Friday 18th December 2008
Increase in demand for Spanish rentals
The downturn in perennial hotspot Spain’s fortunes has been given a lot of column inches of late. Still it’s not all doom and gloom – in fact, if you are a second home owner in Spain, the current crisis could well be a blessing in disguise...
Spain has topped the list of Europe’s most popular countries to emigrate to more times than I can remember.
The sun, sand and sea proved a killer combination and tourists and investors flocked to Spain in droves, causing property prices to sky rocket.
Then the credit crunch came and prices in Spain started to fall, compounded by a glut of unsold apartments built by overenthusiastic developers eager to cash in when the market was piping hot.
Spanish properties have fallen by around 6.5 per cent year on year, it was reported last month and experts have predicted that the decline will continue well into next year with an annual fall of around nine per cent.
So, with prices falling and no sign of an upturn in the near future, buyers are not entering the market, which opens up a good opportunity for second home owners as more and more people look to rent rather than buy.
With the demand for rental accommodation rising, due to people finding it harder to secure mortgage financing and reluctance to buy into an unstable market, second home owners who do want to rent out their home should see stronger demand and higher returns than ever.
Over the last few months we've seen an increase in the number of people who are looking to rent somewhere for a period of around three months.
Some are waiting to see what property prices do and if the Euro/Sterling exchange rate improves, while others are still trying to sell their UK home in order to finance their property purchase in Spain.
Cash buyers who are ready to move fast want to be in the location in which they want to buy in case a real bargain does come onto the market. Buyers who don’t require mortgage finance can snap up a goodie as many desperate vendors and developers are reducing prices by a whopping 30 per cent.
Spanish locals are also wary of the current market and are looking towards the rental sector, something which is traditionally dominated by tourists and expats looking to start a new life in the sun.
Prior to the economic crisis that is sweeping the globe, only a tiny minority of Spanish nationals opted to rent rather than purchase their own homes.
But, as often happens in a crisis, things change and more and more Spaniards are now joining the hoards of tourists and expats enquiring about rental properties in Spain.
Tuesday 3 October 2008
Spain Remains Nº1
Despite Spain’s property market downturn, the country remains the number one holiday home destination for Brits buying a home overseas, followed narrowly by France in second place, according to an overseas property ‘hot spots’ report compiled by overseas mortgage company Conti Financial Services.
Sunday 27th April 2008
The Pain In Spain Can Be Someone´s Gain
A market saturated with product, an economy built upon a once booming property development industry, a world wide economic recession, the pound losing ground to the euro, scare mongering in the European press, failing property prices, developers closing, corruption cases opening. All of the above and much more have recently being making headlines in the European press not to mention the Spanish press themselves.
So why would anyone buy in Spain right now?
Well as the saying goes ‘Every cloud has a silver lining’ and now is the time to cherry pick when looking at property in Spain. Of course we are all hearing the terrible stories about the Spanish property market, but in reality are things really that bad? Or is the market just emerging from its cocoon of youth and boom to a more mature and relaxed state?
In 2007 Spanish property sales fell by 12.4% in new homes and 15% in resales. The IMF have now announced that Spanish property prices will need to drop between 15% to 20% in real terms before they return to their fair value.
So with those thoughts in mind the savvy buyer can now snap up a bargain. As long as they choose the right property in the right location, Spain’s Pain can certainly become their own gain.
Thursday 24th January 2008
Euribor rate down 0.5% so far this year
The Spanish Prime Minister, José Luis Rodríguez Zapatero, has said that Spain is ‘better prepared’ than elsewhere in Europe to face the financial crisis. He joined the call of his Minister for Tax and Finance, Pedro Solbes, in making a call for calm.
Speaking at the Socialist party headquarters in Calle Ferraz in Madrid, Zapatero said there were objective reasons to keep calm. He said Spain was travelling in the ‘safe boat of the Spanish economy’, although he did admit that Spain was not immune to the globalised world.
The Partido Popular spokesman for the economy, Manuel Pizarro, speaking about the recent falls on the market, said that the party was over and now it was time for the hangover. He said no party goes on forever.
The IBEX 35 responded well to the emergency 0.75% cut in interest rates in the United States yesterday, and ended Tuesday up 1.69% at 12,839.70. Today however the market has been sliding back and was down 1.5% at mid-session. That has come following a message from the ECB indicating they will not be moving rates in Europe and also because of a slow down in the services sector.
Some observers have been saying that the Madrid market was down, in line with others across Europe, because of the inflexible policy of the European Central Bank, which has not reacted to the interest rate cut across the Atlantic.
The President of the European Central Bank, Jean-Claude Trichet, has made it clear that the objective of the bank is to control inflation, and that is why no interest rate cut has been made today. He said he did not want to add to the volatility in the markets and called for the financial institutions to better run their own houses and be more aware of the risks of some of their operations.
The good side of the changes on the markets has been for mortgage owners in Spain with the Euribor rate down 0.5% so far this year, to now stand at 4.305%. There have also been price falls seen in raw materials and oil, which is now far below the 100 $ a barrel level.
Hotel prices in Spain increased by an average of 2.5% in 2007, according to the INE National Statistics Institute. Last year saw 272.7 million overnight stays in Spanish hotels, a number up by 2.1% over 2006. Residents of Spain were up in hotel stays by 1.6%, non-residents by 2.5%, and 48% of all the stays were during the summer months, between June and September.
The numbers come the day after the Government announced that last year saw record tourist numbers in Spain last year at 59.2 million.
The Banco Popular has announced a 22.8% hike in profits for last year, to take them to 1.26 million. The numbers follow those from Caja Madrid which announced record profits at 2.86 million. President of Caja Madrid, Miguel Blesa, noted however that there has been a ‘brutal’ increase in the number of bad debtors, up 31% over the year.
The Colonial real estate company, the second largest in Spain, has today been studying the take over offer from General Electric. The board has been meeting to discuss what is now a formal interest expressed by the Americans under their subsidiary GE Real Estate Iberia, although any offer would be subject to due diligence.
Thursday 25th October 2007
Off plan investment property opportunities
There are still plenty of good long-term off plan investment property opportunities in Spain, it has been claimed.
According to Off Plan International, investors in Spain now realise that longer-term capital gains are available and are prepared to buy off plan property and then stay in the market for a few years.
In addition, there are still areas that are at the peak of development, with an abundance of properties waiting to be bought and let out.
"Spain is still a popular place for Brits to invest. Rather than people investing and wanting their return back quickly, a lot of people are buying in a more educated way," said a spokesman.
In a new annual report on the international property market, the Association of International Property Professionals estimates that nearly £20 billion was spent by UK buyers on overseas homes last year.
The study shows that Spain and France are the top two markets for Britons buying property abroad.
Wednesday 24th October 2007
Costa Blanca?s newest property hotspot
Despite enjoying a unique micro-climate, dazzling architecture and unspoilt beaches, until recently the town of Villajoyosa has played second fiddle to neighbouring Benidorm. Now it?s about to become Costa Blanca?s newest property hotspot. Located 30 kilometres north of Alicante on the Costa Blanca, the town of Villajoyosa lies at the mouth of the River Sella. Colourful, vibrant and decidedly Spanish, Villajoyosa (literally ?joyful town?) is situated just south of Benidorm and is sandwiched between the mountains and the sea.
A bustling fishing port, the distinctive, brightly painted facades of the town?s houses were designed to guide the fishermen home from sea. Steeped in history, this is one of the few towns on the Costa Blanca that remains undiscovered, and property here is some of the most competitively priced in southern Spain.
Why Villajoyosa?
Villajoyosa has a colourful history, with the Romans building the first settlement here, but today the feel is overtly Spanish. The town has retained many traditional features, such as its fish market, and there are a number of restaurants along the harbour that serve some of the best seafood in the region. The town is also known for its production of chocolate. The old town has been declared a historic site, and it?s here that you?ll find the multi-coloured houses, Villajoyosa?s gothic church and a number of Roman bridges.
View properties for sale in Villajoyosa
Only 10 kilometres from Benidorm, residents can enjoy the perks of being close to such a major town, while avoiding the tourists that inundate the resort in summer. Couple this with friendly residents, a welcoming local community and the fabulous weather (the temperature rarely falls below 16 degrees Celsius) and you?re looking at a fantastic destination.
Saturday 9th June 2007
Talk of a Spanish property crash is premature
The health of the Spanish property market has been a hot topic in the British press since Madrid?s stock market plunged in April. Much of the coverage has taken a Spanish property market crash for granted, confusing the stock market correction with a housing market crash. Okay, the property market in some areas popular with holiday-home buyers is in the doldrums, and yes, there may be worse to come if the Spanish economy goes into a construction-lead recession in the next couple of years (I give this an even chance). But the truth is that the Spanish property market has not yet crashed. Far from it; the economy is roaring along with 4.1% growth, and the stock market is hitting new highs, having made up all the ground it lost in April by the middle of May. So reports in the British press of the Spanish property market?s demise are premature, to say the least.
One consequence of the crash headlines is an increase in the number of people turning up in Spain under the delusion that desirable properties can be had for a song. Even in today?s market quality still has it?s price, and buyers looking for cheap property rather than good value will be disappointed if they want to buy anything other than the growing stock of dross at the bottom of the market.
Having said that there are plenty of reasons for concern (over development, corruption, absurd town planning, et al), and there is no denying that a glut of certain types of property in some areas already exists, which will continue to push some prices down further. For what it is worth, here is how I see Spanish property prices in popular coastal areas evolving over the next couple of years:
Outstanding property: 10% of market, prices increasing above inflation (currently around 3%).
Quality property: 20% of market, prices rising with inflation.
Average property: 50% of market, prices falling between 10 and 30%.
Below average property: 20% of market, prices falling by over 30%.
MARK STUCKLIN
Spanish Property Insight
Foreign investors return to Spanish property
Foreign investment in Spanish property has increased by 33% in the first 2 months of 2007, according to figures from the Bank of Spain. Foreigners spent a total of 806 million Euros on Spanish property in January and February, compared to 606 million in the same period of 2006. This is the first increase since the end of 2003, when the value of foreign property investments in Spain started to fall, and suggests that the trend towards lower foreign demand may have turned a corner.
Younger buyers opt for Spain
Although Spain is usually thought of as a favourite among retirees and savvy property investors, younger people are beginning to plough their cash into the Iberian peninsula due to potential higher returns on investment than in the UK, according to leading experts in the industry.
A major survey by Royal Institution of Chartered Surveyors (RICS) earlier this month revealed that Spanish property grew by 11 per cent over the course of last year, and while this is four percentage points down on a highly successful 2005, this is still higher than the average UK capital appreciation of ten per cent.
Moreover, research published yesterday by the Spanish government showed that tourist figures were higher than ever before in January, potentially setting the tone for a record year for rental yields.
"Over recent years the market has experienced an injection of new life with the number of younger homebuyers looking to invest in a second home here steadily on the increase," said David Bexon, managing director of Smart New Homes.
But it is not just the monetary gains that are attracting second home buyers still in their youth.
Mr Bexon added: "We have experienced a significant change in the age range of our client base, with many younger buyers now looking to purchase a new home, either to move into and live in Spain permanently or to purchase for investment purposes.
"Younger homebuyers with families view Spain as a safe and reliable destination and with no jet lag and an improving number of attractions geared to families, including water and safari parks as well as water sports it is proving increasingly popular with this buying group."
A further reason why younger people are becoming attracted to Spain in particular is due to the rapid pace of construction in the country. The construction sector of the economy increased by six per cent and local reports suggest that building is continuing at a high rate in the country.
This has meant that the demand for properties has finally been met with substantial supply, meaning that buyers now have much more choice in the market and can be much choosier about the homes they buy.
But the old favourite locations appear to be of continuing interest of British property investors.
Lisa Griffiths, European sales and marketing manager of Taylor Woodrow de Espana, said: "We have experienced a continued demand for new homes in Spain, with typical tourist locations such as Mallorca, Costa Blanca and the Costa del Sol proving ever popular with our clients."
NEW FOR 2007, CLUB MONTIBOLI
During March 2007, Club Montiboli launched its initial offering of fractional ownership apartments in Spain. Choose between either the Costa del Sol or the North Costa Blanca. Example, for 120,000?, members get to stay for up to six weeks a year at "Los Jazmines", a luxury 3 bedroom Penthouse apartment located on the Costa Blanca.
Members own a share/shares in a Limited Liability company, the principle asset of which is a single property. By purchasing legal title in one specific property you gain access to a growing portfolio of luxury properties throughout Europe and the Mediterranean. Membership can be sold back to the club after 3 years and the refund will never be less than the initial investment.
?Club Montiboli offers members a combination of the experience of owning a share in a luxury holiday home and the upside of a property investment fund, but without the associated hassles of upkeep? says Scott Lucy, the club´s Founder & CEO. ?I call it ?experience investing?. We believe this is the future of holiday home ownership in Europe.?
TAX CUTS FOR 2007
From 1st January 2007, Capital Gains Tax on property sales and personal income for non-residents in Spain dropped from 35% to 18%. This change was ordered following the European Courts upholding a complaint that is was unfair for the tax to be charged at 35% for non-residents, but only 18% for Spanish residents.
Recent research from Mintel states that 800,000 Britons now own a second home abroad. Spain is the most popular location amongst more than four in ten respondents who have either already bought or who are looking to buy abroad. The change in taxation will benefit those Britons who live temporarily in or who work for short periods in Spain and are therefore not registered with the Spanish authorities as residents.
Ian Smith, head of European Operations at Halifax plc said:
"This is fantastic news for Britons living or working temporarily in Spain."
Over sixty five year olds who have lived in their home in Spain for the last three years are currently exempt from Spanish Capital Gains Tax.
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