Gibraltar Property, The Only Way Is Up?

2013 was the second-most successful year on record for completion of buildings 200 metres or greater in height worldwide. In 2013, 73 such buildings were completed, second only to the 81 completions of 2011.

Of the 73 buildings over 200 metres completed in 2013, only one, 1717 Broadway in New York, was in the United States. For the sixth year running, China had the most 200-meter-plus completions of any nation, at 37 – located across 22 cities. Among the two ‘supertalls’ (>300 metres) to complete in Europe last year was The Shard, which is not only the UK’s tallest at 306 metres, but one of the more hard-won victories of developer persistence amidst financial crisis, regulatory scrutiny, historic-preservation and traffic-flow constraints.

The tallest building to complete in 2013 was the 355-meter JW Marriott Marquis Hotel in Dubai, UAE, which is now officially the tallest hotel in the world.

The proposed arrival of the Marriot Hotel in Gibraltar has reignited the debate on tall buildings in Gibraltar, albeit we are talking 14 floors above ground level in Gibraltar versus 82 floors in Dubai. So what is all the fuss about? Has ‘Nimby’ism gone mad? Big buildings can enhance urban character or destroy it. Supporters of tall buildings see height and density as the only solution for continued economic growth and vitality and variety in housing stock. Opponents see the damage the buildings do to the character of the landscape, heritage and the impact on our daily lives.

Why high is good

Rents are increasing in Gibraltar as property stock decreases. Chesterton recently reported 10% year on year growth in the private residential rental sector and this looks like repeating itself in 2014. Chesterton has waiting applicants for apartments below £1,500. It is no longer estate agent speak, it is reality. Office rents too are increasing, as commercial tenants target the few quality offices available in Gibraltar. The only sustainable way to prevent Gibraltar pricing itself out of the international business market (compared with Malta for example) is to build more property, and the more rentable space created per building, the greater the impact on rents. So build high.

In the last ten years, the number of jobs in Gibraltar has increased by 8,000 whilst the number of new properties built is around 3,000. Spain has absorbed much of the housing requirement resulting from this imbalance. On-going border issues and Spain’s unattractive tax rates demonstrate that Gibraltar cannot rely on Spain to house its workforce as a long term solution to the property constraints in Gibraltar.

Gibraltar’s tourism product relies upon day-trippers. Perhaps if Gibraltar hosted more than just three hotels (perhaps some internationally recognised hotels) and more than just a handful of short stay accommodation, the number of free spending tourists staying in Gibraltar a few nights at a time might increase. Such provision of new supply requires building.

This government has set bullish economic growth targets. £1.65bn GDP by 2015. Bunkering is under threat, tobacco is under the microscope. Future GDP growth will need to come from expansion in finance centre, gaming and other “office based” activities. New companies will need new office space. New employees need new homes. All of this creates new expenditure in Gibraltar’s leisure industry, on the professional advisory sector and creates a myriad of new tax revenues. Modern economically successful jurisdictions are building high. A win win for all?

A population of 30,000 makes Gibraltar one of the smallest jurisdictions in the world. A frosty relationship with Spain means we cannot rely on our neighbour to provide basic services. Funding public services like hospitals, power supply, and public transport is much more efficient if being provided for 60,000 consumers (for example) than 30,000. So increase the population.

But high isn’t always good

Tall buildings are ugly. Possibly more aesthetic if there are quite a few of them massed in one area (for example Canary Wharf in London) and will spoil the Gibraltar landscape once and for all. Once built, there is no turning back, as we know from some of the less aesthetic estates built in the eighties which are here for the long term.

High-rise towers create wind effects, increase shadowing on the surrounding community and often damage street life through a proliferation of blank walls and car parks at ground level. Build tall and goodbye street character.

The knock on effect of the resulting population growth will be to stress further the provision of schools and hospitals (and other public services) which without further supply could break the system. And where can Gibraltar house new supply? Schools need lateral space requirements not high rise accommodation.

Gibraltar traffic is already close to standstill much of the time and even when it isn’t, it does not take much to create a seizure of flow. Without the willingness to reverse the town planning policy of demanding new parking spaces for new office and residential accommodation, the creation of more property space just piles unwanted pressure on a road structure that is impossible to expand.

High or low?

Tall buildings, however defined, use a small amount of highly scare land availability to bring a number of socio-economic benefits so in that way are very efficient users of land. The taller the building, the more land that can be used for other purposes, for example, open spaces and leisure activities. However, there is a cost to this theory of how some see the Gibraltar way of life.

Anyone fancy a Gibraltar Shard?

Facts and figures courtesy of the Council on Tall Buildings and Urban Habitat