Spain: a Property Market Overview – The Costa Tropical

Spain is still the number one choice for British buyers of overseas property and has been for the last two decades. Buyers are beginning to turn away from well established property hotspots like the Costa del Sol and the Costa Blanca and areas like the Costa Tropical are seeing a surge in investment. All this despite recent bad press about land grab in Valencia, unscrupulous property developers, highway bandits and a whole host of other scare stories. So why are UK buyers still so keen on finding property to buy in Spain? The following article, which is taken in part from a recent Kyero.com report, has some of the answers.

PROFILE - SPAIN: Some Facts and Figures

Area: 504,782 sq km. (Andalucia: 87,268 sq km)

Population: 40.3 million (07/2005 estimate) Andalucia: 7.95 million. (Note: this conservative figure does not incorporate the 1000s of non-resident foreigners who have retired to Spain yet for personal reasons choose to keep their tax domiciliation in their home country).

Net migration rate: 1.00 migrant(s) per 1,000 populations (2006 estimate)

Life expectancy at birth: 79.52 years.

GDP per capita: purchasing power parity - 18,640 euros (2005 estimate)

Main trading partners: Germany, France, UK, and Italy

Internet users: 17.5 million (2006)

Buyers looking at investment property in Spain can be reassured by figures which show that, in real estate terms, Spain is one of the best performing EU countries. Last year the prices went up, on average, by 13-14%; and over the last 10 years they increased by almost 250%. Expert analysts predict a gradual slow down in the market over the next couple of years, however, and at present not all investors enjoy the same capital gains. Some areas offer a superb climate but are seriously over-developed with the property market at saturation point – this has created a shift in the areas where buyers are seeking to invest: areas like the Costa Tropical are emerging property markets and are still relatively undiscovered. Over the next 5 to 10 years the Mediterranean motorway network covering the Costa Tropical will be completed and this together with the new high speed rail links for Malaga-Madrid-Granada will combine to offer an opportunity for further predicted market growth – all excellent news for those looking to invest in property in Spain. Spain remains top of the list of best performing West European residential markets, with increased interest from both local and foreign investors and from people looking for more sunshine and improved quality of life. Buyers are not just from the United Kingdom and Ireland but also the Scandinavian peninsular, France, Canada, Russia and Romania. A thriving economy has also seen an increase in Spanish people investing in the property market - with a marked increase in those purchasing second homes.

The heady days of the early property boom years in Spain, where an investment could see ever increasing capital gains, may well be over. The Spanish property market has matured and some well established areas have seen a distinct slow-down in price increases. There are still profits to be made, however, with some inland areas, previously disregarded by most property investors, showing gains exceeding the national average. The Costa Tropical can offer coastal properties (La Herradura to Salobreña); rural (Rio Seco and Gelibra to the Lecrin valley) and village (Jete, Otivar and Lentegi to Itrabo, or Los Guajares to Albunuelas). Price increases have varied over recent months in these areas – with some remaining fairly static and others, particularly those properties inland, showing marked increases.

A recent report by property valuers Tecnitasa, which looked at more than 60 cities throughout Spain found that there are very few cities in Spain where you can find a house or apartment for less than 1,000 euros per square metre and then only in a few districts. The cities of Cuenca, Murcia, Jaén, Melilla, Alicante, Badajoz, Las Palmas, Lugo, Zamora and Jerez de la Frontera were cited. Here on the Costa Tropical a typical village house in Jete or Otivar (depending on condition) has a base valuation of between 1,000 and 1,200 euros per square metre, and in Almunecar a typical apartment can reach as much as 1,500 and 2,000 euros per square metre. Prices have risen significantly in the last 2 years; and in some parts of the local market by as much as 22% in just one year.

Generally though Tecnitasa found that at the highest price end of the market prices remained static. They found that there were 10 cities where the price per square metre had risen above 6,000 euros. At the top end of the market a square metre in Barcelona or Madrid could set you back as much as 11,000 and 10,000 euros respectively.

The Spanish Minister for Housing, María Antonia Trujillo, when interviewed in March 2007, said that in her opinion the general housing sector was beginning to stabilise and reverse back to figures that were normal 16 years ago. Speaking at a conference organised by one of Spain’s largest unions, the UGT, she said that the government’s objective was for the annual rise in house and flat prices to match the rate of inflation.

In short, the Costa Tropical mirrors the microcosm that is Spain’s property market. For the aspiring, and possibly the rich and famous, we offer Cerro Gordo, Cotobro and Punta de la Mona with luxury villas and plots to build. Investment in off plan property in Spain shows no sign of abating in popularity. For those just starting out in the property market our inland villages (Jete, Otivar, Itrabo, Restabal, Cozvijar, etc) can still offer you an excellent point of entry investment – resale country property on the Costa Tropical is very affordable. There are town and village houses, fincas, cortijos and farmhouses at a range of sizes and prices to suit all budgets - and those with vision may even be ready to tackle a renovation project and create a beautiful home from scratch. Above all, at Tropicana Properties SL we are here to help you… to help you find a property to buy in Spain, make a wise Spanish property investment, and help your dream become reality.