Property News from Spain

The Spanish Golden Visa is an excellent way for a non-EU resident to get automatic residency and free right of movement around the Schengen area of Europe. Many countries offer this type of visa for non-EU nationals but the Spanish Golden Visa has many more advantages over those offered in other countries and is most certainly worth considering if you are after EU residency, especially after Brexit.  The Spanish golden visa program has been very popular because it is clear and very prompt. An investment of €500,000 € in the real estate sector will give you the right to family residency. The visa can be renewed every second year and after five years it is possible to gain permanent residency and then after ten years, it is possible to gain citizenship. One main advantage of the Spanish golden visa program is that it is not necessary to live in Spain in order to retain and renew the residency visa permit.

So what is required to get the Spanish Golden Visa?

The easiest and most normal way to get the Spanish Golden Visa is through the purchase of a property or multiple properties for which you have paid at least a total sum of €500,000. This is the minimum investment. As stated you don’t have to do this in one go, you can buy various properties and spread out your investment.  The property or properties, either residential or commercial can be rented out for income. Also, joint investors can combine investments into one or several properties. The property can also be mortgaged for any investment exceeding the minimum amount.

Briefly, what are the advantages of The Golden Visa in Spain?

1. It can be for one or multiple properties

2. It can be anywhere in the country and isn’t limited to one specific location.

3. There is no time limit to meet the investment minimum. You can buy one property now and add then add to your 500k investment portfolio further down the line.

4. Previously bought properties can also be included in your 500k investment portfolio. If you already have a property in Spain that can be used as a part of the investment or if you have already paid over 500k for it then you have already met the requirement.

5. It allows the whole family unit to have freedom of movement in the Schengen area of Europe. This includes children under 18 and parents if they are dependant on you. Children over 18 will need to apply independently unless they are legally dependant on you as well.

6. You do not have any obligation to be in the country, not even for 6 months. Even if you don’t spend half the year in Spain, which is a requirement of a normal residency visa, you will not lose your Spanish Golden Visa.

When comparing current prices to the prices of properties at the beginning of 2020, in nine autonomous communities the price of apartments has increased, while in ten others we can see an increase in single-family properties (detached, semi-detached and terraced housing).

The largest increases in single-family property prices were registered in La Rioja (5.6%), the Balearic Islands (4%), Andalusia and the Valencian Community (both with 3.9%). But there were also falls, in places such as Castilla y León (-3.2%), Aragon (-2.2%) or Navarra (-1.5%).

The main increases in apartment prices in January were reached in Extremadura (5.8%), the Basque Country (4%), Asturias (3%) or La Rioja (2.8%). While in Andalusia (-1.6%), Castilla y León (-1.4%) or the Canary Islands (-1.2%) fell in the year of the coronavirus.

The highest prices for apartments for sale can be found in Madrid (3,115 euros / m2), the Balearic Islands (2,979 euros / m2), the Basque Country (2,787 euros / m2) and Catalonia (2,536 euros / m2). The cheapest, however, are seen in Castilla-La Mancha (963 euros / m2), Extremadura (1,038 euros / m2) and Murcia (1,046 euros / m2)

Regarding single-family homes, the highest prices have been established in the Balearic Islands (3,275 euros / m2), the Basque Country (1,901 euros / m2), Madrid (1,883 euros / m2) and Catalonia (1,805 euros / m2). On the other hand, the prices of the most affordable single-family homes are in Castilla-La Mancha (730 euros / m2), Extremadura (743 euros / m2) and Castilla y León (84 euros / m2).

If we zoom in at the provincial level, 24 provinces saw house prices rise compared to 26 data declines in the rest of the regions. The situation of the flats was somewhat better, with 27 provinces rising versus 23 falling.

Looking at the single-family home map, the highest increases were recorded in Malaga (10%), La Rioja (5.6%), Lleida (5.2%) or Cáceres (5.1%). While the most pronounced decreases can be observed in Palencia (-8.4%), Huesca (-7.4%) or Córdoba (-5.4%).

Regarding the flats, the most notable increases can be seen in the provinces of Guipúzcoa (8%), Cáceres (6.8%), Badajoz (5.3%) or Cuenca (4.7%). On the other hand, the most notable falls in horizontal housing prices have occurred in Córdoba (-5.8%), Salamanca (-4.7%), Palencia (-4.4%) or Ciudad Real (- 3.8%).

Among the prices of the most expensive villas, the Balearic Islands once again topped the list (3,275 euros / m2), this time followed by Malaga (2,377 euros), Guipúzcoa (2,185 euros / m2), Girona (2,016 euros / m2) or Barcelona (1,931 euros / m2). All their prices increased in the year of the coronavirus, except Guipúzcoa, where it has fallen by 1.7%.

The cheapest single-family home in Spain can be found in Cuenca (560 euros / m2), Ciudad Real (608 euros / m2), Ourense (680 euros / m2) or Jaén (695 euros / m2), all with falls during the last year.

Regarding flats, the provinces with the highest prices range from 3,298 euros / m2 in Guipúzcoa, 3,115 euros in Madrid; the 2,979 euros / m2 in the Balearic Islands; the 2,969 euros / m2 of Barcelona or the 2,732 euros / m2 of Vizcaya. Of these large markets, the Balearic Islands (-0.3%) and Barcelona (-1.3%) had year-on-year falls.

Toledo (808 euros / m2), Ciudad Real (861 euros / m2), Ávila (899 euros / m2), Jaén (932 euros / m2) and Cuenca (947 euros / m2). mark the cheapest areas in Spain.

The uncertainty in the real estate market for sales as well as rentals, generated by the economic crisis as a result of the pandemic and restrictions on activity, makes it very difficult to forecast how prices will evolve. According to the Offical College of Real Estate Agents of Spain (COAPI), the decrease in the purchasing power of buyers may lead to a reduction in prices, but there are also other factors that may affect the future evolution of prices.

"If we dared to generalise, which we wouldn't recommend, we could speak of downward adjustments generally speaking, but with an upward trend as demand rises again in the mid-term," they stated. “But it is too risky to make forecasts. To give us an idea, even what happens with the regulation of rentals will influence the price trend. If properties that were destined for rentals move onto the sales market, that will change everything."

In an analysis of micro-markets segmented by neighbourhoods, type of housing or types of market, it can be seen that property prices have not only not decreased, but actually increased. "This is happening with commercial premises located in non-prime areas, as a result of an adjustment in prices increasing since 2008".

When it comes to housing, real estate agents once again emphasise the role of location. Used housing in central areas may have a better evolution than any new housing available in less privileged locations.

Owners and investors are waiting for the new Housing Law and the possible regulation of rental prices before reacting. "In the free market, everything is regulated by the laws of supply and demand: an 'external' intervention causes supply to be reduced and, if demand increases at the same time, the result could be totally different from what was originally expected", they affirm from COAPI.

Among the factors that could occur with a limit to rental income, the most important is a greater demand on the tenant's profile, tightening the conditions of access to housing and consequently penalising the most disadvantaged groups.

On the flip side, the second-home and holiday-residential markets have seen a lesser drop in demand despite mobility restrictions, a drop in tourism and a decline in local demand. From COAPI they point to technology and the innovation of real estate agents as the reason for cushioning the fall, thus also carving a path to recovery in the future.

“Our API colleagues have been able to reinvent themselves, prospecting in other markets that were not the traditional ones and using technology as they had never used it before. Perhaps, thanks to this, the coastal market has been reasonably maintained” explains the COAPI spokesperson. "It is true that there is still fear and uncertainty, but also a lot of desire to work and innovate that, fortunately so far, has mitigated the situation."

(Source - COAPI)