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Property
Property outlook 2019/20
By Louis C. Montegriffo Managing Director, BMI Group
Of late making sense of anything is hard, the phrase “we live in uncertain times” seems to be making its way into the hall of fame for quotes.......together with “let’s get this done”, “Brexit means Brexit” and, how could we possibly forget the big red bus and “let’s take back control”
What on earth has the above got anything to do with property, well what part of our daily lives over the past three years has not in some way or another, not been touched by the events of June 23rd 2016......believe me the property market is no exception to the rule.
Fact remains that property prices have generally moved upwards since 2016, in fact
very much so from Q4 ’16 to mid-‘18 ; yes, in our view it was unexpected to have experienced price hikes of up to 15% over that period, but the fact that we had a lack of supply in certain segments and an economy continuing to grow simply generated a bull market with rising prices. The uncertainly of Brexit over this period really only affected the top end (4th tier) in the market and it would be true to say that this tier has been relatively flat ever since.
I have sometimes been referred to as sailing the cautious wind when it comes to forecasting the market, we like to attach #zerohype #seriousadvice to our branding and we have done so because of the hype of the past few years in so far as new developments and particularly some segments in the market which in our view are most certainly surplus to demand and end user.
Rental properties
In the last 18 months we have warned of potential increased stock levels driven by speculative demand and we have also highlighted the fact that this results in increased rental properties available. In the
past we have referred to our experiences in 2008 with the over supply of off plan developments and the impact caused which led to increase stock levels in rentals, followed by a price adjustment. We have also warned of over pricing and the fact that price reductions, which are a reality today, are not necessarily the result of a downward trend but merely an adjustment to the levels that the market is prepared to go to.
Today, there is a general (price) adjustment across the board; interestingly unlike in 2008 the adjustment is not just a flattening or downward trend, but rather, in all directions and with varying pace.
This is the result of multi trends steered by demand or supply:
l The new studio / small one-bedroom off-plan sector pied-à-terre segment are of a little concern, regardless of Brexit we do not see the end user being a cross frontier worker renting a three bed town house in Alcaidesa for €750pcm and swapping it for a studio at £1,000pcm – that is not to say that Gibraltar does not see a market in this segment, but volumes of proposed units are high as are sale rates which in some cases are reaching up to £7,000/sqm.
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