Property in Spain has always been popular with foreigners, especially the Brits. The good news is that the number of buyers is on the increase and indicates the beginning of recovery in the market.
According to research published by the Spanish General Council of Notaries on Monday, residential property sales to foreign buyers increased by 27.2% for the first quarter of the year, boosted by increased interest from Asian buyers.
British buyers purchased the most property, representing 13.8% of the foreign market, followed by the French (10.5%) and Russians (8.4%). Buying from Ireland increased significantly by 78% year-on-year.
Asian buyers, predominantly from China showed an increased interest of 83.1% over the last year which is bolstering the Spanish real estate market. Jason Ham, head of business development at Spanish-based property agents Lucas Fox said: “In 2013 the greatest growth markets for enquiries and property viewings came from the Far East market. The Chinese are most attracted to Barcelona and Madrid as well as the southern city of Marbella for its golf courses and good, cheap deals.”
Ham, who travels regularly to China to meet with potential buyers said that the Chinese are generally interested in apartments in city centres which are close to luxury shopping centres, good international schools and amenities.
In general, foreign interest has mainly been concentrated on coastal areas which, together with Madrid, have registered the highest year-on-year growth of any region at over 40%.
Recent large-scale investment in Spanish real estate from heavyweights such as George Soros and Bill Gates have boosted investor confidence amongst American buyers with property purchases by US citizens surging by 88.9% year-on-year. However, despite a huge increase in US investment, just 1% of foreign buyers in Spain are American.
The Spanish government’s ‘Golden Visa’ program is also behind increased real estate investment by non-EU buyers eager to obtain European residency, particularly Russians anxious to protect their wealth from sanctions imposed on their country by the US.
Spain experienced a long-term property boom after the country joined the Euro which was underpinned by a housing bubble, financed by cheap loans to builders and home buyers. However, since the 2007 and following the financial crisis, house prices have declined significantly with many experts speculating that the bottom of the market has now been reached.
According to property valuation firm Tinsa, in the first quarter of 2014 Spanish property prices fell by 6.7% year-on-year which brought house prices to 39.7% lower than the 2007 peak.
Foreign investors are increasingly looking at Spain’s real estate market. According to financial services firm PwC, Spain is the European market to watch in 2014, having switched to “good opportunity” from “no-go” in 2013.
With prices hovering around the bottom range and investor interest picking up, it is expected that house prices will begin to increase, particularly in the coastal areas of southern Spain.