Madrid emerges as safe haven for investors

Calella, Costa del Maresme, Spain

Madrid is emerging as a safe haven for international property investors, with the prime market leading Spain’s recovery.

2016 has been a year of surprises, but Spain’s property market recovery slowly continues to build momentum, with some areas recovering faster than others. One area that has performed well this year has been Madrid’s luxury residential sector, with several new projects now coming to the market, after a lack of supply.

Knight Frank highlights José Abascal as the only new development in central Madrid now available for immediate occupation, reporting interest from a variety of international buyers. The property is located in Chamberi, one of the capital’s principal prime districts, alongside Salamanca, Justicia, Jeronimos and Chamartin. All are located to the north of the city centre, with several surrounding Retiro Park.

The agency highlights Venezuelan and Argentinian investors, in particular, as very active in purchasing units, in addition to buyers from India, the UAE, Portugal, France and the UK.

Indeed, Madrid is now perceived as a safe haven for Latin American buyers, with prime prices that are now 19 per cent above their financial crisis low.

“While Brexit can affect some particular sectors of real estate, Madrid’s prime residential is not only not affected but in some cases can benefit, if investors decide to bet on Madrid instead of London,” says Ernesto Tarazona, Partner Head Residential & Land Knight Frank España.

 

New home sales improve in Spain, as momentum builds

15th November 2016

New home sales have improved notably in Spain this year, as the housing market’s recovery continues to build momentum.

Official figures from the National Institute of Statistics show that property sales rose 12 per cent year-on-year in September 2016, with a total of 30,976 transactions recorded in the Spanish property register. This marks another month of growth in what has been an almost uninterrupted run since March 2014.

What is particularly notable is the improvement in new home sales compared to one year ago; where previously, existing home sales were rising and new build sales were falling, the latest INE data shows that resales jumped 17 per cent and new home sales dipped just 1 per cent.

 

Foreign investors remain driving force behind Spanish recovery

18th October 2016

Foreign investors remain the driving force behind Spain’s property recovery, with buyers from the Middle East doubling their share of activity.

Spanish buyers accounted for 30 per cent of all sales for estate agency Lucas Fox in the first 6 months of 2016, up from 17 per cent in the same period last year, but overseas investors remain the key players in the market’s rebound. The UK represented one in 10 Lucas Fox transactions, with the rest of Europe (mainly France and Scandinavia) accounting for 30 per cent of sales. The number of buyers from the Middle East, meanwhile, effectively doubled, accounting for 8 per cent of all sales, up from 4 per cent in 2015.

The majority of buyers (37 per cent) bought homes as a secondary residence, ahead of 28 per cent buying for a primary residence. There has been a significant rise in those buying for investment – 28 per cent in the first 6 months of 2016, compared to 17 per cent in the same period in 2015. 6 per cent also bought property to obtain the ‘Golden Visa’, up from 3 per cent in the same period in 2015.

The combination of attractive property prices – which in some regions are still around 30 to 35 per cent below the peak of 2006 – and low interest rates have helped contribute to create ideal market conditions for investors, the report says.

Prices rose by an average of 4 per cent in Barcelona city, 6 per cent in Madrid and Marbella and almost 8 per cent in Valencia. Prime urban areas – such as Barcelona’s Eixample district – saw prices rise as much as 10 per cent year-on-year. Significantly, sales of new homes have soared in the last year. notes Lucas Fox, with turnkey property sales rising 55 per cent annually.

“Thanks to increased planning approvals in Barcelona during 2016, our new development portfolio has grown significantly. It currently consists of more than 280 million Euros of property which will provide more than 300 homes within the next 18 months, and a further 1000 homes with the value of 650 million Euros planned for the next 3 years,” comments Alexander Vaughan, Lucas Fox’s co-founder.

“With tourism data set for yet another record-breaking year, we expect that Spain’s second-home destinations will continue to attract demand for this kind of product from both foreign and national investors.”

 

Swedish demand surges as Brits’ Spanish property budget shrinks

17th October 2016

Swedish demand for Spanish property is surging this year, as British buyers are shrinking their budgets.

The number of Swedish buyers looking to Spain as a second home destination has now doubled, according to the latest statistics from leading Spanish homebuilder Taylor Wimpey España.

Overall, the total year to date sales to Swedish nationals, as of September 2016, has increased by 100 per cent in comparison to last year’s figures.

The rise of the Swedes arrives as British buyers slightly lower their budgets. Indeed, according to Kyero.com, enquiries are falling on properties over €250,000 and increasing on homes costing €150,000 or less. Overall in September, 62 per cent of enquiries were for properties costing less than €150,000.

“Brexit isn’t denting Brits’ love for Spain, but it is taking a bite out of their budgets,” says Richard Speigal, Head of Research at Kyero.com.

“September has thrown up the first visible effect of Brexit on the Spanish holiday home market. Overseas interest remains extremely buoyant but buyer budgets have notably reduced. With British buyers making up 21% of foreign house sales in Spain (and 27% of Kyero.com’s traffic), the strength of sterling is important. Its fall since the referendum has reduced purchasing power, but seemingly not people’s willingness to buy abroad.”

“If Brits do drive a harder bargain it is possible we will see some localised discounting in the coming months, particularly in provinces where they are most active such as Alicante and Malaga,” he adds.

Swedish buyers, on the other hand, are enjoying a strong economy, notes Taylor Wimpey, with many Swedes able to purchase that dream second home abroad.

Marc Pritchard, Sales and Marketing Director of Taylor Wimpey España, which has operated successfully in Spain since 1958, has observed firsthand a rise in demand from both Swedish and Belgian buyers.

Indeed, over 220,000 Belgians visited Spanish shores in July this year alone (INE) and according to Taylor Wimpey España’s latest data, from January to September 2016, 22 per cent of their sales were from either Swedish or Belgian nationals.

“The past twelve months have seen a real boost in sales to North Europeans, especially Belgian and Swedish buyers. Easily accessible, with regular, direct, low cost flights from both nations, the Costa Blanca on Spain’s southeastern coast has become a hotspot for buyers in 2016,” he comments.

“European buyers in particular enjoy the friendly atmosphere on our Costa Blanca developments; a great example being Panorama Mar, where there is a strong sense of family and community with three shared swimming pools and a children’s playground. The stunning and enjoyable site encourages international buyers to socialise and appreciate the gorgeous weather in the favourable communal areas.”

 

Middle East drives demand for prime Spanish property

26th September 2016

Investors from the Middle East are driving a rise in demand for luxury Spanish property.

The country’s housing market has always been popular among foreign buyers, with Brits historically leading the way for affordable holiday homes. According to the Ministry of Development, overseas buyers accounted for 18 per cent of all property transactions in Spain in Q1 2016, with British buyers making up a large chunk of that portion.

In June, though, the UK voted to leave the European Union, causing the pound to weaken against the euro. Combined with uncertainty about expat benefits such as healthcare, the property world braced for a decrease in interest.

At the low end of the market, that has not happened, says Kyero.com, which reports that British appetite for retirement properties in Spain remains strong, with Brexit seeming to have done little to dampen the plans of older Brits to spend their golden years in the sunshine.

Indeed, the lifestyle market remains tied closely to the thriving Spanish tourist industry, which has seen inbound trips increase 4.8 per cent this year to 68.1 million. Two in 10 foreign tourists who visit Spain now plan to buy a home there, according to a survey by Iberia Real Estate. It is not just the traditional hotspots, either, with buyers looking everywhere from Andalucia to Galicia, although many prefer areas such as Murcia, Valencia and Catalonia.

Spain’s property market, though, is a game of two halves, and the country’s luxury property market has seen a growing number of British buyers become more cautious about purchasing a prime place in the sun. Instead, buyers from the Middle East are becoming the big spenders.

“The profile of Spain’s luxury buyers is shifting,” observes Knight Frank, which highlights the rise of non-EU buyers in the last year. Latin Americans are lining up in Madrid, Swiss purchasers have a strong presence in Ibiza and Middle Eastern buyers are active in Marbella. The number of online property searches undertaken by Middle Eastern buyers looking at properties in the latter area surged 164 per cent on Knight Frank’s website between 2014 and 2015.

While Catalonia is one of the more popular areas for European buyers with lower budgets to house-hunt, its appeal also extends to the UAE.

“Without a doubt, the most demand at the moment is from Arabic countries,” Catalunya Casas, which specialises in the Catalonia region, tells TheMoveChannel.com.

In the three months since the Brexit vote, the estate agent says that interest from British buyers has been “insignificant”.

The rise in Middle Eastern interest, meanwhile, is attributed largely to the Golden Visa scheme, which offers residency to investors who purchase at least €500,000 of Spanish real estate.

“It’s something that at the moment does not apply to British citizens,” they note. “However, with the UK’s imminent departure from the EU, it may be of great interest to UK investors in the future.”

Fuelled by the offer of residency, Catalunya Casas says that non-EU buyers remain cautious, but that there has been a notable, gradual rise in foreign demand over the years since the global financial crisis.

“It is not at all like five years ago,” they add. “The amount of interest is increasing again but slowly.”

The current market conditions, meanwhile, with prices showing signs of rising in some areas and the euro’s exchange rate making the top end of the market better value for money, should continue to attract interest in the future.

“Prices have stopped dropping and have stabilised,” they explain. “However, there is still a huge backlog of properties on the market, making it an ideal time to invest. Deals can still be had without worry that the market will fall further.”

 

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