Buyers now reign in Spain
Despite pullback on citizenship plan for foreign homeowners, cheap prices draw overseas investors, writes Peta Tomlinson
Desperate times call for desperate measures, and last year Spain was so anxious for an economic quick fix that it was prepared to give away citizenship for a song.
For property purchases of a mere €160,000 (HK$1.7 million), foreign buyers would gain automatic residency, Trade Minister Jaime Garcia-Legaz announced in November last year. With more than 700,000 unsold houses remaining from the 2007 real estate collapse, and no sign of improvement domestically given Spain's 25 per cent unemployment rate, Chinese and Russian investors were targeted, he said.
The plan was widely condemned by other EU nations with higher entry levels - Spain was seen as "selling itself too cheaply", says Barbara Wood, director of The Property Finders, a property search company. But a year is a long time in real estate, and when the law was finally ratified on October 1, the threshold for residency had been lifted to €500,000.
Non-nationals also have to buy mortgage-free, and citizenship is no longer a given. The initial visa will be for two years and will be renewed if the property is still owned at that time. Application for citizenship will be allowed after 10 years.
What's changed, apart from international sentiment, is the real estate landscape itself. According to official data, residential sales volume increased by 2.3 per cent year-on-year in June - a modest jump, but a gain nonetheless. Purchases by foreigners increased by 28.4 per cent in the second quarter, making year-on-year growth for eight consecutive quarters.
Agents and developers anticipate that the relaxed laws on foreign ownership - known as the "golden visa" - will encourage a raft of overseas buyers. The €500,000 spend doesn't have to be on just one property - the amount is accumulative, so buyers can build a portfolio of two or more cheaper properties.
