Market report

Spain: MarketReport

Summary

The Spanish economy grew 3.2 percent in 2016, outperforming the other Eurozone big four economies.

Between 2015 and 2016, the Spanish property market grew significantly with a 14 percent increase in property sales transactions. The biggest increases where seen in the Balearic Islands, Madrid, Barcelona, Girona and the Valencia region. Many analysts are forecasting up to a 30 percent increase in 2017.

The National Institute of Statistics show that new mortgage lending increased 32.2% in November 2016 compared with November 2015. This is likely in part due to Spanish banks introducing fixed term packages that are far superior to previous offerings.

Early 2017 figures show 19 percent growth in January compared to the previous year. Spain saw the highest number of January sales since the end of the last “boom period" in 2008.

Spain welcomed a record number of tourists in 2016. Over 75 million people visited Spain in 2016, an 11 percent increase on the previous year's figures.

Property Sales Figures

While the Spanish property market has been in recover for several years now, 2016 showed marked a significant positive change. The National Institute of Statistics reported a total of 403,866 registered property sales. This represents an increase of 14 percent on 2015 sales.

Growth was strongest in the Balearics with a 31 percent increase with Barcelona in second with a 22 percent rise. Madrid saw a 12 percent increase in sales while the Valencia povince that encompasses the Costa Blanca saw growth of 14 percent.

Areas more heavily reliant on British sales saw limited growth due to the perceived uncertainty of Brexit and the change in exchange rate. The Costa Del Sol property market for example grew just 7 percent.

Early data from 2017 shows a continuation of this trend with a 19 percent increase in sales compared to Januray 2016. Recorded January sales of 2017 are the highest since the last boom ended in 2008. The Costa Blanca showed a 17 percent increase on the previous year.

Property Prices

While official data shows various different figures relating to property price trends, Casas de Luxe observes that the Costa Blanca is showing steady increases in home prices. Resale values have risen with the cheapest properties and bank stock largely off the market. New build prices have steadily risen over the last couple of years. This can be seen by the incremental increases in price during each phase of building.

Where are the buyers coming from?

Foreign investors are a big factor in the growth of the Spanish property market. UK and Irish buyers are still a significant part of the overall picture but they are joined by buyers from Scandinavia, France and other Northern European countries. Luxury properties in the big cities are also seeing a great deal of activity with Chinese and wealthy Middle Eastern buyers.

The Costa Blanca remains highly popular with Brits that are attracted by the lower living costs and increased purchasing power compared to the Costa Del Sol and island resorts. There has been a significant increase in buyers from Northern Europe, Belgium and Scandinavia in particular with buyers reporting that the weather, in particular the mild winters, is a key factor.

The short travel time and regular flights from almost all major Northern European and UK airports make the Costa Blanca an ideal choice for many. With the reliable climate, affordable living costs and quality affordable properties, it seems natural that interest in the region will continue to grow.

The Economy

Spain performed even better than expected during 2016 reporting GDP growth of 3.2 percent. Spain's economy is heavily reliant on its tourism industry and an 11 percent increase in visitors contributed to Spain's successful year. 75 million people visited the country in 2016 spending an average of 800 euros per person. The increase in tourism is partly attributed to the increased perceived risk in travelling to other formerly popular destinations. With security a natural concern, it is widely assumed that this trend will continue.

Growth forecasts for 2017 stand at a rate of 2.3 percent while unemployment is at its lowest level since 2009. The political difficulties after inconclusive elections has been resolved, the property market has improved and Spain's future looks brighter than it has in several years.

Exchange Rates

The Pound – Euro exchange rate is a significant factor for British residents looking to purchase in the UK. The uncertainty of Brexit and subsequent “leave vote" led to a sharp weakening of the pound against the euro but it has recovered some of the lost ground and stabilised during the early stages of 2017. The April 2017 rate of 1.18 is still significantly higher than rates of 2008/9 and is comparable with the 2013/14 rates.

Cost of living remains lower in most regions of Spain even with a slightly diminished exchange rate. Brits purchasing power remains high on the Costa Blanca and is reflected by the positive market trends.

Investment in Spanish Property

Property purchases in Spain can be broken down into a number of categories from permanent moves to second homes, holiday homes, investment and often a combination of all of the above. With property prices in Spain still well below their peak prices of 10 years ago, many have concluded that there is real opportunity and value in the Spanish market and have already acted. Many more are considering a Spanish property investment before prices rise further as patterns suggest. The last few years have seen solid growth in the property market with 2016 being a particularly positive year. The signs of Spain's growth are clear from the statistics as well as the new developments constantly appearing to cater for the high demand, something that didn't happen for several years during the recession.

Shift towards Costa Blanca

Why the Costa Blanca?

The Costa Blanca, as the statistics show, is experiencing a high rate of growth in property sales. The region appeals to a wide range of people because it has so much variety to offer. Families enjoy the relatively peaceful atmosphere compared to busier traditional holiday resorts. Couples and group travelers can enjoy the cosmopolitan cities of Alicante and Murcia as well as historic sites and the famous wine region. Sports teams regularly travel to the region for winter training, including top European football clubs and the leading pro cycling teams that are attracted by the mild climate and excellent facilities. The southern Costa Blanca is also a true golfing haven with a host of top quality courses that can be played in excellent conditions all year round. Golf tourism alone accounts for a considerable percentage of visitors to the area throughout the spring and autumn months.

Tourism and Rentals

The record Spanish tourism figures of of 2016 are part of an ongoing pattern. Tourism has risen each year for the past 4 years and Spain is currently the 3rd most visited country in the world. Shifts away from destinations that are perceived to be high risk such as Turkey and Northern Africa have aided this increase. Visitors are mostly from the UK, Germany and France while there is a clear global appeal.

With several private rental portals including AirBnB, homeaway and holidaylettings increasing in popularity, there is a market for Spanish vacation rentals. Casas de Luxe has observed that many buyers see the idea of purchasing a property to be rented to holiday makers as a way of gaining an income that can contribute to the cost of their own place in the sun. The family orientated nature of the Costa Blanca means that apartment and villa rentals have a strong chance of success in the rental market. The Costa Blanca is also a sought after golfing destination and so offers another market to target for rentals.

Choosing the Right Property

Purchasing an overseas property provides unique challenges and can often be confusing due to the amount of different properties available across many locations. Without extensive knowledge of the area and the current market, buyers can find it difficult to establish the best products available to them.

The issue of property developments and local area knowledge is also relevant to the Real Estate Agents. They must know everything there is to know about new developments in order to assess its quality and value. Unfortunately, some agents do not investigate thoroughly enough, instead adopting a “list as many properties as possible" attitude.

In order to help clients narrow their search to only the best property developments in the most attractive area, Casas de Luxe applied its 30 years market experience to create a rating system that assesses a property's current market value and its potential for the future. The award for the highest rated developments with the best properties are awarded the title “Casas de Luxe Hot Spot".

The developments with the Hot Spot award are considered the gold standard of currently available products. Potential purchasers can use this as the benchmark by which to compare properties. The Hot Spot rating system allows clients to focus their search on the best properties they can afford without wasting a great deal of time and resources exploring options that do not satisfy their needs.

What does it take to achieve a Hot Spot rating?

Well.. we obviously aren't talking about the weather. Any property on the Costa Blanca offers the wonderful Spanish climate with mild winters and long hot summers. The Hot Spot property rating, however, looks at details that separate a great overseas property from the pack.

We rate properties and developments based on several key criteria, awarding points in each area according to their performance. If a property scores 80 or more out of 100, it achieves the Casas de Luxe Hot Spot award. Here we will take you through the scoring system.

LOCATION OF DEVELOPMENT – Total points available - 20
Based on Specific surroundings, Airport and Transport Links and Building Density

SERVICES & AMENITIES lifestyle enhancing features – Total points available - 20.

Based on: Daily needs – Recreational Activity sites – Health & Wellbeing Amenities - Nightlife

DESIGN CHARACTERISTICS – Total points available - 20 points

Based on: Latest Specifications, Design – Layout Quality, Extra Features.

TRACK RECORD OF DEVELOPER – Total points available - 20points

Based on: Years of Experience, Bank Guarantees, Demonstrable assets

RETURN ON INVESTMENT SCORE (ROI RATING) – Total points available - 10 points

Based on Comparable properties performance and overall rating of first 4 sections.

EXIT STRATEGY POTENTIAL - Total points available, 10 points

Based on sales statistics of comparable properties and different phases of building if a new property.

A property that scores 80 points or more achieves a ´´Casas de Luxe Hot spot´´ rating

For more detailed explanation of our Calculations, please visit our Hotspots Tab.

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