spanish property review - dec 2013

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A roundup of news stories relating to the Spanish property market, brought to you by Crystal Shore Properties, Marbella


  • 1. Spanish Property News Roundup December 2013 Crystal Shore Properties is a leading real estate agency with offices in the prestigious area of Guadalmina in Marbella, on Spains Costa del Sol. With 25 years experience helping our clients buy, sell and rent property here on the Costa del Sol, we keep our finger on the pulse of every development and news story relating to the property market in order to ensure we are able to offer our clients the very best opportunities. 2013 has been a difficult year in many ways, but there are plenty of positive signs of recovery in the economy, signaling that now could be the best time to invest in Spanish property. Here we bring you a selection of significant recent news items.
  • 2. Growth in construction returns, wealthy investors show interest in Spanish property The landscape today is very different to the forest of cranes that could be seen all over the Costa del Sol before the property bubble burst, but neither does it resemble the desert that followed that crisis. The construction industry is beginning to show signs of life again, thanks to the high-end property sector, which so far this year has experienced a growth which is even greater than that achieved in 2012. According to figures from the DOM3 association, which encompasses 23 companies related to the construction of this type of property, 60 houses costing more than one million euros were built in 2011 in the triangle formed by Marbella, Estepona and Benahavs, with a global investment of 250 million euros, while 2012 ended with 75 houses built and 300 million euros invested. That was a 20 per cent increase in the number of properties, but this year, growth in this sector is even higher. The president of the association, Sofa Polo, attributes this growth above all to flourishing foreign markets and greater confidence in the Spanish economy from those who are considering investing in this country. For Jos Antonio Muoz, of Analistas Econmicos de Andaluca, this sector in Marbella is beginning to perform well because it is an atypical market, with an important presence of foreign clients who tend to be very well-informed, so the fact that they are purchasing properties is a good sign for the province overall. In areas where the operators have a greater than average knowledge, they perceive the start and also the end of a crisis earlier than most, he says. This explains why, just as has occurred on previous occasions, Marbella was one of the first places to go into the crisis and is now beginning to show signs of coming out of it. In Jos Antonio Muozs opinion, the perception is that the bottom has been reached and the only way now is up. Also, he says, a market with better information than average may be detecting interesting investment opportunities, and this could mean that recovery is not far off. (1) Wealthy Investors For some wealthy investors, Spain is beginning to be seen as a place of opportunity. Many may be aware of Marbellas reputation as the St.Tropez of southern Spain. As well as its old-world charm, the city is also a magnet for the worlds rich and famous - George Clooney reportedly just bought a villa here. Millions have been poured into the areas infrastructure, including 400m into the new port Al-Thani at La Bajadilla, Marbella, which plans to rival Puerto Banus as the most desirable place to be seen.
  • 3. Whilst optimism for the countrys economy remains cautious (its GDP increased for the first time since 2011 during the third financial quarter, though only by 0.1 per cent), eyebrows were raised recently when Microsoft founder Bill Gates invested $155m in Spanish construction giant FCC (Fomento de Construcciones & Contratas). Particularly in the Costa del Sol there is some real value in the market, with Real Capital Solutions Spain (RCS) leading the way by way of development. The American Investment Fund launched 53 beachfront apartments to the Marbella property sales market this November. This is just the first property release from the fund that intends to invest a significant amount of capital into the Costa del Sol property market over the next 10 years. (2) Billionaire investor George Soros, and Pimco the largest bond investor in the world are reported to be looking for opportunities related to real estate. With such illustrious names from the investment world now considering Spanish property, you can bet the rest will follow, says Mark Stucklin of Spanish Property Insight (3) Signs property market has reached bottom In an article published in the business pages of El Mundo (4), the CEO and managing director of CBRE Spain, Alfonso Galobart, is repored as saying that the Spanish real estate market has reached the bottom, and next year will see investment of around 4 billion euros, levels not seen since 2004 before the crisis. The arrival of big investors such as Goldman Sachs and Blackstone to buy large portfolios shows that the real estate market in Spain has bottomed and that it is the time to invest. Spain, as a country, no longer has the risks it had five years ago and that makes it much more attractive, explained Galobart. And according to Tecnocasa, a leading chain of Spanish estate agents, property prices in prime areas in Spain have finally stabilised. Prices are holding steady, and even beginning to rise again, in prime areas such as Marbella and Puerto Banus. The Spanish housing market has clearly moved beyond the phase of across-theboard price falls, helped by foreign demand for homes in popular destinations like the Costa del Sol, where sales increased by 33% in the first half of the year, according to figures published by notaries and regional authorities. In their latest report on the housing markets of the Eurozone, Deutsche Bank also claim house prices in Spain could be touching bottom, indicating that Spain could be one of the best property investments in Europe over the next five years.
  • 4. Foreign buyers leading demand Elas Bendodo, President of the regional Tourism body and the Provincial Council in Malaga province, has revealed that foreigners bought a total of 3,260 homes on the Costa del Sol in the first six months of the year, 812 more than the same period last year, based on the number of deeds witnessed by notaries in the province. The biggest group of buyers, as always, was the British, proving that Spain is as popular as ever with visitors and residents from the UK. Bendodo presented the figures at the World Travel Market (WTM) fair in London, during the presentation of a recent initiative called Living Costa del Sol a joint venture between the regional tourist office and the local builders association to promote residential tourism in the region. US investment bank Goldman Sachs also reported that the Spanish housing market should be near a turning point, based on data from other countries that experienced the boom and bust. Citing US house prices which bottomed out when unemployment reached its peak, confirming a basic economic reality that people need jobs to pay for houses, and the case of Ireland, where house prices have risen 4% since unemployment peaked in March, the report suggests that Spanish unemployment has bottomed out, with unemployment falling in October for the first time since May 2007. If the US and other countries are any guide, the Spanish housing market is that bit closer to turning a corner, say Goldman, who recently spent 200 million on a portfolio of rental properties in Madrid. Spain still number one Spain still tops the list as the most popular destination for investors buying overseas property, according to research by Rightmove Overseas (5), which revealed that over 60% of property investors buying overseas said that they had received a higher return on investment than they had expected. Nearly half of all the investors surveyed said that high rental yields were the most important factor behind their decision to purchase an overseas property. Good weather and short flights keep Spain as the number one destination with UK holiday makers, which combined with property price reductions of up to 50% compared to 2007 in the South and East coastal regions is why investors are are jumping in now, before the economy improves and property prices begin to rise again. Properties in the Costa del Sol and the Costa Blanca seem to be the most sought after with Rightmove Overseas receiving an average of 500,000 searches each month for properties in those regions alone.
  • 5. Spanish property sales to foreigners surged by almost 25% in the third quarter of 2013. Spains low property values have made the country an affordable place to snap up holiday homes in the popular Costas. Foreign buyers now account for 17.2% of the market, notes Spanish Property Insight, the highest level since the Government began releasing these figures. Sterling strengthens against Euro With sterling experiencing an upturn, increasing numbers of expats are looking to buy property, according to an article published by the Telegraph. (6) Sterling has strengthened in recent weeks relative to other currencies, which presents Britons with one of the best times to buy property abroad. Clare Nessling, director