Economic Landscape
Gibraltar's economy is underpinned by sectors such as financial services, online gaming, and tourism. The government's commitment to maintaining a business-friendly environment has attracted international companies, bolstering economic stability. This economic resilience has historically supported a strong property market, with demand often outstripping supply due to the territory's limited land area. The uncertainty surrounding the ongoing border issue has done its bit to destabilise the market, however it seems people are adjusting to this 'new normal' and getting on with their lives again.
Market Realignment
Recent analyses indicate that Gibraltar's property market has undergone a period of realignment. There has been a 'correction' of property values to meet realistically affordable demand, influenced by external factors and shifts in buyer and investor behavior. Despite a slowdown in sales, the long-term outlook remains optimistic, supported by Gibraltar's enduring resilience and adaptability.
Prices increased at such a rate following Covid until the middle of 2023, that we had got to a point on a local and international level, where it was unsustainable and there were better places for investors to trust their assets, while the increase in mortgage rates due to the sharp increase in BoE base rate, meant first time buyers simply could not afford to buy property on their incomes.
Throughout the year, we saw reductions in the region of 10%-15%. Sellers eventually began to acclimatise to this and we did notice the market rapidly improve from the middle of the year to a point where December outstripped any other month of the year in terms of agreed sales.
Sadly, there will always be one or two Estate Agents within the market who continue to give overly inflated values in order to gain instructions. With no obvious way of vendors comparing recent comparable sales data, some will be hoodwinked, leading to an artificially high number of properties on the market that aren't selling. This causes the market to look 'stale' when in reality, when things are priced correctly, there is a healthy demand out there.
In a falling market, overvaluing rarely works. Just as London's notorious overvaluers - Foxtons - struggled in a slow post-Covid decline, so too have our own notorious overvaluers. The public will soon cotton on when they realise the 2 main culprits currently have an 'under offer' rate of about 7%, meaning 93% of their clients have not exactly had the service they were promised.
Category II residents
With the UK's new government's tax increases for the wealthy, research suggests that 9,500 HNWIs will be emigrating throughout 2025. Although many will end up in far-flung places such as Dubai or Singapore, for any Briton's wanting to retain a feel of home, Gibraltar is the ideal place. At Richardsons we saw an increase in Cat II applications in the second half of the year and believe this will increase further throughout 2025.
Additional money coming from outside our local market, ought to improve turnover, allowing vendors and buyers alike to move on with their loves.
Regional Influences
The property markets in neighboring regions, such as Spain's Costa del Sol, also impact Gibraltar. Spain has experienced rising property prices, with forecasts predicting continued increases into 2025, driven by inflation and growing demand. For instance, house prices in Spain are expected to rise by approximately 4.7% in 2025. These regional trends can influence buyer behavior and investment decisions in Gibraltar, especially among international investors considering the broader Iberian market.
Investor Considerations
For investors, Gibraltar offers a stable and attractive property market, though it requires navigating unique challenges such as limited supply and high demand. The territory's favorable tax regime and strategic location continue to attract international buyers. However, potential investors should conduct thorough due diligence, considering factors like property valuations, rental yields, and long-term market trends.
Conclusion
As 2025 approaches, Gibraltar's property market is expected to remain robust, supported by a resilient economy and sustained demand. While challenges such as limited supply and market realignment present considerations for buyers and investors, the overall outlook suggests continued growth and opportunity in this unique market.
For a sensible conversation about today's market values and the landscape moving forward into 2025, get in contact with us now: