The Latest Spanish Property News from Kyero.com
May 31st, 2007
So, you own a property overseas. Lucky you. And now you want to make it earn its keep by letting it out. Doing so successfully can be as tricky as buying the right place to start with, but don’t despair: rental success abroad can be yours, provided you follow some simple rules.
Essentially, holidaymakers and long-term corporate tenants are looking for the same thing: a simple, properly kitted-out flat or house in the right location that will fulfil their needs and is not full of dusty priceless antiques or ghastly plastic furniture. It needs to be spotless, workable and appropriately decorated.
So, leave the family snaps at home and choose framed pictures that won’t frighten anyone and, ideally, have a vague link to the location – arty black-and-white shots of local views, that sort of thing, to remind your tenant why they have chosen your property.
Even though your tenants have gone abroad, they will still want to keep in touch with home. “My top two tips for renting successfully are: a) install Sky and b) install a broadband connection,” says Mary McCallum, who runs Holidays Marbella (www. holidaysmarbella.com), which rents out properties on the Costa del Sol, in Spain. “People don’t want to go to a local internet cafe. They want to log on while they are in the holiday home so they can work and be with the family at the same time.”
Next, it is absolutely vital that you have someone on site who can manage your property for you. Renting by owner, as the Americans call it, sounds like a great idea and, in theory, will save you the 25% commission most managing agents charge. In practice, however, it will land you with a lot of problems, unless you really want to do it full-time and have air miles to burn.
Guests, whether long-term or not, need looking after – and this cannot be done by a disembodied voice at the end of a telephone. They need a reliable meeter-and-greeter and someone to orchestrate changeovers, not to mention cope with calamities.
Do you want your visitors to arrive in a dirty flat with unchanged linen? If not, you need to arrange a proper service for it. If the managing agent can find new tenants for you, so much the better. You’ll both have a vested interest in keeping the property neat and tidy.
Recently, one set of visitors to my flat in Paris left behind an entire drawer of new T-shirts. Another had her wallet pinched on the Métro. A third managed to flood the kitchen. All of the above problems were dealt with on the spot by Gail, my angelic Parisian agent. Not only does having a Gail save you the headache of panicking guests on the phone, or the colossal bore of physically having to go to Paris, Vienna or Cape Town yourself, but it impresses guests.
Indeed, an efficient and charming agent on the ground is one of the things that makes people rebook. And that, dear landlord, makes a 25% commission rate bearable. Finding one is easy: go back to your original estate agent, look in local papers, look on the net.
On the other hand, this does not necessarily mean you have to entrust them with the important task of finding tenants. If you are prepared to invest more time, you should market the property yourself.
Here, the internet is invaluable, and has virtually replaced other forms of advertising. In return for a flat fee, sites such as www. holiday-rentals.co.uk and www.holidaylettings.co.uk give access to thousands of potential tenants.
Tips for efficient adverts? According to Holiday-Rentals. co.uk, the average time spent on each page of a booking site is less than a minute – so the first paragraph should tell potential renters everything they need to know.
And make it memorable. “Paris love nest in the 9th arrondissement” is how mine starts. It seems to work. After a single explanatory paragraph, give further details on subsequent pages. Remember to put in contact numbers and important details (whether the property has a shower or a bath, for example). Tips on sightseeing would be handy, too.
If your property is not in the centre of town, come clean; make a virtue of it. Photographs are also crucial: I have a picture of a bath brimming with bubbles and surrounded by lit candles (it is a love nest).
The other key is not being too greedy. Offer your property at a decent rate, in line with comparable places. Then you can slash prices if you need to fill it up during slow months. August is the favoured time for discounts in Paris, but in Cornwall, it’s January. On the coast of Europe, the high season is essentially the summer months; in Asia, or the Caribbean, it is the other way round; and in some key cities (New York, London, Venice), there is no low season.
And please don’t do all your sums on the assumption that your holiday home will be let 90% of the time. This is unlikely – and unwise, because without any empty weeks, your property will have no time to recover.
I think 65% occupancy is perfect. In any case, because you have invested in such a great area, you’ll want to stay in your holiday home a bit. Won’t you?
May 30th, 2007
Despite the recent property crisis in Spain, Tenerife’s property sales are still rising. Reports that the housing bubble in Spain has burst have led to an increase in property sales elsewhere around the mainland. Tenerife, fortunate to have all year round perfect weather, is well placed to cater for the large number of people from the UK wishing to purchase somewhere in the sun. Tenerife must be viewed as a ‘micro-market’, operating within the larger Spanish economy but independent to factors affecting a crash from the Spanish market.
The property boom in the Costas looks to slow due to an over supply of property, corruption scandals and land grab issues, diminishing the confidence of the buyer.
In 2001 the Tenerife government voted a moratorium on new touristic building, limiting the supply of new homes thus preventing over building. Despite the restricted supply, with no artificial media frenzy similar to that incited on the Costas, price rises were more moderate.
Currently, property in Tenerife continues to rise in value, while the Costas stagnate and are even expected to drop in the next 12 – 18 months.
The foreign buyer market remains strong in Tenerife. Research shows 42,000 homes are owned by the British alone, and property owners are achieving high rental income.
The incentive of year long sunshine and the increasing number of tourists, 6 million in 2006, has led to a demand for low cost flight operators to obtain new routes.
Tenerife’s resident population is one of the fastest growing in Europe. New mortgage lenders and applications are increasing and rental costs are high, encouraging locals to buy as soon as they can and ensuring local demand remains strong.
These factors combined with future predictions, would indicate that demand for property will be rising correspondingly, due to the close correlation between the number of visitors to the island and the number of properties sold to foreigners.
The future for property in Tenerife remains positive. A recent report commissioned by Halifax Holiday Insurance Services identified that almost all popular destinations of today will experience dramatic change by 2030. However, research has shown Tenerife will be relatively unaffected by global warming, experiencing only a few more tropical storms and some coastal erosion. It is only a matter of time for property pundits to jump on the global warming band wagon and start to analyse the effects on the international property industry, and when they do, Tenerife will benefit enormously.
May 29th, 2007
The Channel 4 hit show A Place in the Sun has again been in the Costa Tropical, Granada, Andalucia, Spain and featuring the beautiful Marina Del Este in La Herradura, enlisting the help of local property professional Nick Westby of www.wisemovetospain.com.
The Costa Tropical again features highly in one of the most popular overseas property shows on TV. A Place in The Sun were out in force to film there latest series and highlighted the beautiful bay of La Herradura and its famous Marina del Este. The marina is situated on the Punta del La Mona, which is in the top ten most exclusive areas in Spain. This peninsula is home to million euro villas by the plenty and provides a holiday home for politicians and business men from Madrid and Barcelona.
La Herradura has become massively popular in the last six months with the opening last month of the latest section of the A7 Mediteranean Motorway The TV crew worked tirelessly to find the right property for their clients and enlisted the help of Nick Westby who works as a relocation agent throughout the Costa Tropical. Wise Move to Spain search all the agents and vendors selling directly to find the perfect properties for their clients. They succeeded yet again and the clients loved the luxury 3 bedroomed townhouse over looking the marina, having sifted through over 100 potentially suitable properties for sale.
Look out for the programme over the next few weeks.
May 28th, 2007
Come 1 July, Spain will have a new land law aimed at part in curbing ‘exorbitant house prices’.
Passed by Spain’s upper house of Parliament, the Bill targets speculators and planning corruption by requiring disclosure of all owners of land being developed in the previous five years within official documents. Local government officials will also have to list their land ownership.
There will also be tougher tests imposed on developments likely to increase a town’s population by more than a fifth. Meanwhile within major developments, 30 per cent of new housing will have to comprise affordable housing.
Some planning decisions taken in the last two years will be open to review.
Housing Minister Maria Antonia Trujillo said he believes the measures will ensure a ‘soft landing’ for the property market.
Introduction of the law follows a series of planning scandals in Spain, notably in Marbella but also in other towns, worries about over building, and, more lately, about the price of housing.
Gary Weston of Murcia specialist Weston & Dubois, which operates investment purchase plans tailored to fly to let buyers, said the new law is a ‘step in the right direction’ and a step away from corruption. Requirements for social housing and availability of Government subsidised mortgages would help younger Spaniards get a foot on the property ladder but other than increasing confidence, would be unlikely to have direct impact on the market for overseas investors, he said.
‘There has been oversupply of properties, especially in developments sold specifically to investors who had no intention of completing. The result is that hundreds of identical properties come onto the market at the same time.
‘My advice to investors is always to look for phased developments with distinct differences between the properties in each phase’.
Despite recent fears over a slump in the Spanish stock market and continuing battles with the Spanish authorities over ‘land grab’ laws, Alicante in eastern Spain has seen a 9 per cent rise in property prices since January 2007, the English language Spanish property portal Kyero.com has reported.
The average price of a property in Alicante province now stands at £170,600, equalling the Spanish national average. Average property prices have been rising steadily since the beginning of the year, said Kyero.com managing director Martin Dell. ‘Compared with the national average property price increase of 2 per cent in the same period it is clear that demand is and will remain high in Alicante province. Some 20 per cent of all foreign property sales in Spain were located in Alicante in 2006 and I see no reason why this should reduce in 2007’.
May 24th, 2007
Many Britons dream of owning a property in Spain, but research shows that when buying property abroad, only three in ten Britons have a survey carried out.
Banco Halifax Hispania believes that the importance of having a survey carried out cannot be overlooked when buying a property in Spain, as there are a number of things that could go wrong with the property which are not immediately obvious to the untrained eye.
Although surveying fees will increase the purchase cost, this sum is a relatively small price to pay for peace of mind, compared to the expense of trying to sort out unexpected difficulties in the future. It also makes sense to know exactly what you are buying into.
A professional surveyor will be able to identify signs of damage or causes for concern. Finding out about these potential problems at an early stage of buying may even help the renegotiation of a cheaper sales price to reflect the cost of repairs.
Banco Halifax Hispania has an approved panel of English speaking Spanish surveyors who can assist you during your property purchase. Banco Halifax Hispania can also recommend English speaking Spanish solicitors who will ensure that all aspects of the purchase, including planning permission, title deeds and other legal requirements are satisfactory and will investigate the property as thoroughly as possible. They will also be able to carry out searches and legal investigations and check that there are no outstanding debts on the property.
This process is likely to be much smoother if the surveyor in Spain is fluent in English and has local knowledge and experience of acting for British customers. It is also good practice to use an independent solicitor rather than one that has been appointed by the agent that you are buying property from, to protect your best interests.
Ian Smith, head of European Operations at Halifax said: “Our approved panel of independent solicitors and surveyors are all experts who can provide sound guidance and reliable advice and we recommend that anyone intending to purchase property in Spain arranges a consultation as early as possible. Few people would consider buying a property in the UK without instructing a solicitor or surveyor and the same care and consideration should be taken when buying abroad.”
Banco Halifax Hispania offers a range of current account and mortgages for Britons looking to buy a holiday home in Spain. It also provides an English speaking helpline within the UK for customers who wish to sort out their financial options prior to arriving in Spain. The helpline answers queries about what’s involved in buying in Spain and can arrange for the completion of mortgage and bank account application papers.
May 23rd, 2007
The number of occupied holiday lets in Spain has risen over the last 12 months, according to recent figures.
This is positive news for holiday homeowners in Spain in the wake of recent worries over the property market.
Overnight stays in holiday homes totalled 4.8 million, a rise of 2.2% on figures from the same time last year, and rents are also up, according to data from the Institute of National Statistics reported by Fly2let.
Spain remains popular with British holidaymakers, who represented 30% of lets, with Germans coming in second at 22% and Scandanavian tourists at 17%.
Overseas tourists accounted for 87% of holiday rentals.
The Canary Islands, Andalucia and Valencia were the top destinations for both Spanish and overseas holiday makers, according to the website.
There are more foreigners than Spanish residents in 15 towns in Alicante, according to the reported figures.
It also says that house prices in Alicante have risen by 9% since January.
May 18th, 2007
Martin Dell, Kyero.com: A recent article in The Daily Telegraph highlighted that property owners in Spain cannot legally let their property without a special licence. In many areas of Spain, even if the licence is applied for, it is rarely granted.
Of course, property owners cannot know whether a licence will be granted or denied until they apply. If the licence is not granted, the owner can no longer continue renting the property ‘under the radar’ as the vast majority currently do. Hence, most owners never apply for a licence, certain that it will be denied anyway.
This practice may no longer be viable, however, as a fresh crackdown by Spanish tourism and tax authorities over unlicensed apartments and villas threatens home owners with fines of up to €30,000.
I asked Richard Spiegal from holiday rental portal Espana Breaks for his opinion and experience.
“Most owners would have no problem if the authorities just issued licenses. In fact most would benefit from a set of consistent standards to follow. In Menorca they were taking a more pragmatic approach and allowing people to submit licence applications with every possibility of them getting passed. This means cash for local estate agents/architects (who do the paperwork) and legal renting which means quality tourists. It all depends which approach each region takes.”
Many home owners are reliant on holiday rental income to pay the mortgage on their home in Spain. If this source of income is no longer available or, worse, carries a real risk of financial penalty, many may be compelled to sell the property itself. Knowing that a property now takes an average of 39 months to sell in Spain, many homeowners face a very difficult choice:
- Continue to rent and accept the risk of a substantial fine
- Stop renting and apply for a licence to do so legally
- Attempt to sell the property in a difficult market
I believe that most home owners would opt to let their property ‘legally’ if given a real option of doing so. If you are renting your property in Spain (legally or illegally) I’d appreciate your feedback. Simply complete this anonymous 60 second survey. Once you’re finished, you’ll be able to see the results and we’ll publish a summary and analysis here in a month’s time.
May 17th, 2007
A short drive from the centre of the glitzy resort of Marbella on the edge of a banana plantation with views over the Mediterranean, the newly built beach front apartment seemed too good an opportunity to miss for Jack and Yvonne Burditt. The Devonshire couple were looking to invest their life savings on a home to spend their retirement in so they handed over more than €250,000 (£170,000) and moved in right away.
Three years later they are still there but instead of enjoying sunsets from their terrace they are keeping a watchful eye out for the bulldozers they fear will come to demolish their home.
The Burditts are among the many victims of an alleged property fraud that has rocked the town of Marbella on the Costa del Sol and landed more than 50 people including the mayor, councillors, developers, estate agents and lawyers in prison, pending trial for fraud, embezzlement and other charges.
In April the Madrid government took the unprecedented step of dismissing the entire town council after an investigation, dubbed Operation Malaya, claiming that it was embroiled in a network of bribes and corruption, siphoning cash from the huge construction boom of Spain’s southern coast.
It is alleged that under the chief of urban planning, Juan Antonio Roca, the town hall accepted bribes for, among other things, granting building permits on land not designated for construction.
It is thought that about 30,000 of the 80,000 Marbella properties built in the past decade have been constructed illegally, and at least 4,500 of these face court decisions on whether they should be demolished or legalised. Those in most danger of being flattened are buildings constructed too close to the sea or on public parkland such as the Burditts’ home at Banana Beach.
“It came as such a shock to us to hear that our building is on what is essentially green belt land and shouldn’t be here,” said Mrs Burditt, 83, who was assured by a local lawyer that everything was above board when she and her husband made the purchase. “Our block was listed on the local news as one of those likely to be demolished but we have heard nothing official. It’s torture not knowing what is going to happen.”
That sentiment is shared by scores of other British investors left in limbo as to the fate of their properties. Christopher Winter, a music producer from Rangeworthy, near Bristol, and his wife have £40,000 invested in a rural property in the hills above Marbella that they had hoped to rent out as a holiday home before reselling at a profit. “We paid the deposit in March 2003 and were due to take possession last spring but before we paid the final £100,000 we found out that the land was not designated for this type of building and it was therefore illegal,” he said. “The decision we have to make now is do we pay the rest and possibly throw good money after bad in the hope that the building is approved or do we pull out, lose the £40,000 and hope for compensation?”
It is not only foreign purchasers who are suffering. Thousands of locals have also been affected. Antonio Banderas, the Spanish actor, made headlines when it emerged that one of his properties could also face demolition for not having the proper authorisation.
Gwilym Rhys-Jones, an adviser and investigator at the Costa del Sol Action Group, which helps expatriates in the region to fight fraud, estimates that it could cost almost £4.5 billion to compensate those caught up in the swindle. “That’s the minimum figure officials say it will cost them to indemnify innocent parties caught up in Marbella’s building scandal,” he said. “It’s a nightmare for everyone involved as there is no way the council can afford that. As we now know, the town’s coffers have been drained by all the embezzlement and Marbella has been left poor.”
The true extent of the scandal is not yet known but is thought to run into billions. Initial raids as part of the ongoing Operation Malaya seized large amounts of hidden cash along with 200 fighting bulls, 103 thoroughbred horses, 275 works of art, a helicopter and four Porsches.
According to one local lawyer it was only a matter of time before such things were discovered.
“Of course everyone knew to some extent what was going on but there was so much corruption on all levels that it was impossible to fight it,” said Rafael Berdaguer Abogados, a property law expert.
Story from www.telegraph.co.uk
May 11th, 2007
NEW Polaris World Resort, now released - Prices from £99,000
La Isla del Condado is a development of just 396 apartments, uniquely situated on an island surrounded by the Great Lake of the Polaris World Golf Resort of Condado de Alhama.
La Isla occupies one of the resort’s finest locations - more than 1.5km of nature, surrounded by water with quays and viewing points, the Jack Nicklaus golf course, and the mountains in the distance.
La Isla will undoubtedly be regarded as one of the region’s most exclusive residential projects, with entry across a bridge to the island protected by 24 hour security.
A path next to the lake surrounds the island and leads to the exclusive Club La Casa, with coffee shop, swimming pools, terraces and gym. In addition, the expansive resort centre El Oasis is just across the great lake, and houses a range of superb amenities, such as shops, bars, restaurants, spa and water palace.
La Isla del Condado is located within Condado de Alhama, boasting three eighteen-hole Jack Nicklaus Golf Courses, and is just 10 minutes from sandy Mediterranean beaches and 25 minutes from international airports.
Prices start at 144,300 euros for a 2 bed apartment. With this unique location, limited availability and superb prices - La Isla del Conado is an unrepeatable opportunity.
More information and a full prospectus from Your Key to Spain
May 10th, 2007
Imagine what would happen if a prosperous Western nation threw open its borders, allowing immigrants to flood in virtually unchecked. Soaring unemployment, overstretched social services, rising crime, even rioting in the streets? Not in Spain.
Over the past decade, the traditionally homogeneous country has become a sort of open-door laboratory on immigration. Spain has absorbed more than 3 million foreigners from places as diverse as Romania, Morocco, and South America. More than 11% of the country’s 44 million residents are now foreign-born, one of the highest proportions in Europe. With hundreds of thousands more arriving each year, Spain could soon match the U.S. rate of 12.9%.
And it doesn’t seem to have hurt much. Spain is Europe’s best-performing major economy, with growth averaging 3.1% over the past five years. Since 2002, the country has created half the new jobs in the euro zone. Unemployment has plummeted from more than 20% in the 1990s to 8.6%, within shooting distance of the 7.2% euro zone average. The government attributes more than half this stellar performance to immigration. “We are very thankful for all these people who have come here to work with us,” says Javier Vallés, economic policy chief for Prime Minister José Luis Zapatero.
If anything, the worry is that Spain is a bubble waiting to burst. Construction, which accounts for 18% of the economy and is a major employer of immigrants, is slowing noticeably after a decade-long boom. A steep decline could trigger social conflict, which so far has been minimal—perhaps because about three-fourths of immigrants come from Latin American and European countries with languages and cultures similar to Spain’s.
For now, Spain is keeping the welcome mat out. Besides providing muscle for construction, immigrants care for children and the elderly, allowing more Spanish women to take jobs outside the home. They do backbreaking agricultural labor and take minimum-wage positions in restaurants and hotels. “Spanish workers don’t want these jobs,” says Marta Martín, who has recruited immigrant employees for the Madrid-based hotel chain NH Hoteles. And the government says immigrants’ tax and social security contributions exceed by more than 20% the cost of the public services they use.
Immigrants are weaving vitality into Spanish society, too. Stroll through Tetuán, a vibrant multiethnic neighborhood in north-central Madrid, and you’ll find an Ecuadoran bakery, a Moroccan furniture shop, and an everything-for-€1 store called Los Chinos because its owners are Chinese. On Calle Bravo Murillo, Tetuán’s main drag, mobile-phone stores and bank branches beckon with discounts on international calls and wire transfers.
“They understand now that we are a good market for them,” Ecuadoran immigrant Mercedes Factos says over lunch at San Francisco de Quito, a Tetuán café that serves Ecuadoran specialties such as fried yucca and toasted corn. Like many immigrant women, Factos arrived on her own and found a job as a domestic worker, sharing a room with a cousin until she saved enough to get her own apartment and send for her child.
Could Spain be a model for invigorating aging, slow-growth societies in Western Europe and elsewhere? Many economists say yes. “If you make your labor market more open and flexible, in a world where populations are more mobile and economies are globalizing, you attract people who want to work,” says Eric Chaney, chief economist for Europe at Morgan Stanley (MS) in London.
Yet in much of the developed world, immigration is seen as a threat. Anti-immigrant politicians have gained strength even in tolerant nations such as Denmark and the Netherlands.
Nicolas Sarkozy, elected President of France on May 6, ran on a platform calling for stricter border controls. A recent poll by Harris Interactive shows that only 19% of British and French think immigration is helping their countries, vs. 42% of Spaniards.
Certainly, Spain has some anxieties about immigration. A deadly 2004 train bombing in Madrid, blamed on a Moroccan-led terrorist group, underscored the risk of Islamic extremism, although there have been no major attacks since then. More recently, Spaniards have been alarmed by news reports showing African boat people trying to reach Spain’s Canary Islands. And there have been scattered incidents of anti-immigrant violence.
Compared to its neighbors, though, Spain has had special reasons to welcome outsiders. As recently as the mid-1990s it was an economic backwater with an aging population and per-capita income only 80% of the EU average, vs. 96% now. But lower interest rates and a healthy dose of aid from Brussels sparked a demand for labor.
To fill jobs, Spain looked abroad. Immigration rose from 57,000 in 1998 to more than 600,000 for each of the past two years. The biggest influx, about 800,000 since the mid-1990s, came from Ecuador, followed by Morocco and Romania. Spain, unlike France and Germany, places no restrictions on immigration from the EU’s new members in the old Soviet Bloc (see BusinessWeek.com, 5/1/07, “Germany to Keep Immigrant Labor Limits”).
Many from other countries arrived under the radar: An estimated 25% to 35% of the current immigrant population is undocumented. But Spain has been generous with amnesty, granting legal status since 2000 to more than 1 million who could prove that they were employed.
Many found work in the booming construction sector. Across the suburbs of Madrid, armies of hard-hatted workers speaking a babel of languages are building row upon row of apartment high-rises on freshly bulldozed hillsides. “If you work well, you always have work,” says Constantin Nitu, a Romanian who arrived in Spain in 1999 to work as a day laborer and now runs his own small construction business which employs other Romanian immigrants.
Now budding entrepreneurs are branching out into other sectors. Take Luminita Tecu, who runs a thriving bakery in the Madrid suburb of Coslada where she sells poppy seed pastries and other specialties of her native Romania. Trained as a nurse, she arrived in Spain in 1997 with little more than a suitcase, and took a job caring for an elderly Spanish woman while her husband did construction work.
By 2001, they had saved and borrowed enough from friends to open the bakery. When they wanted to expand the business two years ago, they easily got a $55,000 loan from a local bank. “At first my idea was to stay here for a year, earn money, and go back, but now I know I won’t leave,” she says. “I work hard, but my life is like a fairy tale.”
May 9th, 2007
According the National Institute for Statistics (INE) there are now 15 Valencian towns where foreigners outnumber Spanish residents.
All of the towns are in the province of Alicante, mainly in and around the areas la Vega Baja and Marina Alta. In San Fulgencio 73.9% of those who took part in the census were foreigners and in the same district Rojales was found to have the second largest foreign population (69.4%).
Following these two towns there were a handful of small towns such as Benitatxell, Llíber (63.7%), Teulada (61.9%), San Miguel (60.1%), Els Poblets (60.1%) and Calp ronda (59.7 %) whose foreign population outnumbered Spanish citizens. Foreigners living here were either EU pensioners in search of sunshine or young people from Eastern Europe, North Africa or Latin America in search of work. Just a few years ago Benitatxell was the only place where foreigners outnumbered the locals.
The European Office for Statistics (Eurostat) calculates that by 2030 the Communidad Valenciana will have a million more inhabitants due to the growing number of foreign residents coming to this area of Spain, an increase of 7.3% of the total population. Immigration into the area has continued non stop ever since it began decades ago.
Foreigners who have made their home in the Communidad Valenciana are a mix of nationalities consisting of Eastern Europe, Latin America, Africa and EU countries. In Algorfa, Alcalalí, Benifójar, L’Alfàs del Pi, Xàbia, Hondón de los Frailes and Torrevieja the proportion of locals made up approximately 50.3% and 57.4% of the population.
According to statistics from the INE the Communidad Valenciana has the second largest immigrant population in Spain consisting of 13.9% of the total population. The Balearic Islands is the first with 16.8% of the population made up of foreign residents.
The Valencianan regional government has warned of lack of resources to cope with its growing immigrant population. It has warned that the civil register could collapse under the significant increase in the number of marriage applications and application for foreign residence permits.
May 8th, 2007
Could you use another gin and tonic? Signs that the Spanish housing market is about to implode are jangling nerves among some Brits. A lot of previously smug owners of holiday homes, not to mention deeply tanned expats, are worried sick.
Last week, shares in Astroc - a Valencian property developer - fell sharply. That sparked a wider sell-off in Spanish housing-related equities, leading to fevered talk that the property market itself is about to crash.
Around 250,000 Spanish homes - a third of the country’s tourist properties - are British-owned. If prices do tumble, some of us could end up being burnt by our place in the sun.
While that’s worrying enough, much bigger questions loom. What would a property crash mean for the Spanish economy - the fifth biggest in Europe? And if the music stops in Spain, could the same thing happen here?
Spain’s property market has certainly over-heated. Since 1997, house prices have risen by an incredible 170 per cent. The resulting wealth effect has led to Spaniards borrowing more and more. Households, on average, are now shouldering debts exceeding 120 per cent of annual income.
The big concern is an over-supply of housing. The Spanish are building 620,000 homes a year - four times more than the UK, despite Spain having 20m fewer people. The number of new Spanish homes is expected to reach 800,000 this year. So there are justifiable fears not only that the market will run out of buyers, but that, if prices do drop, deeply indebted owners will be forced into distress sales, causing prices to fall even more.
That’s why Spanish investors are worried not only about property developers, but lenders too. Last week’s panic caused the share price of BBVA, Spain’s second-largest bank, to dip on fears it could ending up swallowing a bunch of bad loans.
This wobble on Madrid’s markets was made much worse because it came at a time when US real estate is suffering. But, amid all the doom and gloom, it is easy to lose sight of the bigger picture in Spain.
For one thing, while the share traders were screaming and the expats were fretting, data was published showing that during the first three months of this year, Spanish house prices rose at an annual rate of 7.2 per cent.
Yes - that was the lowest quarterly rise for a few years. But that’s a good thing. Property prices are slowing in Spain, as they will soon slow in the UK, but that is very different to an actual fall in property prices. I don’t think Spanish prices will fall - and here’s why.
For another, the market has been steadily adjusting for the past two years, with no sign of a collapse. The years of dangerous double-digit house-price growth have gone. Since 2004, the rises have been smaller and, therefore, more sustainable.
Also, the US and Spain are different. America’s real estate turmoil has been caused largely by greedy lenders extending loans to borrowers with bad credit-ratings - the so-called “sub-prime” market. Spain’s sub-prime market is minuscule in comparison.
It’s worth knowing, too, that the initial cause of last week’s panic - Astroc’s falling share price - was caused by something specific to that particular developer. The company revealed in its accounts that it had sold assets to its chairman - raising suspicions that it was trying to falsely support the market.
I accept that in some hyped-up Spanish holiday destinations there is the possibility of a small outright fall in prices. After all, there are lots of new properties around and, as a destination for home-buying sunseekers, Spain now faces competition from the likes of Bulgaria, Turkey and Morocco.
But even if prices do fall in some isolated areas, most British owners, having enjoyed large annual gains on their Spanish castles in recent years, will be able to ride out any storm.
Across Spain as a whole, though, I strongly suspect prices will continue to grow over the coming years - and, thankfully, more slowly than they have. And that’s why the broader economy will do just fine.
Spain’s economy grew by 4 per cent last year. A less frothy housing market will reduce GDP growth to 3.5 per cent, or perhaps slightly less. But that should be a source of relief, rather than concern.
Last week, Miguel Fernández Ordóñez, the govenor of the Bank of Spain, tried to calm a nation which, having looked at the shares of the property developers, was worried that house prices were about to collapse.
“You know what the stock market is like,” said Ordóñez. “It’s calm one day, goes up the next, goes down the day after that. It’s not always grounded in reality”.
Some Brits exposed to the Spanish property market may scoff at Ordóñez’s laid-back language. You wouldn’t hear that kind of thing from the Bank of England or the US Federal Reserve. But, whatever you think of his diction, Ordóñez is right. Gin and tonic, anyone?
May 7th, 2007
A recent report compiled by property consultants Aguirre Newman, has shown that the average time taken to sell a house on the Costa del Sol has risen to 35 months.
This is one of the conclusions in the report published annually which indicated a rise over the figure of 32 months in last year’s report.
The report has also indicated a slight fall in the average cost of holiday homes in the same period. Villas are taking longest to sell, with an average of 37 months (and even longer in Manilva and Alcaidesa) despite a slight fall in price.
To buy an apartment is now around 4.7% cheaper, corresponding to a 3.9% drop in the average price per metre and a general 1% drop in the average size of apartments. The cost of a two-bedroomed house of around 130 m2 built is in the region of 345,000 euros.
In Manilva the average price of a one bedroomed house is 212,686 euros with a constructed area of 75, 8 square metres representing an average price per metre of 2,806 euros.
As far as a two bedroomed house located in Manilva, with a surface area of 110.9 square metres you are looking at an approximate price of 263,670 euros, at 2.378 euro a square metre.
As for villas they have seen the greatest decrease, with the price falling by 6.3% in the last 12 months, this figure is largely due though to a reduction in the average built area of 10.7%, as the price per square metre has actually increased by 4,9%. This gives and average price, for a three-bedroomed villa of 211 square metres of 500,000 euros.
Another interesting fact to come out of the survey was that Marbella, which for the past two years has on average had the most expensive property, has been supplanted by Sotogrande which now sits at the top of the pile. Estepona has seen a 25% increase in property prices at the top end of the market.
The report also indicated that the number of Spanish purchasers rose against that of foreign purchasers, and fact that has been put down to ‘high prices’ and political and legal uncertainties. The supply of new developments is down by 6.3% with 23 projects in development less than the same time in the previous year. But the supply of villas has increased by 45% indicating a move away from high density construction.
The forecasts for 2007 indicates little increase in the number of units and a slight fall in property prices, however sales are expected to pick up in the second half of the year after the local elections in May.
May 4th, 2007
As fears grow in Spain that the housing market bubble will burst, should you sell up or hold tight?
Half a million Britons who own properties in Spain are being urged to hold their nerve after experts warned of an impending property crash that could wipe tens of thousands of pounds off the value of their holiday homes.
The Organisation for Economic Cooperation & Development warned that prices are now 30% overvalued as evidence grows that the decade-long boom in Spanish property is about to go bust.
Britons who have recently invested on the Spanish Costas could face steep losses if the predictions are correct. There are also worries that those who have bought into future developments could be left high and dry.
Analysts believe that most will be able to weather the downturn. Stunning gains over the past decade mean that anyone who has owned a property for five years or more should make a profit even if house prices plummet. For Britons considering a Spanish holiday home, a collapse in the housing market could create a golden opportunity to pick up a bargain.
Spain has long been the favoured location for Britons buying abroad. Nearly 32% of people who bought an overseas property last year opted for Spain, according to the AIPP international property market report, compared with 19% who bought in France, the second most popular country.
About 500,000 people have either retired there, or bought second homes or investment properties. Most have opted for coastal locations on the Costa del Sol, Costa Brava and Costa Blanca.
Over the past decade buying a property in Spain has been an almost sure-fire way to make money. The boom in the Spanish housing market has been even more spectacular than the one here in Britain. Property prices have risen by 270% over the past decade, compared with 209% in Britain.
Last week fears that the boom is over were sparked by panic selling of shares in Spain’s property firms on the Madrid stock exchange. On Tuesday, Spain’s leading stock-market index, the Ibex 35, fell nearly 4% while property shares plunged 20%.
The Spanish finance minister sought to reassure investors that the wobble in financial markets was unconnected with the strength of the housing market. He said the government still believed that house prices were heading for a soft landing rather than a crash. Many economists are not so optimistic.
Charles Dumas, chief economist at Lombard Street Research, an economics consultancy, said: “The country is overhoused, people are overindebted and the construction industry continues to churn out homes. The housing market in Spain is about to implode.”
In some areas the slowdown is already under way. Despite fears of a crash, properties have continued to be built in their thousands. With so much development, homeowners trying to sell properties that are only a few years old have been struggling to find buyers.
Mark Stucklin at Spanish Property Insight, a website that provides advice for people buying in Spain, said: “The market in the coastal areas, which are popular with the British, has been difficult for a couple of years. There was a real boom here, but this led to huge levels of development and supply is exceeding demand. Prices have already been slipping and many new properties are being sold for the same amount as those built two or three years ago.”
Britons who have bought property off-plan are particularly vulnerable if prices slide. Buying in this way means you commit to somewhere before it is built. It has been a popular option with speculators who intend to sell the property on when it is complete, netting themselves a profit. In a rising market this can be successful, but if prices slow they could end up with an investment worth less than they paid for.
Tim Hodges of The County Homesearch Company, a property finding firm, said: “Fundamentally, I think there needs to be a correction. The two-bedroom apartment market is most at risk because there is a glut of supply. “I would estimate that there is probably a 15% to 20% oversupply of apartments across the coastal regions.”
People who own property in Spain and are already thinking of selling are being advised to get out now before big price falls. For those who are thinking of buying, some analysts believe there will be good investment opportunities – if you wait and then choose carefully.
Hodges said: “I think there will be significant opportunities in villas that were built 15 to 20 years ago. The owners will have seen the value of their properties surge over that time, so the smart sellers will discount prices in order to shift them.”
Katy Katani at Grupo Lar Sol, a Spanish property developer, thinks the top end of the market will be less affected by the slowdown. She said: “I don’t think high-quality areas, such as the west of Marbella, will be badly affected although eastern Marbella and towns in the southern Costa Blanca, such as Torrevieja, could be hit because they are so built up.”
For many existing homeowners the simplest option is to sit out any downturn. This is what Cheryl Edwards, 42, pictured with her two daughters Sian, 13, and Alisha, 7, intends to do. Edwards owns a two-bedroom apartment in Villamartin on the Costa Blanca which she and her husband Chris bought three years ago.
The personal assistant from Walsall in the West Midlands said: “This is a holiday home for us and we are not planning to sell. You have to be slightly concerned about talks of price falls, but we like the location and still believe it will be a good investment over the long term.”
Tips for dealing with the fall-out
If you are planning to sell, you may have to accept a lower price than you would have achieved this time last year.
However, if you have owned the property for more than five years you should still be selling for substantially more than when you bought.
People who have bought in the past three years or have invested off-plan with the intention of selling it on completion may already be nursing a loss.
Unless you have to sell, it is probably worth waiting for prices to recover.
Do not expect the strong returns that have been seen over the past decade. Low single-digit returns are more likely from now on.
I was thinking of buying a property in Spain. Is it still worth it?
Experts recommend that you hold off until the situation becomes clearer, but a property slump could throw up some bargains.
Andrew Benitz at Titan Properties, a property investment adviser, said: “The market is undoubtedly swinging in favour of the buyer, and astute investors who do their research will be able to secure some fantastic properties as the market softens.” For up-to-date information about what is happening in the Spanish market look at websites such as spanishpropertyinsight.co.uk and kyero.com.
Are there better prospects in France and Italy?
France’s market is slowing after a decade of double-digit returns but it is not expected to crash. Therefore it might be a safer bet than Spain for Britons looking for an overseas bolthole.
The same is true in Italy where the rate of house-price growth has already slowed. Prices there rose by an average of 4% last year, according to Knight Frank, the estate agent, compared with 8.1% in 2005. The slowdown is set to continue this year, although price falls are not expected.
Analysts expect house-price growth across Europe to be in low single digits for the forseeable future. Investors who want to make a quick profit should therefore look elsewhere. Adam Cornwell at estate agent GEM Estates tips Brazil and Morocco. He said: “For those who want to make money, the best opportunities are in the emerging markets.”
Is it worth buying in America to take advantage of the weak dollar?
The cost of buying a property in America has plunged 11% over the past year as sterling has surged against the greenback. The pound broke through the $2 dollar mark a fortnight ago and is still at $1.99 to the pound.
This should have provided a golden opportunity to snap up a holiday bolthole, but the unsettled US housing market is putting off many potential buyers.
Nationally, house prices are expected to fall 0.7% this year, according to the National Association of Realtors.
In Florida, the most popular destination for British buyers, sales have slumped by nearly a third. There are bargains to be had, but risks of significant further falls remain, so only buy now if you are investing for the long haul.
David Dabby, a property analyst in Florida, said: “The market is trying to find its bottom, but it could take a while. I don’t see any significant appreciation in prices for at least a few years.”
You might also consider its neighbour, Canada, where the property market is still strong. The Canadian dollar has also weakened 11% against the pound over the past year.
How easy is it to get a mortgage?
Some British high-street banks and building societies, including Halifax, Lloyds TSB and Barclays, will lend abroad.
However, you can often get a better rate from a local bank, so seek advice from a specialist broker such as Savills Private Finance International or Conti Financial Services.
May 3rd, 2007
A growing number of expats in Spain have made their boats home. Finding a home in Spain is becoming ever more difficult, with prices in cities like Barcelona rising faster than in London and Paris.
But if you are determined to live abroad and already belong to that select few who aren’t landlubbers and own their own boats, why bother buying a place at all? There are none of the hassles of trying to find that dream place in the sun or even renting at what are increasingly exorbitant prices.
To those who have already fallen in love with life on the sea, home is aboard their own boats. Barcelona now has a small, but steadily increasing, colony of about 150 expats who have decided to capitalise on the pleasures of the Mediterranean climate and life in an international city. But they have set up home in the port, on their boats.
Port Vell is right in the centre of Barcelona, with some of its best beaches or the hippest parts of the city just around the corner. At the height of summer, if the tourists get too much, boat-bound expats can quietly slip away into the briny and head off to…well, wherever they want; the world really is their oyster.
What marks them out from expats who stop off at ports in other parts of Spain is a growing community of mainly retired ‘yachties’ who are here to stay. Elsewhere, they either stop off for a short while or they buy homes inland and enjoy their yachts when they feel like it.
Albert and Pamela Blackshaw, from Britain, are typical of the ‘new breed’ of Barcelona’s almost permanent residents. Sick of the British climate, they left their own country six years ago. They arrived in Barcelona, only intending to stay a short while, like many others before them.
Now they spend most of the winter docked at Barcelona, before sailing off to whichever Mediterranean islands take their fancy in the summer. They insist their life lacks for nothing in comparison with the more conventional existence under bricks and mortar – with one exception.
“The only thing that we do not have here is a garden,” admits Pamela. But she insists everything else you might want for is on board, from a fridge, heating, painting materials, books and even a piano. “This is a house; we have everything that we might need,” she says. “And it is much cheaper than to live in a normal house.”
Though maintaining a moorage in Spain is not as cheap as other countries in Europe, these confirmed yachties insist there are other savings to be made. Expats are taking to the sea in Port Vell, Barcelona. Yachts have to be maintained regularly, with motors and sails the most expensive outgoings. But according to Don Stewart, from Toronto, Canada, who lives in Port Vell with his wife, there are other savings to be made.
“What do you do when you break something? Often a person on a boat fixes it them themselves; a fridge, the heating, the toilet,” he says. For Stewart, living life on the high seas has been a dream since childhood. Since they gave up their life on terra firma, he and his wife have lived in 17 countries in the Caribbean and Europe, but want to apply for residence in Spain.
He confesses there have been some scary moments, like when their boat collided with a whale. They have stayed in Barcelona for two years. Their daughter has also made the move to Catalonia, but lives on dry land and is about to have a baby. Stewart says: “Barcelona is the best place; it is interesting and it is full of culture.”
But as he and his wife prepare to become grandparents, their life might be about to settle down somewhat. They insist that their way of life is much cheaper than a conventional way of living.
“We don’t have to pay for a car nor insurance. We don’t wear fashionable clothes and the food in Spain is much cheaper than in other countries, despite the arrival of the euro,” says Stewart.
A retired couple from Frankfurt, Germany, who did not want to be named, complained about the rising cost of moorings in Barcelona, particularly in high season. But apart from this they believed the life on the ocean waves was rejuvenating them. “Our family is proud of us because this is keeping us young,” they said. But they know their own limits and said they will probably return to life on land when their age makes life on a yacht impractical.
The colony of ‘yachties’ is not only made up of expats; there are many Spaniards too. Toni, who brought his wife and daughter to live on the boat, summed up why they had swapped their previous life for this less predictable existence. “We decided to go and live on a boat because we realised that we needed the tranquillity and liberty which it gives,” he said.
“I don’t have somewhere to park my car, but otherwise there are no disadvantages. I don’t miss anything.” Moorings in Port Vell, Barcelona cost between EUR 300-800 per month depending on the size of the boat.
