Low house prices stimulate foreign investment in Spain

How is that, you may be wondering? Given that most of what you probably see in the press is negative with regards to Spain’s property market.

The short answer is, of course, bargain property prices. It’s obviously helping entice foreign investors, as interest from overseas buyers increased by 17 per cent last year – the highest increase since 2004.

Today’s current economic situation means buyers are in the driving seat, with the choice of properties plentiful and little sign of prices increasing any time soon. In fact, quite the opposite: it’s predicted that property prices in the country will drop a further 13 per cent between now and the end of 2014.

Of course, mortgage lending isn’t as straight forward in the current climate, so it does help if you have a substantial deposit to put down. However, as sellers desperately scramble to sell their properties, buyers have the potential to negotiate prices even further.

Spain’s famous Costas continue to be popular amongst foreign investors – they always will be – but there are other areas that attract overseas buyers.

Two hours’ drive north east of Malaga, on the Costa del Sol, you’ll find the Sierra de Segura mountains where you  have to go out your way to hear English or find a golf course.

Here, only two per cent of homes are snapped up by foreigners, meaning it is an idea area for buyers looking to discover the ‘real’ Spain without its English influences, like you tend to get more on the Costas.

However, that’s not to say the Costas should be ruled out. On the Costa del Sol, non-Spanish buyers made up 45 per cent of the market so far this year. The area is renowned for its glitzy and glamorous image, attracting rich businessmen and even Hollywood A-listers.

House building firm Taylor Wimpey Espana recently revealed they have seen a 300 percent year-on-year increase in property sales on the Costa del Sol, and in areas such as Puerto Banus on the outskirts of Marbella, penthouses are on the market from as little as EUR115,000.

Meanwhile, north east up the coast, at the Costa Blanca, there are hundreds of developments going on.

The demographics of the buyers are changing too. Traditionally the marketplace was flooded by British expats escaping the English weather, but now you will find a mix of British, various other European nationalities, such as German, Swedish and Norwegian, and even expats from further afield, such as Russian and Chinese.

In certain areas here you can find art-deco styled two bedroom and two bathroom homes, with a roof terrace offering unparalleled views, from around EUR 117,000. The Costa Blanca gets, on average, more than 300 sunny days every year and in 2006 was named Europe’s most healthy region by the World Health Organisation (WHO).

The signs appear to show that, while Spain’s property market is still a long way from the boom of 10 or so years ago, things do at least look to be moving once again.

Undoubtedly a lot of this is down to foreign property investors looking to grab a bargain while the going is good, because Spain generally has not lost its appeal as a desired destination.

Investing in Spanish property for most is a lifestyle choice, with buyers being lured by the climate and culture, which has not changed throughout the economic hardship.

Should you buy sensibly, an investment may turn out to be a very shrewd move in the long run, as there is always going to be a high tourist demand in Spain, leaving investors with options to rent out their property long-term or lease it as a holiday let. 

SpainSpainSpain / Expatica