Realistic Optimism in the Spanish Property Market?
April 2nd, 2009
As prices in the world’s most popular second home destinations for international buyers hit rock bottom, interest rates fall and stock markets remain volatile, a growing number of industry specialists believe that the first signs of recovery in the market are being seen.
Leading the charge are high net-worth (HNW) individuals, according to the latest Wealth Report from Knight Frank, with 55% recognising present fundamentals and planning to increase their exposure to residential property over the next two years.
“In turbulent times the wealthy want their investments to be both tangible and transparent,” said Liam Bailey, head of residential research at Knight Frank.
HNWs are not the only ones looking for a relative safe-haven for their money at present. In spite of difficult economic conditions and significant falls in the value of Sterling, searches for international property on Primelocation.com increased in January 2009 by 72% month-on-month and broke through the one million barrier in February, according to data released on Friday.
Some analysts believe that the resurgent mortgage market in the UK is also behind the sudden rise in confidence.
“Further evidence that the pick-up in buyer interest in the housing market [UK] is feeding through into actual activity is evident in the latest mortgage approvals data from the Bank of England,” said Simon Rubinsohn, chief economist at RICS. “The number of mortgages sanctioned in February climbed to the best level since May 2008.”
Behind these fundamentals, a growing number in the industry are recording a rising level of sales.
“Considering the current economic situation, we are quite surprised as our rate of enquiries is actually increasing,” said Chris Mercer, founder of Spanish state agency Mercers. “These enquiries are from both Spanish nationals and Brits as well as other Northern Europeans. We made nine sales in the first seven weeks of 2009 which is very encouraging.”
Andrew Benitz, founder of Costa de la Luz-based agency Titan Properties, added: “Interest in Spanish property hasn’t really dwindled, it’s just the type of buyer who’s changed. Investors have all-but disappeared and it’s the lifestyle buyer who has stepped in keen to find a holiday home in the sunshine at a good price.”
Across Spain there seems to be a realistic, but optimistic sense that the beginning of the end could be approaching as more buyers discover the value.
“I believe that there will be enough volume of sales this year that people will start to wake up and think that they better get in now before prices rise any further and the bottom of the market is reached,” said Chris Clover, founder of Marbella-based agency Panorama. “This means that the beginning of a recovery can commence, with total recovery happening within three to four years.”
Spain is not the only market to record a rise in sales in the last few weeks.
In Florida, agents have reported an increase in activity, while in Italy, Luca Catalano of developer Realitalia, said: “March 2009 was our best month since maybe summer 2006. In fact we have collected a much higher number of contacts compared with recent months and we are seeing the come back of American and English buyers.”
Further east along the Med in Egypt, a rise in UK and French investor activity has also been recorded.
“We have fielded enquiries and had five inspection visits in the last few weeks for our Egypt development,” said Tahir Ali, from estate agency Egypt-Revealed. “We have also had our first queries for Tunisia which we launched last month and had our first sales confirmed. I think it’s a combination of low interest rates (meaning investors want out of the UK as their savings are doing nothing) and low outlay in these two markets. People are willing to risk £20,000 – £30,000 in two very promising emerging markets.”
In Cyprus, two of the island’s biggest developers have also reported a recent upswing in transactions in just the last two weeks, mostly from the UK and Russia.
“I believe that with the latest announcements from the strong economies of this world, people feel a bit more confident now, it is a matter of pure psychology, the market has its ups and downs, but will not last for ever and more investors are realising this,” said Panayiotis Michaelides, group marketing manager for Cypriot developer Aristo.
Pantelis Leptos, vice chairman of developer Leptos, agreed, adding: “Over the last few weeks, as the UK mortgage market has improved again, there are definite signs that the British second home buyers are back in Cyprus. In March, Leptos Estates has enjoyed a marked increase in enquiries. In the past month, there has also been a growing number of enquiries from and sales to international buyers from around the world, particularly Russia and other established Leptos markets.”
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