While Europe in general faces an increasingly uncertain economic future, there is a rare good news story in Gibraltar. The British colony on Spain's southern tip has never gone into recession, unemployment is almost nil, its projected growth is the best in western Europe at five per cent this year and — unlike the property market in neighbouring Spanish cities, which has tumbled by 35 per cent — its house prices have stayed remarkably constant.
Gibraltar is a difficult place to pin down. The three-mile-long rocky peninsula is self-financing and self-governing but with reminders of its British ties at every turn.
There are branches of Topshop and M&S along cobbled Main Street, English is widely spoken and British pounds fill the tills. Yet step across the border and you are in full-blooded Andalucia with its strong Spanish heritage of flamenco and white painted villages.
"Gibraltar is a safe, comfortable place to live and as the tax burden becomes increasingly heavy in the UK its low-tax regime makes it more appealing, especially to businesses who are relocating their headquarters here" says Sammy Armstrong of Savills Gibraltar.
Savills opened its first office in Gibraltar last month, a response to the high net worth individuals and retirees heading that way. Corporation tax of 10 per cent means Gibraltar has become a hub for financial services and offshore gaming companies, and there is no inheritance tax, capital gains tax or VAT. Add in income tax between 17 and 25 per cent and the financial case is compelling.
An island on the up
Visitor numbers are growing and a new £50 million airport terminal partially opened last year, but until recently there was little housing stock aimed at style-conscious buyers.
Ten years ago no flat was priced over £250,000. Even today Gibraltar, with a population of 30,000, has only 50 properties valued over £1 million, with much of the design at best unimaginative. Hotels also seem out of step with modern times. The Rock Hotel, the best on the island, has an enviable position and a beautiful art deco façade, but inside it is more Margate than Mayfair.
Prices of property aimed at redressing this balance start at £300,000 for a two-bedroom apartment rising to £4 million-plus for a five-bedroom waterfront townhouse and berth on the sought-after Island Marina. A three-bedroom apartment in the South District, with communal pool, gym plus underground parking — an important extra in tiny Gibraltar — is £540,000, and a 1,000sq ft two-bedroom apartment at Kings Wharf is £415,000, all through Savills (020 7016 3740).
Chesterton (00 350 200 400 41) has a three-bedroom resale apartment in Marina Court with good views over the marina for £290,000, and a three-bedroom apartment in the refurbished former Naval Hospital in South District, further from Main Street, for £695,000, also with underground parking.
Ocean Village (00 350 200 400 48) and Casino is a high-rise modern development aimed squarely at international buyers. It comes with impressive sports facilities including seven pools and an extensive marina. The first of three towers launched in 2003 and sold rapidly, as did the second and third towers, launched in much more trying times during 2010.
Resale apartments start from around £300,000, with a two-bedroom, 1,790sq ft penthouse with extensive balconies overlooking the marina — and the airport — for £895,000.
The rental market
Despite the new developments, as more companies relocate to Gibraltar there is a shortage of available rental properties for executives. Chesterton Gibraltar reports strong demand for rental properties up to £1,800 a calendar month. Expect to pay about £1,200 to rent a small two-bedroom flat, at least double the price of a similar place across the border in Spain.
An alternative for many workers is to live in Sotogrande, the expansive Spanish sporting estate just 20 minutes' drive away. Even workers who have a weekday home in Gibraltar join the Friday exodus across the border for space and family-friendly facilities, causing that most English of problems — the rush hour.
Tax breaks in a business-friendly environment
Gibraltar is no longer a "tax haven" after signing up to the EU savings directive, but it pursues the goal of being a "low-tax, business-friendly environment," says James Tipping, finance centre director for Gibraltar Government.
"Personal taxation has fallen from 50 per cent 12 years ago to an effective rate of 25 per cent and our high net worth programme is one of the best in Europe."
With no inheritance tax, VAT or capital gains tax and high standards of education, housing and healthcare, Gibraltar is an attractive option. In addition there is no road tax on cars, no television licence fee, free bus travel for all and National Insurance fixed at £125 a month for a family of four.
'It's friendly and great for exploring'
Julie and Edward Thompson left the UK in February last year to live in a waterfront flat at The Sails in Queensway Marina. The combination of good weather, personal safety and the familiarity of Gibraltar appealed.
"We have custody of our 13-year-old grand-daughter Amber and the quality of education for her is a big plus," says Julie. "Classes follow the UK system and are small. If she chooses to go to university in the UK, the Government pays all fees including return airfares for her."
Like London, space is at a premium but quality of life is good. Edward, a retired property developer, plays golf and there are 35 courses within 35 minutes.
"Gibraltar is in a process of change as more Army personnel leave but it is still very friendly, and from here we are well placed to explore Spain and Portugal."