Spain has long been renowned as a second home destination for those looking for a lifestyle purchase. And it’s not surprising with the country’s perfect climate – mild winters and radiant summers – the sparkling Mediterranean and the country’s rich culture yet welcoming embrace of expat communities.
Yet despite all this, our relationship with Spain has developed into a love/hate affair, particularly when talking about buying property. However there is a sea of change taking hold of the Spanish property market, most notably on two fronts.
Since the country’s peak in 2007, property prices have been steadily correcting as Spain, along with the rest of the world, has gone into economic decline. But it appears the market has finally reached a turning point with property prices flattening out.
In addition, the type of purchasers looking at Spanish property has a very different profile. Spain will always remain a favourite for lifestyle buyers and even more so now property is affordable. But there is a tangible presence of investors eyeing the market.
This general consensus felt by professionals in the country has now been confirmed by Knight Frank. A Partner from the consultancy confirmed if a property is at around 35% discount from 3 years ago and in the right location, this is the level at which property is selling and it is likely to remain there until 2011.
Although property prices are still leaning towards the optimistic, those properties at a significant discount are selling.
Knight Frank also highlighted that there is money for investment in the market, with investors taking a particular interest in commercial real estate assets and rental opportunities. As investors are no longer waiting for prices to drop further there is an air of excitement as foreign money returns to the market.
Low interest rates are serving as an additional incentive to take advantage of savings that can be made across the board. The Euribor has fallen for 13 consecutive months and now stands at 76% lower than a year ago, at a record low of 1.243%. The Libor also saw its record low of 0.54% in September 09.
With property now selling at realistic prices combined with the lowest costs of borrowing we have seen in years, this all makes for a lucrative investment option.
Cash buyers have even more sway in the current market with substantial discounts being negotiated across the board for those with funds readily available.
Other factors are serving as a further driving force for investors on the Costa del Sol. Major infrastructure projects are set to boost tourism and in turn the property industry. The new terminal at Malaga International Airport has been confirmed to open by Easter 2010, bringing the airport’s capacity to 30 million passengers per year, double its current capacity. Malaga will become the Spanish peninsulas 3rd largest airport.
Upgrading of the road and train links to and from the airport and a new Malaga ring road are also underway, all of which ease accessibility in the area, facilitating easy travel for tourists and residents alike.
With close analysis it is clear the Spanish property market has much to offer today’s investors. With a world very different from what we knew, finding those investment opportunities is not always so clear cut. However, upon review, Spain offers some lucrative options for those investors looking towards a longer term investment strategy.
Source: Reuters UK, Kyero.com
