What The Future Holds For The Spanish Property Market

Published on 19/10/2010 in Your Spanish Home

Javier Ballester, managing director of Taylor Wimpey de España, talks about the state of the Spanish property market today, and what he expects for 2011.

Your company closed 2009 with 175 home completions in Spain. What is your forecast for the rest of 2010?

Spanish construction cranesLeading up to 2010 there has been less development by Taylor Wimpey de España in Spain and by developers generally across the country. Therefore, in the prime locations especially stock is very limited.

Overall with less stock to sell in the completed turnkey developments we anticipate sales generally will be approximately 10 per cent below that of last year, but with a resurgence in off plan buyers of the new units there is a positive outlook for 2011.

You are saying that you have less stock of finished homes available? How much stock do you have?

When the downturn hit in 2008, we put a halt to new developments and focused our energy on finishing the existing builds. Today we are very close to closing sales for this existing stock. Many of our current developments have only a few units remaining and to help the flow of sales discount pricing has been applied.

What new developments are you launching? What plans do you have for 2011?

Last February we launched our first new development since the recession started - La Floresta de la Mairena, very close to Marbella on the Costa del Sol. It has been well received by clients seeking off-plan investments, safe in the knowledge they are purchasing through an established developer. In the first 3 months we sold 11 homes. Since then we have launched the second phase at El Puerto in Cala D'Or (Mallorca) and this September we are launching Las Brisas at Alenda Golf on the Costa Blanca. In 2011 we expect to release two more new developments in Mallorca.

Is it true that there are 700,000 stock units waiting to be sold in Spain?

I don't know if this figure is accurate... nevertheless, it is very important to understand where most of those units are.

Spain is a very fragmented market which varies from one region to another, even from one town to the next. Most of the Spanish property oversupply is concentrated in the domestic markets in the commuter belts of big cities such as Madrid, Valencia or Seville.

On the coast, there are areas with significant over supply, but after two years with no construction the prime areas are now running out of property to sell. For instance, premium locations like Mallorca are today already in short supply. In these areas, prices are poised to steadily rise during next year to keep pace with demand.

Regarding the Costa del Sol, what are your expectations?

Areas like Casares, Manilva and Calahonda are still suffering from over supply and will take much longer to recover, but if you are heading to a "premium" location like Marbella or Benahavis, buyers will find that good product between €200,000 and €300,000 is already hard to find.

It is also very important to research a developer before you buy. With some still struggling to make ends meet we sadly have seen a number of people coming to us having lost deposits as their developer has gone into administration. Ensure your builder has financial stability before parting with any cash. This is especially relevant for off-plan purchases.

Written by: Javier Ballester

About the author:

Javier Ballester is the Managing Director of Taylor Wimpey de España.

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Harvey said:
21 October 2010 @ 12:15

Having lived in the Murcia province of Spain since 1995 and been involved with the property market since 1996 I do not see how Javier thinks we need any more off plan projects. I am still meeting many people from northern europe who have interest in spanish property and spain as a place to live but none of them have confianza in Spanish constructors re off plan properties and many are unhappy with a legal system that allows property to be built and sold in areas that do not have building permissions.

John Page said:
20 October 2010 @ 20:42

I agree, an interesting article, but how informative was it, perhaps a tad if you are in the Costa del Sol. Buying off plan, only a fool would do that , builders are constantly stil going into receivership. Would you part with your cash, I know I wouldn't. I nearly lost my investment once, your right Steve, you need to see the FOUR south facing walls etc. We see resales at silly prices now, getting cheaper and cheaper all the time, that's the way to go if you want property in Spain now, plus a damn good lawyer of course, not one of these coast based solicitors, they just do conveyancing in the main and don't go right in depth with searches etc. Still we shall see in time, how the market goes. I suppose that now I have made my comments the published article, now seems to me to be a waste of time for the majority who are not green in purchases in Spain.

John Scott said:
20 October 2010 @ 10:55

The article was headed,"what the future holds for the Spanish market" Taylor Wimpey's view on it differs from my experiance. At the present time, I would report thus, demand for off plan investments, NIL. Demand for key ready new property, MINIMAL.
Demand for realistically priced resale properties, in good locations, very good, and resulting in completions. I would suggest
to acheive greater sales numbers, we do not need anymore "off plan "developments, from Wimpey, or anybody else, but we do need a better attitude to lending, from the banks, and as far as the British market is concerned something of an upturn in the economy. More than 50% of our completions come from buyers outside of the UK, that fact alone tells me something about the parlous state of things in the UK. Personally I fail to see how, building more new developments will change the STATUS QUO.

Steve Hall said:
19 October 2010 @ 22:10

I am struggling to see why ANYBODY could possibly want to buy off-plan after all the shenanigans of the past 10 years.

Anything I buy I want to see it, touch it, feel it and to know that the promised four south facing facades are for real and not the product of some over-fertile mind.

I want to see electric installed, telephone lines available and calls being made. I want to see that the "area to the left, sir" is really a golf course and not a supermarket car-park.

Cynical? Maybe but with perhaps as many as 1,5 million empty properties to chose from why would I want to leave anything to chance.

Eric Thomas said:
19 October 2010 @ 21:44

I agree with the comments already made regarding the lack of information. Also I would be afraid that a person in such a position in the construction industry may be tempted to 'talk up the future prospects situation' in the hope of creating a belief that property prices are likely to move upwards and thus create a demand.

bob ledbetter said:
19 October 2010 @ 20:32

Not very informative. Could have gone into more detail about other areas. ie. Costa Blanca.

David Cave said:
19 October 2010 @ 19:21

An interesting article, however I feel it might have been more informative especially concerning developments which have been completed or 90% completed and the developer has gone into liquidation and the developments remain uninhabited. What would someone from within the Spanish building industry forecast will happen to these developments?
Whilst I do not have funds invested in these type of developments I do own a property close to several and wonder: a). What has happened to the unfortunate investors/buyers
b). What is likely to happen to these developments when the Spanish economy picks up?

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