If Gibraltar Wants the Money, Perhaps We Should Let Them In

Perhaps it’s time to rethink who Gibraltar wants behind the front door

by Paul Gibbens MNAEA, Sales & Lettings Manager, Richardsons

"Last month I wrote about Gibraltar having “Opened the Border but Pulled Up the Drawbridge”.

It was deliberately provocative, but there was a serious point behind it.  Just as Gibraltar was preparing to become considerably more accessible to Europe, we were becoming considerably more selective about who could actually come and live here.

I argued that this wasn't necessarily a bad thing.  Gibraltar is tiny.  We have limited land, limited infrastructure, limited healthcare capacity and a finite number of places in our schools.  Economic growth cannot simply mean population growth.

But there is another side to the argument which I think deserves a little more attention.

What if some of the people we are keeping out are precisely the people Gibraltar should be trying to attract?

Not everybody who wants to live in Gibraltar wants a job here.  Not everybody who wants to live here needs a place in a government school.  Not everybody needs to use the GHA.  And not everybody is going to be a drain on public services.

Some people might actually be quite the opposite.

They might arrive with their own money, their own healthcare provision, their own property and an appetite to spend that money in Gibraltar.

And one group in particular seems to me to be worth reconsidering: financially independent people who want to retire here.

I sit here on the eve of National Day, and I find myself wondering whether we have become so focused on the question of how many people Gibraltar can accommodate that we have forgotten to ask a more useful question.

What kind of people can Gibraltar afford to accommodate?

And by retirees, I don't necessarily mean somebody who has reached 65 or 70.  There is a growing group of people who have simply done well enough in life that they don't need to work anymore.  Someone might be 48, 52 or 58 and decide that they have had enough of the daily commute, enough of running a business and enough of chasing the next promotion.  They may have sold a company, built up a portfolio of investments or simply accumulated enough capital to become financially independent.

They may still have decades of life ahead of them.

Why shouldn't some of them choose Gibraltar?

Imagine somebody who has spent their working life in the UK or elsewhere.  They have substantial savings, perhaps a pension or investment income, and they own a property in Gibraltar outright.  They have comprehensive private medical insurance.  They don't need social housing.  They don't need a government-funded pension to support them.  Their children may be grown up and living elsewhere.   They aren't looking for a job.

They simply want to live in Gibraltar.

What happens then?

They go to Main Street.  They have lunch.  They buy clothes.  They use the hairdresser.  They go to the supermarket.  They use taxis.  They eat out.  They buy a car.  They have their property maintained.  They employ tradespeople.  They use accountants, lawyers, estate agents, cleaners and other local businesses.  Their friends and family come to visit.

They spend money.

Quite a lot of money, potentially.

And almost all of that spending happens in the local economy.

I find it difficult to see why that should automatically be regarded as a problem.

In fact, I think Gibraltar should be asking whether there is a way of actively encouraging exactly this type of resident.

Not somebody arriving with no means of supporting themselves and an expectation that the state will eventually pick up the bill.  I'm talking about the opposite: a self-sufficient person who has the financial means to support themselves, owns or rents suitable accommodation, carries private medical insurance and accepts that they will not necessarily be entitled to the same range of publicly funded services as somebody who has built their entire working life here.

That seems to me to be a potentially very attractive proposition for Gibraltar.

And it becomes even more interesting when you look at what we are about to build.

Gibraltar is not standing still when it comes to housing.  Quite the opposite.

The Government has confirmed that the Westside reclamation will be exclusively affordable housing, with 2,300 homes planned.  Elysium Bayside is bringing another 369 residences, together with more than 10,000 square metres of office space and almost 3,000 square metres of retail.  Monument Plaza adds another 80 homes, another 100 at the Reserve, while the Eastside project is looking to deliver around 1,300 residential units.

Put all of that together with the existing housing stock and the other developments already completed or under construction, and the potential is enormous.

Indeed, once all of these developments are eventually completed, Gibraltar could have the capacity to house something approaching 60,000 people.

Our population is currently around 40,000.

That should make all of us stop for a moment.

Because it creates a rather obvious question.

Who exactly are all these homes going to be for?

We have spent years talking about Gibraltar's housing shortage.  Now we are moving towards a point where the number of new homes being contemplated is extraordinary in the context of the size of our population.

The answer cannot simply be “Gibraltarians”.  There aren't enough.

And if the answer is that these homes will largely be occupied by people who already live here, then we need to ask what happens to the existing housing stock as people move into the new developments.

The housing market is not a tap that you turn on and off.

New supply creates movement throughout the market.  People buy new homes and sell old ones.  People move from rented accommodation into ownership.  Older people downsize.  Families move up.  Investors rent properties.  Properties are refurbished and brought back into use.

The important thing is that there needs to be demand.

And demand doesn't necessarily have to mean thousands of new workers arriving in Gibraltar and competing for school places and appointments at the hospital.

There are other types of demand.

This is where I think the conversation about residency has become too binary.

We seem to have two categories in our heads.  There are people who come to Gibraltar to work, and therefore contribute economically.  And then there are people who don't work, who we tend to view as potential users of public services.

But there is a huge middle ground.

There are entrepreneurs who don't need to be employed.  There are investors.  There are international business owners.  There are people whose income is generated outside Gibraltar.  There are financially independent retirees.  There are people who might spend £50,000, £100,000 or considerably more a year in Gibraltar without ever appearing on a payroll.

We should surely be interested in them.

For the very wealthy, Gibraltar already has an established mechanism in Category 2 residence, although the recently increased asset threshold means that route is now aimed at a considerably narrower group.  That is entirely understandable.  But it also highlights a gap: there are people who may be financially independent enough to support themselves entirely, but who are nowhere near the level of wealth required for Category 2.

Why should the choice be between being wealthy enough for Category 2 and being employed?

There should, perhaps, be something in between.

The new residency framework already recognises some of this thinking.  The Government has moved towards residence being tied more closely to economic contribution and the sustainability of public services.  For ordinary employee applications, the £37,500 income threshold and requirement for appropriate accommodation are intended to ensure that people taking up residence have a genuine economic connection and can support themselves.

That makes sense.

But perhaps the next step is to recognise that economic contribution does not always come from employment.

Take the financially independent person I described earlier.

They own their home outright.  They have substantial investments.  They have private medical insurance.  They don't require social housing.  Their children may be grown up.  They don't need a job and they don't need government financial assistance.

But they want to spend the next 20 or 30 years living in Gibraltar.

Would that person be good or bad for Gibraltar?

Provided the appropriate safeguards are in place, I'd suggest that the answer is fairly obvious.

They are a consumer.  They are a property owner.  They are a taxpayer.  They are a customer of local businesses.  They are potentially an employer.  They are somebody who brings wealth into Gibraltar rather than earning their income here and taking it elsewhere.

And they may be doing something as simple as buying their lunch on Main Street three or four times a week.

Multiply that by a few hundred people and suddenly the conversation becomes rather different.

This isn't just about property.  It is about the economic ecosystem that exists around property.

A resident doesn't just buy an apartment.  They buy furniture.  They insure it.  They maintain it.  They pay service charges.  They eat out.  They shop.  They travel.  They entertain visitors.   They use professional services.

They spend money.

The property is simply the anchor that keeps that spending here.

Of course, this is where we need to be careful.

I am not suggesting that Gibraltar should suddenly throw open the doors to everybody who can afford a flat.  We have to protect the housing needs of people already here.  Affordable housing must remain a priority.  Young Gibraltarians need to be able to get onto the property ladder.  People who work here need somewhere to live.

And the Government is clearly trying to address that with the scale of affordable housing planned at Westside.

But we should also recognise that not every new property has the same purpose.

A 2,300-unit affordable housing development is fundamentally different from a private development aimed at international buyers.  The latter can attract international capital, create construction employment, generate taxes and fees, support professional services and, ultimately, needs people prepared and able to buy or rent those properties.

The question shouldn't therefore be whether Gibraltar wants international residents.

It should be whether the residents we attract are compatible with the capacity of Gibraltar's public services.

That is a much more sensible test.

I would like to see Gibraltar consider a clearly defined residence route for financially independent people.

Not a loophole.  Not an automatic right.  And certainly not a route to jump straight to Gibraltarian status.

A genuine residence permit with clear financial requirements.

Applicants would have to demonstrate substantial independent income or assets.  They would need to own or rent suitable accommodation.  They would need comprehensive private medical insurance.  They would have to demonstrate that they could support themselves without relying on public assistance.  There could be clear restrictions around publicly funded housing and certain long-term care services.

In return, they get the right to live here.

It is not a revolutionary concept.

Gibraltar already has different categories of residence with different rights and obligations.  What I am suggesting is that we should be more imaginative about what constitutes a valuable resident.

Because if somebody can demonstrate that they will bring money into Gibraltar, buy a property, pay their taxes and spend their retirement here while privately funding their healthcare and long-term needs, I'm not sure we should be looking for reasons to say no.

We should be looking for reasons to say yes.

And this brings us back to the elephant in the room: the Eastside.

If Gibraltar genuinely creates residential capacity on anything approaching the scale being discussed, we are going to have to make some fairly fundamental decisions about what kind of place we want Gibraltar to become.

You cannot build thousands upon thousands of homes and simultaneously behave as though allowing people to live here is somehow an unfortunate side effect.

At some point the two policies have to meet.

If we want the investment, the construction jobs, the property transactions and the economic activity generated by building all these homes, then we also need a credible strategy for who is going to occupy them.

That doesn't mean increasing Gibraltar's population from 40,000 to 60,000 overnight.

It certainly doesn't mean putting additional pressure on schools, healthcare and social services without considering capacity.

But it does mean thinking differently about the people we want to attract.

Maybe the answer is not more people.

Maybe it is more economic value per person.

There is sometimes an instinctive reaction in Gibraltar that if someone wealthy comes here and buys an expensive property, they are somehow taking something away from the local population.

I understand where that feeling comes from.

Housing is emotional.  It is not simply an investment.  It is where people live, raise families and build their lives.

But there is another side to the equation.

If a wealthy individual buys a property that would otherwise remain empty, employs local businesses, spends money locally, pays taxes and funds their own healthcare, is that necessarily harmful?

And if that person is choosing between Gibraltar, Dubai, Singapore, Spain, Malta or somewhere else, why shouldn't Gibraltar try to win them?

We have an extraordinary proposition.

British legal and institutional structures.  A Mediterranean climate.  A major international business community.  A location at the gateway between Europe and North Africa.  And, following the treaty developments, a far more practical relationship with Spain and the wider European area.

Developments such as Elysium Bayside are themselves being promoted on the basis of attracting an international community and creating a mixed-use environment of residential, commercial and retail activity.

That is the point.

We shouldn't just think about the person buying the apartment.

We should think about the money that follows them.

Last month I suggested that Gibraltar had opened the border while pulling up the drawbridge.

Perhaps this month I am arguing for the opposite.

Perhaps we should lower it.

But not indiscriminately.

Let's be selective.

Let's attract people who create businesses.  Let's attract people who bring investment.  Let's attract people who create employment.  And let's attract people who have worked hard, accumulated wealth and simply want to spend their retirement here - whether that retirement starts at 48, 58 or 68 - provided they can demonstrate that they will support themselves and privately provide for their healthcare and long-term needs.

Because there is something slightly odd about saying that Gibraltar needs more economic activity while simultaneously turning away people who could spend their retirement savings here.

There is something equally odd about building thousands of new homes while restricting the number of people who can realistically live in them.

And there is certainly something odd about worrying about the economic health of Main Street while potentially telling a financially independent retiree that they are not the sort of person we want.

I don't think the answer is to abandon the safeguards.

I think the answer is to make them more intelligent.

Gibraltar is too small to have an open-door policy.

But perhaps it is also too ambitious to have a closed one.

The opportunity is to create a residence system that asks a much more sophisticated question than simply:

“Can this person live here?”

It should ask:

“Will Gibraltar be better off because this person lives here?”

If the answer is yes, perhaps we should be making it easier for them to come.

After all, if we are going to build homes for a population that could one day be considerably larger than the one we have today, we are going to need to decide who we actually want behind those front doors.

And perhaps some of them should be people who have already made their money elsewhere, have their own healthcare, their own home and no intention of asking Gibraltar to fund their retirement.

They just want to spend it here.

I can't think of many reasons why we shouldn't want some of that money walking down Main Street."