Buying In Spain - It's Never Been Better!

Published on 18/02/2008 in Investing in Spanish Property

Property in SpainDespite lots of negative press to the contrary, I truly believe that there has never been a better time to buy a Spanish property. There have been too many reports, none more so than recently, surrounding the decline of the Spanish market and imminent crash that surrounds us. However, by looking beyond the brash headlines to gain even the smallest understanding of today's market, you will see that in fact, it couldn't be further from the truth.

If we rewind back to April last year, we witnessed a European media frenzy over the poor state of the Spanish property market. These rumours we can lay at the feet of the demise of Astroc Mediterranea S.A, a construction company from Valencia on the Spanish stock market. Share prices experienced an unprecedented dramatic rise, closely followed by an equally dramatic fall which ultimately led to not only the bankruptcy of the company, but a knock on effect on other companies in the industry whose share price also fell, some quite significantly.

Almost immediately followed a tidal wave of dramatic reports from the likes of Bloomberg which consequently made their way in to our newspapers, about how the so called Spanish bubble had burst and we were all in a terrible mess. They failed to report on those affected share prices rising back up, following what is only a natural chain reaction when one of the largest companies in that sector goes bankrupt.

Now let's take a look at what the newspapers don't want you to see. Acciona Infraestructuras, Spain's leading construction company, are building one of our newest developments, Las Colinas de Campoamor Golf Resort, the largest resort of its kind in throughout the whole Mediterranean. Investment to date for this development alone stands at an incredible 850 million euros, not exactly what you would expect if the market was in the turmoil that we are led to believe it is. The point is this, the Spanish property market is very regional and fragmented and you simply cannot draw conclusions based on the downfall of one company in one city.

I am in no way denying that the market of today is not the same as it was yesterday, of course it has changed rather dramatically. I do however consider these changes to be vast improvements and just the beginning of what we can expect to see in the future.

The first obvious difference is naturally the prices. Spain has always been a popular destination due to property prices being a lot lower than in Norway, the cost of living is significantly cheaper so therefore people were flocking to Spain as an obvious destination for living out their retirement. Spain today attracts a different client with not only higher demands but also a completely different profile. More and more young people and families are choosing the area as their new home, bringing with them various entrepreneurial skills and new business ideas, thus increasing the services and facilities on offer in the local area.

An all too common mistake to make is to compare Spain's market to the likes of some of the newer markets like Brazil, Cape Verde and Turkey. These countries have really opened up in recent years and are experiencing unprecedented growth. Easy to see why with the world being a smaller place today, destinations further afield are more accessible and travel costs are lower. Infrastructures are basic, facilities and amenities are limited but yes, prices are low. Looking simply at the numbers, Spain cannot compete with these markets on a price only basis.

However, if we revert back to the client, it is also fair to say that Spain is in no way in competition with these countries as it is not offering the same and therefore fulfills different demands. If you want to buy cheap for a short term investment, selling on completion, taking your money and running, then Spain is not for you and you should definitely consider another market place entirely. Looking at how Spain's market has evolved over the years we can predict what is going to happen in these emerging destinations. Right now, people are snapping up whatever they can get their hands on as they have been promised high returns on their money with rapidly increasing house prices. The supply is there and at the moment at least, the demand is there to match.

Buyers are investors and most of them don't even think twice about which country the property is in, if the price is right, they will buy. They are not looking for somewhere to move to, maybe not even anywhere to visit, they want to invest, make money and get out. However, this is not going to last, it didn't last in Spain so why should it last anywhere else. What you will be left with is a lot of properties for sale in an underdeveloped area where no one wants to invest as the next market has opened up. Spain has been through this stage and has come out the other side. Gone are the days of selling en-masse to the investors that are queuing up. We are now selling properties of a much higher quality than before to people that want to enjoy a life in Spain. The market has shifted.

Looking at the Spain of today, specifically the Costa Blanca and Costa Calida where we sell, the outlook is positive. The market has slowed and as I mentioned before, the mass market is not here any more. What we do have is a lot of serious investment from the government, local authorities and businesses to bring more to the area and the residents, both to cope with the demand and to ensure a long term interest in these market places. To highlight just some of the major investments which are going on, there is a new international in Corvera (Murcia) under construction which is expected to open in 2010.

Initial annual passenger volume is expected to be 1.5 million, doubling in the future once all the facilities are fully operational. The budget for the work currently runs at 185 million euros. In Alicante, the airport is under expansion with a new terminal being built at a cost of 436 million euros. This will make it large enough and equipped enough to cope with the predicted passenger numbers of 20 million in 2020. Torrevieja's new public hospital opened at the end of last year at a cost of 43 million euros, 42 new hotels are coming to the Murcia region, a new desalinisation plant in Torrevieja is well under construction as even though there is currently no water shortage, the local government is making provisions for the future. What you have to ask yourself is why is all this happening? Easy, because the demand and the need are there.

One extremely important factor that we cannot overlook is value for money. We know that prices in Spain aren't as low as they were but it is fair to say that you get a lot more for your money. Without a shadow of a doubt it is a buyer's market. Developers are listening to the changing needs and demands of the client and responding accordingly. Gone are the days of panic buying where you end up with a property that you don't want in an area you don't like because you feel the pressure of a hectic market place. Builders are only too aware that Spain's client is not after a cheap property, these are the people that are following the trends and invest in other market places.

Someone who buys in Spain is looking for a second home or to relocate, they want to live in an area where you have neighbours not empty houses, where children can go to local good schools, where you have an excellent healthcare system and facilities, where you can run your own business if you want to, buy the comforts from home and integrate in to a civilised society where you can feel at home. They want to be in Spain.

Spain is far from a collapse. In the past the market was chaotic, houses were selling quicker than imaginable and the high demand was there. It was an unnatural market place for many years, with all the emphasis on quantity not quality and furthermore, was hardly the basis on which to base studies, draw comparatives and reach conclusions. Today, we have a strong and stable market place, where prices are still increasing, only at a slower, more realistic pace. Looking at the figures for the second quarter of 2007, in Alicante we experienced an annual growth of 2.1% whilst in Murcia it was still high at 9.5%. We can put this down to Murcia being less developed than Alicante with a lot of builders recently moving that little bit further south to this area.

We can conclude that the market is changing and stabilising but certainly not collapsing and the quality of what you can by today is a far cry from the situation we have seen in the past. It is an exciting time in Spain, it's a buyer's market and quite frankly, it's never been better.



Written by: Lyndsey Andrew

About the author:I lived and worked on the Costa Blanca for almost five years, having returned to the UK November 2006. I have been working for Mediter Real Estate since 2005, promoting and selling Spanish property on the Costa Blanca and Costa Calida. Mediter has almost a decade's experience in the area, working hard to build up a solid reputation as one of the best agents in the area. Scandinavian owned, we have are highly regarded both locally and internationally, working with only the best projects in the area. Our fundamental belief since the beginning, is only to sell quality properties which is why our portfolio is smaller than many of our competitors. Quality over quantity. For more information please see www.mediter.as




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Comments:

Cruster said:
14 April 2008 @ 18:54

Is this an April Fool? "buyers are investors and donl't even think twice which country the property is in" Which planet has this woman been living on?

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