Spain starts to sparkle once again
The rain may still be falling on Spain's beleaguered property market, but it seems that overseas buyers are prepared to wade in for a bargain. Following three years of collapsing prices and few, if any, takers for that once-so-aspirational Spanish villa in the sun, investors are returning, according to Bank of Spain figures.
Latest data indicates that last year ended relatively well for vendors. Foreign investment in Spanish property 'surged through' September with a 27.8 per cent year-on-year increase. This pushed transaction growth over the whole quarter to 19.2 per cent and, for the third quarter in a row, the value of property sold surpassed Euro1 billion (HK$10.2 billion) - something not seen since 2008.
Few would be brave enough to declare that the storm clouds have parted. Foreign investment into Spain has been very changeable in recent years - even before the crisis of 2008, notes Marc Pritchard, sales manager of Taylor Wimpey Espana, a leading Spanish house builder.
'It progressively declined between 2003 and 2006, only to rise in 2007. Then the upward trend was cut in 2008 during the economic crisis, seeing foreign investment fall.' However, Pritchard views news that the foreign-investment market is up once again as a sign that conditions are improving.
So far this year, he sees the trend continuing. 'The increase in Spanish property sales seen in the last quarter of 2011 has spilled over into 2012 as international bargain seekers hunt down the best Costa deals.'
How low can prices go? Last month, Spain's Economy Minister Luis de Guindos said values had dropped by 35 per cent since the crisis started.
Nevertheless, the question is what will happen now that the new Spanish government is pushing banks to tighten their lending requirements, with a view to driving prices down?
Besides, in this market, desperate vendors will listen to any offer. One agent on a Spanish property blog notes: 'I have been surprised by the number of vendors who say that they will not drop their prices. However, once the money is on the table, they change their minds.'
Marc Da-Silva, editorial director of International Estate Agent Today, quotes a 'demand thermometer' tool on Spanish property website idealista.com to indicate the 'huge gulf' between asking prices and what prospective purchasers are actually prepared to pay.
'The findings show that home hunters offered 23 per cent, on average, below asking prices in January,' he says. 'The largest difference is being recorded in locations with the greatest glut of homes. It is no coincidence that all these destinations are popular with international holiday home buyers.'
According to the tool's methodology, in Malaga, on the Costa del Sol, bargain hunters are offering an average of 29 per cent below a vendor's asking price. In Soria, it's 28 per cent less, and the Balearics, 27 per cent. Differences of in excess of 25 per cent were also being recorded in Castellon (Costa Azahar), Girona (Costa Brava), Almeria (Costa Calida), Tarragona (Costa Dorada) and Murcia, Da-Silva notes.
Repossession specialists, such as www.propertyrepossessionsspain. com, advertise villas 'at half price or better', and www.direct propertyinvestments.com offers 'up to 70 per cent off present market prices'.
Of course, there is wisdom in the warning about things that seem too good to be true. Spain has its share of subprime properties that might be poorly located, of inferior - or even illegal - construction, or need extensive refurbishment. As with any investment decision, it's a case of buyer beware - mindful that a bargain-priced property may not be the same as a good-value property.
Nevertheless, it appears that holidaymakers are returning, which is surely good news for property investors. British vacation-rental website HomeAway.com reports a 27 per cent increase in booking inquiries for Spain last year compared with 2010 - a factor which Les Calvert, founder of overseas property portal Property-Abroad.com, says can influence purchasing decisions.
'Property rentals can have a great impact on the buying and selling of overseas property, as more and more of us dream of owning our dream home abroad. Not only do you earn money to help pay for the property while you are not using it, but it also helps to keep the property safe and secure during your absence.'
And, when it is time to sell an overseas property, 'having a history of rentals can help secure a good price, as the property can, in effect, be classified as a small business with a profitable return.
'However, remember to look into taxation issues when considering this road,' Calvert adds.
Interest from Hong Kong and the mainland is particularly strong this year, increasing 'from a trickle over the past year to more of a trot today', Calvert says.
'Inquiries from investors looking to invest both from and in the Chinese markets, especially within the Hong Kong sector, have risen by almost 22 per cent over the same two-month period in 2011.'
Golf-course homes play on local style
Golf-course homes, with the option of sea views, have been developed by Taylor Wimpey at Andratx, Mallorca, 800m from Camp de Mar beach.
Los Altos del Golf consists of 16 large, detached houses split into two-, three- and four-bedroom properties.
Designed in the style of a Mediterranean village, the development features spacious terraces, gardens and three communal swimming pools. Prices are from Euro495,000 (HK$6.1 million).
The Montesol residential complex in Calpe, Costa Blanca offers houses with gardens and communal swimming pools. Each has three bedrooms, two bathrooms, a cloakroom, roofed sun terrace and private parking. Air conditioning and hydro massage bath are also included. Priced from Euro237,900. Details of both developments: www.taylorwimpeyspain.com