Is it a good time for buying property in Spain | Real Estate

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At times it feels as though the overseas property market in Spain has been
doomed for years. On top of this, a recent downturn in the share price of large
Spanish property companies provoked another round of media panic, along with
the usual 'I told you so' reactions of industry analysts.
While there seems to be a new emerging market appearing on the scene every
week to attract the cash of investors, Spain is often used as an example of
how not to run an overseas property investment market. Recent revelations revealed
the full extent of the corruption at all levels of local government, where planning
chief Juan Antonio Roca amassed a fortune of €120 million through backhanders
and bribes, allegedly involving the last three mayors of the region.
Meanwhile, developers are keen to sell Spain as a destination that still offers
fantastic returns and bargain property to fulfil the dream of a place in the
sun.
As usual with these things, the reality is somewhere in between the two sides
of the story. There is no doubt the rampant price rises that were seen with
the mass speculation of the first years of the 21st Century are over (there
were stories at the time of prices on some developments increasing their prices
by 10 per cent each week). At the same time, the property market in Spain is
by no means dead and buried.
Mark Stucklin is head of Spanish Property Insight, a property information website,
has seen the changes in the market. "The Spanish
property market is not what economists would call an efficient market, largely
because it lacks transparency." He Says, "This makes it difficult
for buyers and sellers to know what is going on, creating great opportunities
for those people who are really prepared to investigate the market. This is
especially so now that the property boom has come to an end, and some buyers
are desperate to get out. The key is access to independent information, and
seeing lots of market comparables to get a real feel for market prices, which
you will never get on a subsidised and rushed inspection trip."
Andy Hawkins, Senior International Property Consultant at Chesterton International
comments: "There has been a huge amount written recently regarding the
Spanish property market. Most of it has not been particularly positive. However,
if the situation is examined closely it is clear to see that some of the media
hype does not paint the most accurate of pictures."
In fact, the original package holiday destination is still the most popular
place for Brits to buy property overseas, and while you might not be able to
pick up a plot of land overlooking the sea on the Costa del Sol for the same
price as a small car, there are ways to take advantage this perceived downturn
in the Spanish property market.
Whenever there is widespread speculation in a property market, there are inevitably
people who have been a little overzealous in their budgeting, or who have been
caught investing at the same time as many of the speculators are on their way
to new hunting grounds. The result is a large number of properties coming onto
the market, for which the owners cannot raise the finance, or who just want
to release their equity as they are unable to 'flip' the properties for the
large profits they anticipated.
Adam Gale, Managing Director of Duchy Estates, concedes that there is a correction
in the market "The Costa del Sol does have a certain oversupply of property,
particularly in new build apartments up and down the coastline. It's going to
take a couple of years for this stock to amortize, and many will be snapped
up for fantastic prices by investors who are confident, like us, that after
a few years of correction, the bullishness will return. It is indeed a buyer's
market. Both developers and private vendors who are keen to sell property
in Costa Del Sol will be more realistic about pricing, maybe even accept
an offer, which was unheard of as little as three years ago."
This view appears to be backed up across the industry, as agents see different
results at either end of the property spectrum. Paul Rossiter, Managing Director
of Costa del Sol based specialist land and self-build agency, Carrington Estates,
comments, "I think the bottom end of the market, the 'stack them high,
sell them cheap' identikit market has had a big wobble, but conversely, the
top end villa market has remained steadfast. Even when Spanish property stocks
took a pounding in April, with shares in freefall overnight, there was still
no knock-on effect to this sector of the market."
While this doesn't make Spain the same speculators market that it was some
years ago, there are opportunities to invest in a place that will become much
more stable in the coming years. Spain should follow the trends set by France,
in that many of the buyers there in the future will be people who are looking
to use the property themselves for large portions of the year. This leads to
a more mature, stable market, with sustainable growth. That is not to say that
the market for investors becomes boring - parts of south-western France have
recorded annual price rises of above 15 per cent in recent years.
Further proof of the maturing of the property
market in Spain is the amount being spent on maintaining and improving the
infrastructure of the most popular areas. As Adam Gale points out, "In
response to the relentless popularity of the region, 2007 is the year for infrastructure
improvement by the bucket-load. One glance at the tangles of steel girders and
armies of hard-hatted men, and it's perfectly obvious that Málaga Airport
is undergoing major modernisation."
If you are interested in the Spanish Costas property market, keep an eye on
the marketplace for auction websites, or so-called 'distressed' sales. The properties
found here don't necessarily have anything wrong with them; the owners just
want to release their capital and are prepared to accept under the market value
to do so. As ever, make sure you carry out full legal checks and surveys ahead
of buying, but this can be a great way to bag yourself a Spanish bargain. And
you shouldn't worry about the prospect of profiting from the misfortune of others
- in many cases, these sellers are just happy to be able to release the equity
they have tied up in the property.
Mark Stucklin's final piece of advice for those heading to Spain to look for
property: "If you do your research, and take your time, you can find great
value property in Spain today. But remember that good value is not the same
as cheapness, and be prepared to pay a fair price for good quality."

About the Author

Pauline Felward writes advice about a wide range of International Property markets with BuyAssociation, compiling a collection of extensive impartial Buying Guides, Fact Sheets, Podcasts and Radio Shows about buying property in Spain, as well as across the world. For free access to this library of invaluable information, please visit www.buyassociation.co.uk

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