Spanish Sales Surge in Renewed Investor Confidence
April 16th, 2010
A surge of foreign lifestyle buyers and investors has split the Spanish property market.
Sales are up 200% in some regions compared with 2009 – despite the Bank of Spain claiming that last year was the worst in a decade for foreign property investment in Spain.
“Parts of Spain are doing really well at the moment but there are two completely different markets,” said James Dearsley, European sales manager at agent Atlas International. The company has reported a significant increase in sales since November 2009.
The split has seen lifestyle buyers choosing less built-up areas such as Marbella, where prices are at their most affordable level for years. Meanwhile, investors are looking for distressed bargains in over-developed locations such as the southern Costa Blanca.
Exclusive locations
Building restrictions in Marbella over the last few years have kept stock levels relatively low, while a glut of homes has emerged in other destinations on the Costa del Sol. Total property sales in the city have risen to their highest level in four years, research from the tax office shows.
Developer Taylor Wimpey de Espana has seen first quarter sales to foreign buyers at its Marbella project rise by 150% compared to the same period last year. And it’s a similar picture in Mallorca, where sales have risen 200%.
“The British know Andalucia and Mallorca are premium locations and are taking advantage of interesting current prices,” said sales and marketing director, Victor Sagué.
“In areas like Mallorca and Marbella the offer is quite limited already. Costa Blanca is absolutely different. There is a lot of oversupply and therefore developers are reducing prices to keep selling.”
Bargain investments
In places such as the southern Costa Blanca, over-development and a high number of repossessions have given buyers the upper hand in negotiations.
“The resale and repossession market in places like Torrevieja on the Costa Blanca is unbelievably strong,” said Dearsley. “Investors want to get a deal, or at least the perception of a deal, and sellers are willing to negotiate.”
Bank repossessions agent CAM Mediterranean is currently making two-thirds of its international sales in the southern Costa Blanca. “The other areas of the country don’t even come close to competing with this figure,” said CAM’s director of international investments, Alfredo Milla.
He added that CAM hasn’t changed its prices since 2009 but foreign investors have regained their confidence. He said: “It’s no longer deemed financially irresponsible to buy a second home here in Spain in this new optimistic climate.”
Story from OPP
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Directly contradicts your article on 13th April: “Foreign Buyers in Spain at Decade Low”
Bottom line is Spain is still for the most part very expensive if you compare it to the rental yield you obtain. Spain now looks expensive compared to even London with current fx rate.
Question buyer has to ask himself is with the 10% of ‘gastos’ (tax) associated with a purchase, if you are buying a 400 or 500k property, you would be able to rent a similar property for 4-5 years before your rent has even covered the tax and fees (i.e. 40 to 50k) . This market will continue to deflate… it will take a long and painful time, but proposing that Spanish property prices are likely to rise seems a bit like very wishful thinking… There is nothing to support it at all.
We’re in Madrid where we live and work and I see no value up here at present at all. The Spanish stubbornly list their houses at 2007 prices and the houses don’t budge. Southern Costa Blanca is a different market altogether, but hardly representative of rest of Spain. With 20% unemployment, 1 Million unsold homes and negative GDP forecasts, just can’t see where the capital growth is going to come from.
I think Christopher Boas is spot on. This article is so way off track, I am surprised that Kyero would print such inaccurate material.
Hi Laurie, we print the articles we think you should be aware of – not necessarily only those which we happen to agree with.
Generally speaking, OPP articles are reasonably well-researched and articulated, which often makes their viewpoint a valuable contribution to understanding the Spanish property market.