So far so good in the Spanish property market. There is evidence of a slow down but nothing too abrupt and the much hoped for soft-landing looks increasingly possible. Construction activity and property prices have been roaring ahead at an unsustainable rate over the past few years leading to fears of a painful readjustment. Given the Spanish economy’s unhealthy dependence on the property sector a big readjustment would be painful indeed.
On the other hand howls of pain could clearly be heard from the Spanish tourist sector during August. Growth in tourism has slowed significantly in 2004 with tourists booking shorter visits at the last minute, spending less money per visit and increasingly staying in private apartments as opposed to hotels. All of which sparked off a fractious debate between government and industry as to the cause of the problem. Some members of the government have had the good sense to question whether the traditional model of ‘sol y playa’ (sand and sun) plus cheap beer is the right strategy for the future, which prompted a furious response from entrenched interests in the industry. This debate is long overdue.
But the big news in August was the tragic death at home of Carmen Ordoñez. Daughter of one of Spain’s great bullfighters, Carmen married a bullfighter called Paquirri who left her for La Pantoja (Spain’s Diva) and then died on the horns of a bull in the ring. A tragic story full of passion and drama her life and death has sent the prensa rosa – the gossip press – into a state of hysteria and no doubt has been the main topic of conversation over many a beachside aperitivo from Cadaqués to Tarifa during August. Meanwhile the British press was salivating over yet another football ‘n sex story. Spain – home of Hello! Magazine – invented the genre of the gossip magazine and the Spanish certainly know how to gossip with more style than the British.
Barcelona Property Guide now available
The Barcelona Property Guide produced by Spanish Property Insight is now available. This guide looks in details at buying property in Barcelona for either private use or as an investment. The guide can be read online at this website.
Growth in number of new homes started falls by 50%
According to figures provided by the Spanish Government the number of residential building permits granted in March 2004 was up by 17% to 63,000 compared to March 2003. This compares with the 40% increase registered in March 2003 over 2002 – a reduction in the growth rate of over 50%. Some industry commentators have used these figures to argue that the Spanish real estate sector is experiencing a soft landing given that demand is slowing down due to high property prices.
Foreigners buy 150,000 properties in Spain every year
150,000 properties – approximately 15% of the properties sold in Spain each year – are sold to foreign buyers. Of this figure 90,000 are bought by EU citizens as second homes whilst 45,000 are bought by foreigners moving to Spain for good. A recent report by Analistas Financieros Internacionales for the Association of Developers and Contractors of Spain (APCE) concludes that 200,000 foreigners will move to Spain every year until 2008, implying the foreigners will continue to play a significant role in the Spanish real estate market.
Industry experts believe that property prices will increase by 7% in 2004
According to José Luis Marcos, Director of the real estate consultancy Roan, Average Spanish property prices will increase by 7% in 2004, double the rate of inflation. He estimates that 600,000 new properties will be started in 2004 (down from 690,000 in 2003), falling to an average of around 350,000 to 400,000 new properties started each year in 2007 and 2008.
Tallest residential building in Europe to be built in Benidorm.
The tallest residential building in Europe – called Torre Lugano – will be built in Benidorm just 600 metres from the beach (Playa De Levante). The tower block will be 158 metres high and have 42 floors in all. Prices will range from 150,000 Euros for the cheapest apartments to 600,000 Euros for the penthouses on the 42nd floor.
2,1 million Spanish families own at least 2 properties
New figures show that 2.1 million Spanish families own at least 2 properties in Spain. There are now 6.5 million properties in Spain that are either never used or used only for occasional visits.
180,000 second homes to be sold in Spain each year
Industry analysts predict that 175,000 to 180,000 second homes will be sold in Spain each year until 2008. The majority of these holiday properties are expected to be sold to foreigners, of which 52% will be British buyers, 22% German, 8% French, 6% Italian, 6% Scandinavians and 3% Belgians.
Spanish mortgage payments rise for first time in 3 years
Average monthly mortgage payments in Spain have risen by 3 Euros – the first rise since April 2001. Euribor – the Euro zone base rate used to determine mortgage rates in Spain – was 2.252% in May of 2003 and rose to 2.297% in May 2004, resulting in an annual increase of 31.08 Euros of mortgage repayments on the average Spanish mortgage of 120,000 Euros.
Spanish GDP rises 2.8% in the 1st quarter of 2004
With 2.8% GDP growth in the 1st quarter of 2004 Spain’s economy grew by more than double the Euro zone average of 1.3%. Spanish economic growth was largely fuelled by investment in the construction sector, which grew by 3.3%.
Study reveals problems with new build properties
A new study using a sample of 82 properties in the provinces of Madrid, Barcelona and Valencia reveals that over half of all newly build properties are delivered late or with construction faults. In 17 cases delivery took place over a year late and in 28 cases the delay in delivery was between 2 and 6 months. The biggest cause for complaint amongst buyers was poor finishings and workmanship.
Catalonia is Europe’s second most attractive region for investments
According to a new report released by the Chamber of Commerce of Paris, Catalonia is now Europe’s 2nd most attractive investment region after the London area. The report is based on an analysis of foreign investments in 12 metropolitan regions of Europe. In 2003 the London area lead the way with 112 foreign companies investing in the area, followed by Catalonia with 82. Catalonia enjoyed one of the biggest increases, rising from 62 investments the previous year.
Construction activity in Balearics lowest in all of Spain in 2003
The number of new properties started in the Balearics in 2003 was 7.8 per 1,000 inhabitants, which is the lowest level of all of Spain’s autonomous regions, behind Madrid (8.5), The Basque Country (8.2) and Extremadura (11.6), according to a report published by “La Caixa”. At the other end of the scale, with the highest level of new homes started in relation to the population were Andalucia (24.9), Murcia (21.5) and the Autonomous Region of Valencia (18.4).
© Mark Stucklin (Spanish Property Insight)