focus on green landscaping will go some way to achieve this.”

Since 2010, Chestertons has recorded the number of Gibraltar residential properties available for sale and to rent across the top eight estate agents on a monthly basis.

Properties may be multi-listed, sole agency, open market, local market or off-plan, “hence it’s not so much the absolute number that matters but the trend”.

Over the past five years, a number of developments have been concluded including Imperial Ocean Plaza, Ocean Spa Plaza, Midtown, Clemence Suites, Quay 29, Quay 31, The Hub, as well as some local three-year residency stock.

All of these properties have been absorbed into the market, either occupied by owners or let.

Additionally, “virtually all” properties currently under construction and made available by the developers of Eurocity, E1, Arengos, Sylvian Suites and Forbes have also sold ahead of completion.

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