Property investors take another look at Spain
Over the past few years the traditional investment advice of putting money into bricks and mortar has been questioned as a safe strategy. The volatility in property prices coupled with the global financial crisis has left property investment towards the bottom of many advisers “to do” lists.
But this situation is now turning. Like so many things in the world of finance, the attraction of property investment is cyclical. And the smart investors are always a few steps ahead of the pack. Consider the factors at play. Firstly, property prices have stabilised. Certainly, compared with a couple of years ago prices appear to have not only touched bottom, they now seem to be rising, albeit slowly. Interest rates in the banks are at an all time low, so the value of any money left on deposit is being eroded by inflation.
In respect of property in Spain, and in particular, investment property on the Costa del Sol, the circumstances are further affected by the return of Spain as a premier tourist destination. Whilst the tourist market may have flirted with other, more exotic, destinations, Spain has any number of factors in its favour. Whether visitors are looking for sunshine and beaches, golf or nightlife, the Costa del Sol has it all. And, with so many other destinations presenting security issues, Spain has regained its rightful place in the hearts of visitors.
For the British investor – and indeed any of those from outside the euro-zone – the relative weakness of the euro is another contributing factor. The pound, which was languishing just above parity, has risen and stabilised around 1.16 euros. Whilst this is a long way from the headier days of 1.45 euros, it must be remembered that the reduction in property prices which has been seen over the last couple of years of around 30%, more than compensates for the difference.
With this in mind, there are certain property types that hold their prices well. The top end of the market – luxury property in the 4 – 10million euro bracket – has been remarkably stable. Properties on the golf course, and beachfront properties are generally in demand, as the supply is limited to a degree. And there are popular property developments and apartment complexes which have maintained their prices well.
As a result, many of the smart investors are looking towards property again as not only a safe bet, but one which is most likely to give returns in the medium term. Certainly compared to the stock markets, which have been more than unpredictable, the idea of owning a home in Spain becomes increasingly attractive.
