Gibraltar: a firm foundation

News

02 October 1993

As defence cutbacks hit the UK’s last dependent territory in Europe, Charlie Jacoby examines the Government’s attempts to find alternative sources of income for the local population.

With just 2.25 square miles of territory to its name, high-density development has been a familiar feature for some time. But in 1988 property development entered a new phase when the Government, in a joint venture with a consortium led by Danish contractor Hoggard & Schultz, began to reclaim 75 acres of land from the sea.

Prior to that date, the Gibraltar Government owned 45.1% of the colony’s freehold landholdings, the Ministry of Defence owned 50.9%, with private individuals owning the remaining 4%. As the military presence declines on the Rock, surplus lands are passing to the Crown.

The local economy has always been heavily based on defence. But, as MOD budgets are cut, the Government is now trying to diversify the economy and increase the influence of the private sector. According to Brian Francis of Land Property Services: “In broad terms, the Government’s strategy is to aspire towards self-sufficiency within a reasonable period of time.”

The major office development on the reclaimed part of the peninsula is the 960,000-sq ft Europort, which includes 430,000 sq ft of hotel facilities. This scheme is owned by Danish company Gefion, which emerged from the restructuring of former owner Baltica Holdings.

Gefion is marketing the office element itself, but with a general instruction for local agents. Rents in the building touched £17 per sq ft in 1990, but this has dropped to £15 per sq ft in more recent lettings. Occupiers include Nynex and the recently privatised Gibraltar Company Registry.

But, as Francis admits: “Take-up has not been as good as expected.”

In partnership with Taylor Woodrow, the Government has been involved in Queensway Quay, another development on land reclaimed from the sea. The scheme provides 125 residential units along with 20,500 sq ft of retail in 28 units. About 45% of the development is let and no agent is retained. Rents are undisclosed, but local agents put retail rents at between £15 and £18 per sq ft. There is no zoning in Gibraltar.

Elsewhere on the peninsula, current retail rents in prime Main Street touch £25 per sq ft. “There are still premiums being paid on the basis of a £25 per sq ft passing rent,” adds Francis.

Outside the reclamation project site, Francis says that office rents have dropped from £17 per sq ft in 1990 to about £12 per sq ft today. As best evidence of this he cites a recent arbitration where he used comparable evidence dating from July 1991. French water company Lyonnaise des Eaux took 3,210 sq ft at Leanse Place on a 21-year lease at £12.50 per sq ft.

As defence cutbacks hit the UK’s last dependent territory in Europe, Charlie Jacoby examines the Government’s attempts to find alternative sources of income for the local population. With just 2.25 square miles of territory to its name, high-density development has been a familiar feature for some time. But in 1988 property development entered a new phase when the Government, in a joint venture with a consortium led by Danish contractor Hoggard & Schultz, began to reclaim 75 acres of land from the sea. Prior to that date, the Gibraltar Government owned 45.1% of the colony’s freehold landholdings, the Ministry of Defence owned 50.9%, with private individuals owning the remaining 4%. As the military presence declines on the Rock, surplus lands are passing to the Crown. The local economy has always been heavily based on defence. But, as MOD budgets are cut, the Government is now trying to diversify the economy and increase the influence of the private sector. According to Brian Francis of Land Property Services: “In broad terms, the Government’s strategy is to aspire towards self-sufficiency within a reasonable period of time.” The major office development on the reclaimed part of the peninsula is the 960,000-sq ft Europort, which includes 430,000 sq ft of hotel facilities. This scheme is owned by Danish company Gefion, which emerged from the restructuring of former owner Baltica Holdings. Gefion is marketing the office element itself, but with a general instruction for local agents. Rents in the building touched £17 per sq ft in 1990, but this has dropped to £15 per sq ft in more recent lettings. Occupiers include Nynex and the recently privatised Gibraltar Company Registry. But, as Francis admits: “Take-up has not been as good as expected.” In partnership with Taylor Woodrow, the Government has been involved in Queensway Quay, another development on land reclaimed from the sea. The scheme provides 125 residential units along with 20,500 sq ft of retail in 28 units. About 45% of the development is let and no agent is retained. Rents are undisclosed, but local agents put retail rents at between £15 and £18 per sq ft. There is no zoning in Gibraltar. Elsewhere on the peninsula, current retail rents in prime Main Street touch £25 per sq ft. “There are still premiums being paid on the basis of a £25 per sq ft passing rent,” adds Francis. Outside the reclamation project site, Francis says that office rents have dropped from £17 per sq ft in 1990 to about £12 per sq ft today. As best evidence of this he cites a recent arbitration where he used comparable evidence dating from July 1991. French water company Lyonnaise des Eaux took 3,210 sq ft at Leanse Place on a 21-year lease at £12.50 per sq ft.