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House Hunting in Gibraltar: A Corner Townhouse on Main Street for $1.9 Million

This three-story rowhouse sits on a bustling corner of Main Street in the heart of Gibraltar, the 2.6-square-mile British Overseas Territory hanging off the southern tip of Spain. The building includes a 3,300-square-foot duplex residence with five bedrooms and two bathrooms, and a ground level with two retail spaces.

The 18th-century building underwent some cosmetic work about five years ago, including new paint, polished floors and a refreshed kitchen, said Sammy Armstrong, the founder and managing director of Savills Gibraltar, which is co-listing the property.

A street-level door opens to a hall with a staircase up to the second floor. From the landing, a hallway leads past an office, a bedroom, and the dining room with double doors and a fireplace at the center of the house. At one end of the hallway, facing Main Street, is a spacious living room with a fireplace, sash windows and views of the Rock of Gibraltar. Ms. Armstrong said the room is awash in natural light because it is open to the gardens of Gibraltar’s Magistrates’ Court, across the street. At the other end, in the rear, are the kitchen and a bathroom.

The third floor has a similar layout, with a long central hallway connecting rooms from front to back. At the front, above Main Street, is the main bedroom, with an adjoining sitting room. Three more bedrooms line the hallway, with a bathroom and a laundry room that opens to a rooftop terrace in the back.

Most special about the home, Ms. Armstrong said, are “the views that it enjoys from its front room, overlooking the gardens of the law courts and the fact that your eyes go up to the Rock. You can actually see the greenery of the Rock.”

The ground-floor retail spaces — currently a boutique and a barbershop — produce around $24,600 (18,000 pounds) a year in income, Ms. Armstrong said. The building is a leisurely stroll from key spots in Gibraltar, including the famous limestone Rock, Gibraltar International Airport and Spain’s southern border.

Gibraltar, known as much as a tax haven as for its topography, ceased to be a member of the European Union when Britain made its exit from the bloc in January 2020, despite the territory’s 34,000 residents voting overwhelming to stay in the E.U. But a subsequent agreement between the governments of Spain and Britain allowed Gibraltar to remain in the Schengen zone, with unrestricted travel to most European countries.

The agreement should make Gibraltar “more attractive to invest and reside in,” said Sarah Bray, a partner with ISOLAS, a Gibraltar law firm.

Ms. Bray said the firm’s property department had “a very busy year” in 2020, with increases in both transactions and prices at all tiers of the residential market. “Gibraltar’s real estate market has continued to grow over the last few years, despite the initial uncertainty that Brexit posed when first announced,” she wrote in an email. “We envisage further interest in this area and further increases in real estate prices. I believe we will continue to see a buoyant and active property market in Gibraltar going forward.”

The petite territory has made itself a hub for the online gambling industry and for financial technology services companies in recent years, which together accounted for nearly a quarter of the area’s jobs in 2017, according to a House of Commons briefing paper that year.

In 2020, buyers invested for a mix of reasons. Mike Nicholls, the CEO of Chestertons, a Gibraltar real estate agency, said that demand has remained strong among locals, many of whom have reconsidered their housing needs during the pandemic, and among buyers who reside in Spain, lured by a new tax treaty that intends to disincentivize living in Spain while working in Gibraltar. About 75 to 80 percent of those relocating, whether buying or renting, are British, he said.

For “the current thousands of workers who live in Spain but work in Gibraltar, there’s just every encouragement for them to come in, and many of them are. Not all. We couldn’t cope with thousands. We can only cope with hundreds,” Mr. Nicholls said, noting that Gibraltar’s housing market is tiny — about half of its roughly 14,000 homes are government housing and half are private. A few hundred buyers can drive up prices.

As a result of the demand, Ms. Armstrong said, prices ticked up an average of 4 to 5 percent across the territory, particularly for “good quality apartments” priced above 500,000 pounds ($684,000). Those listings tended to lag in 2019, while in 2020, when fewer sellers tested the market, buyers were considering more homes approaching 800,000 pounds ($1.1 million).

“The difference is the clientele,” she said. “What we’re finding is people with bigger wallets are coming into Gibraltar.”

Many of those buyers are flocking to the territory’s spate of newer high-end developments. Jean-Paul Lugaro, the founder of local Mulberry Real Estate, pointed to Gibraltar’s “new, exciting projects,” including the recently launched The Reserve, which sits on the site of the 1950s-era casino, and the eco-luxury Arengos Gardens, which borders a nature reserve.

Prices for affordable homes rose as much as 5 percent in 2020, Mr. Lugaro estimated.

The Upper Town, Gibraltar’s historic district built inside the old city walls, had long been overlooked by investors, but has seen a surge of “urban regeneration” in the past four to five years, he said, especially among younger buyers. “It’s looking quite exciting, because the old town is being brought back to life,” he said.

Mr. Lugaro’s buyers are 60 to 70 percent locals, while his foreign buyers are mostly British, “who love the British sense of lifestyle, security, educational system, legal system, but still want to have the Mediterranean weather.” German and French buyers have also shown recent interest, he said.

Ms. Armstrong worked with more buyers from Russia, Israel and Australia in 2020, noting that she is “seeing more diverse nationalities.”

The majority are British expatriates who were living in Spain and commuting to Gibraltar. “Brexit has pushed quite a lot of them into Gibraltar,” she said. These are people who “lived in Spain for 10 years and have thought, ‘We’re moving out of Europe, we don’t want to go back to the U.K.’ So they bought in Gibraltar instead.”

Most of Mr. Nicholls’s foreign buyers are from Britain, followed by the U.S., China and Hong Kong. Many new arrivals in Gibraltar are workers in local industries, including online gambling and insurance. “We’re attracting entrepreneurs from Europe because of low tax, and then we need the foreign-language speakers to work for those companies,” he said.

The rules for buying real estate were not impacted by Gibraltar’s Brexit agreement, Ms. Bray said.

Foreigners can buy real estate without restriction, although certain low-cost properties in the government housing program can only be bought by Gibraltar citizens and those who meet a residency requirement. Most properties are leasehold, with a typical term of 149 or 150 years, she said. (This property is freehold.)

Transactions are handled by lawyers working for the buyer and seller. The fee typically ranges between 0.5 and 1 percent of the purchase price, Ms. Bray said. Buyers also pay a stamp duty on a sliding scale.

“Mortgages for foreigners are considered on a case-by-case basis and vary from lender to lender,” she said. Transactions are done in British pounds or Gibraltar pounds.

Mr. Nicholls said the seller typically pays the real estate agent’s commission. There is no wealth tax, annual property tax or capital gains tax in Gibraltar.

English; Gibraltar pound, British pound (1 pound = $1.36)

Homeowners in Gibraltar pay maintenance fees for services like trash collection and streetlights. This property’s rate is about $1,900 a year, Ms. Armstrong said.

Sammy Armstrong, Savills Gibraltar, 011-350-200-666-33; savills.gi

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