Strong economic growth in Gibraltar's financial sector since the 1990s has transformed the property market into one which can cater for high-end buyers, say Montegriffo (Image: BMI Group)
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Gibraltar’s property market: too good to be true?

Louis Montegriffo, director of one of Gibraltar’s oldest property companies, unpacks the facts behind the Rock’s remarkable rise from a one to three-tiered market driven by owner-occupiers

My brief in a nutshell is to describe Gibraltar’s property market over the past decade or so. Below is a chart which helps to tell that story in graphic form. As you can see, it certainly paints a pretty picture. When viewed against the fairly disastrous backdrop of western economies (and their respective property markets – save for London) over the past six or seven years, Gibraltar appears to be a great success story.

But does it all look a bit “too good to be true”? In order to make that judgement, it’s only fair that the reader be presented with some of the facts, so stick will me a little more.

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Gibraltar is a British Territory and not a colony, as popularly believed, and is self-governed.  We enjoy a stable, democratic, multicultural, low-crime environment – but that’s not all. Economically, the Rock is strong. In his budget speech this June the Chief Minister announced GDP growth was estimated at 10.2 per cent for the tax year 2013/14, that gross public debt stands at 32 per cent of GDP, with net public debt at 25 per cent of GDP, and that the budget surplus for 2013/2014 is estimated to be a record £65m, 4.6 per cent of GDP. Furthermore, it was announced that Gibraltar ranked in the top 20 globally for GDP growth and placed in the top 10 ranking of GDP per capita.  

I won’t bore you with any more detail on stats, budgets and charts but will say this: the dotted blue line on our graphic (above) shows the GDP trend up to 2013. While it cannot perhaps be said to have a direct bearing on property sales figures, it certainly underpins a record of increasing strength in our economy.

So how did this all come about? Gibraltar’s property market really began to take shape back in the mid to late 90s (it is interesting to note that prior to 1990 only 5 per cent of Gibraltarians owned their own home). Through a targeted effort by local government in providing low-cost properties to locals during this period, owner-occupier figures soon rose to over 35 per cent and began what we know as the market today.

It’s important that we remember that back in the 1990s, our market was principally driven by a one-tier sector (the low tier). At this time, rates per square meter averaged around £850/sqm (compare this with boroughs in London today where property can sell for over £10,000/sqm) and the majority of our buyers were invariably all of local origin or with some organic connection to Gib.

It was the advent of a growing financial centre on the Rock during the late 1990s that created a new platform in our property market which swiftly developed into a three-tier market (low – mid – high); one which could cater for all sectors, albeit still at prices which by comparison to competitor jurisdictions - such Jersey, Guernsey, Monaco, and Switzerland - were (and remain) low. As was the case with most western economies, the property trend between 2000 and 2007 was bullish, and in our case was steered primarily by a burgeoning economy in which the financial sector, online gaming and port related activity formed the major thrust of growth. The graphic above clearly shows how both “average house price” stats rose, with the green line excluding the top 10 per cent high value sales.

You will be forgiven for assuming that in Gibraltar we too suffered from that fateful calamity which is now known as the “credit crunch”; or as George W. Bush so finely put it: “Wall Street got drunk and now it’s got a hangover”. Property prices did see a dip over a 24 month period, but not because of an economy in decline; rather an overheated speculative market with a little too much stock. In other words, that peak that you see in 2007 was driven purely by speculative investors.

The following 24 months were not easy, and like other property markets around the world we were heavy in stock and light on buyers. However, unlike other markets, it took Gibraltar all of just two years to turn it around.

The Queensway Quay development in Gibraltar (Image: BMI)

Clearly our strong economy (that blue dotted line) has been the overriding factor in the recovery of the market over the past four years. The current climate continues to be positive and is likely to improve further. For three years (since 2011) we have witnessed the market harden up and prices slowly improve; 2013 underpinned this further with a marked increase in “high value” sales. Demand has continued in line with the growth in the economy and we have seen property prices (particularly in the high value market) over the past three years increase by up to 40 per cent in some areas, but averaging out at around 20 per cent.

Key to all of this is the fact that unlike our last property boom in 2007, which was speculatively led, today’s prices are geared by an owner-occupier market. That is to say, those who drive Gibraltar’s property market currently are existing users working and residing in Gibraltar, as opposed to speculators which, in buoyant environment with over-development, will tend to overheat the market with sometimes dangerous consequences. The fact that the property sector is steered by owner-occupiers also suggests that the market is strong and stable with real demand outstripping speculative demand – this says a great deal about the strength of the economy and the attraction of living and working in Gibraltar: English-speaking, great schooling, low crime, sunshine, well-regulated finance centre, stable economy, multi-cultural society……need I say more?   

Of particular interest is the high value sector which over the past two years has matured markedly. In fact, it has matured to an extent that we are potentially seeing a four tier market: low, mid, high and a new high with an increase in £1m-plus property sales. This is one area to keep a watchful eye on, as we are beginning to see interest from new high value players who years ago would just not have considered the Rock. This, in my view, says a great deal about the future.

So after weathering the financial downturn, as always will remain cautiously optimistic. At BMI Group, the Gibraltar real estate company which I direct, our sales volume has been on the rise since 2011. Last year kicked off as the best year we have had since 2007, with 2014 already shaping up too with similar forecasts. So, is Gibraltar’s property market too good to be true? Well, I like to think not, but it’s your call.

Louis C. Montegriffo is Managing Director of BMI Group              

 

Photo: Getty
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Cyberspace: the final frontier

With a Gibraltarian team set to enter the finals of the Cyber Security Challenge UK, Guy Clapperton looks at some of the fundamental mistakes people still make in securing their personal and business networks.

A few years ago I was stand-in news editor for a computing publication which had better remain nameless. I was asked to go and check the regular person’s database of press releases for stories. It was inaccessible unless you had the password, so I just tried p-a-s-s-w-o-r-d. I was in immediately.

It wasn’t a problem as the organisation wanted me to have the information, but what if it hadn’t? What if I’d been in HR or finance instead, and had malicious intentions? Presumably that little hole has been plugged by now but it’s indicative of the sort of managerial rather than technological issue people can face if they’re not careful. The Cyber Security Challenge UK laudably highlights the talents of young people when it comes to working out means of protection and the excellent progress of the Gsec team from Gibraltar is promising. However, two things stand out as needing to be addressed: first, the extent of the problem, and second, the basic errors people like my ex-client still make.

Extent

The extent of the problem is hard to pin down when you’re in the press. Walk into a room full of CEOs and ask who’s been hacked and regardless of the truth, nobody is going to confirm it’s happened to them because nobody wants it publicised. This is reasonable enough, and when someone like Sony a few years ago or Ashley Madison more recently suffer Cyber-attacks you can be sure these are just the ones the press has heard of. There is other data, though, to suggest the issue will continue to grow. This article is being published on Tuesday 9th February, designated Safer Internet Day, and to mark it security company Kaspersky Lab has published research that suggests 12% of 16 to 19 year olds in the UK know someone who has done something illegal on the Internet; 35% would be impressed if a friend hacked into a bank’s website and replaced the homepage with a cartoon and one in ten would be impressed if a friend hacked into an airport’s traffic control systems.

There wasn’t any data on how many teenagers would say any old thing to shock a researcher. However, the first point is the most salient – over one in ten suggest they’ve seen someone do something illegal electronically. So, if you’re a business owner or just concerned about your security it’s just as well to ensure that a number of previous clangers don’t affect you.

Managerial errors

Security is far from just electronic. A handful of things can go wrong because staff haven’t been briefed:

  • You protect all electronic copies of every sensitive document and someone prints one of them out – and leaves it on the printer for an hour before picking it up. Or leaves it in a hotel lobby, on a train…all of these things have happened and hard copy print isn’t protected or encrypted.
  • You have visitors to your company and one of your employees nips to the loo. This is fine as long as their screen saver covers anything sensitive pretty quickly, and as long as the screen saver is password protected so someone wiggling the mouse or pressing a key won’t be able to get at all the details.
  • Pet names, partner names and the word “password” have never been good passwords and it remains poor practice to keep the default PIN that came with your phone’s voicemail.

Finally, back on the technology side, if you have a small network and it’s big enough to have a network administrator, don’t forget to ensure their administrator password is changed frequently and not easy to guess. There have been instances in which this hasn’t been done, and that password controls the system that can change all the other passwords and lock you out.

A lot of it is common sense. The Gsec team will be looking to defend people from more sophisticated attacks – but never overlook the obvious.

The New Statesman will be publishing a supplement on Cybersecurity in the issue dated 26 February.

Guy Clapperton is the freelance journalist who edits the New Statesman’s Gibraltar hub. You can also find him in the Guardian, Computer Business Review and Professional Outsourcing which he edits.