Property Investors Drawn to Recovering Spanish Market

The financial crisis definitely left its mark on the Spanish property market. Once a hotbed for investment thanks to strong demand for tourist properties and second homes, the …

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The financial crisis definitely left its mark on the Spanish property market. Once a hotbed for investment thanks to strong demand for tourist properties and second homes, the crisis saw property values in the country plummet.

However, not all investors lost heart, with some taking the opportunity to snap up low-cost properties in anticipation of a recovery. Now it seems this group may have been rewarded, and the country’s surprise change of fortunes is drawing the attention of more and more international buyers.

Following a few quarters of GDP growth and a modest but much-needed drop in unemployment, Spain’s property market now seems to be on the rise again. After a record-breaking summer for tourism, property prices in the country have now risen. This is the first time in over six years that the country’s property market has seen price growth.

Naturally, this recovery is centered around the popular coastal areas where the larger part of the country’s tourist numbers choose to go. Now that value growth has finally arrived in the country, more and more investors are starting to pay attention to the area and look for properties in these coastal tourist hotspots. Through the month of June alone, some regions saw an increase approaching 9% in the total volume of transactions taking place.

Furthermore, June saw year-on-year growth of 19% in lending compared to the equivalent period in 2013. This represents both a possible sign of increased mortgage lending as buyer confidence in the region returns, and a show of confidence in the overall strength of Spain’s recovery.

One aspect of the crash that caught the attention of buyers was the fact that it meant significantly lower prices. Compared to 2007 before the global financial crisis really took effect, prices are hugely discounted and investors can now get a lot more for the same level of outlay. Now that the market seems to be starting a recovery, for some investors the price drops of recent years have gone from being a red flag to an opportunity to pick up a property while prices are low.

If the recovery proceeds as expected, this could serve to significantly boost the rental returns on offer and potentially provide significant capital growth as the market regains lost ground.

Certainly, compared to 2007, the market has shifted to being much more in favor of buyers. Before, the Spanish property market was one with little room for negotiation of prices or flexibility in returns. Now, buyers of Spanish property are in a much stronger position relative to sellers, and benefit from a much more positive situation.

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