Long overshadowed by Spain’s other property hot spots, Murcia now has development fever. But is it a good deal?
First published in the Sunday Times, 18 September 2005
The fastest rising house prices in Spain are not on the Costa del Sol, or even on the Costa Brava, but in Murcia. Until recently it was more famous for producing vegetables than attracting holidaymakers, but the agricultural region has seen prices rise by 169% in the past five years, according to government figures. Andalusia comes in second, with a modest 132%.
The information has prompted the Organisation for Economic Co-operation and Development, the International Monetary Fund, and even the Bank of Spain to express concern that the country’s turbocharged property market is overheating. And if the market’s been hot in recent years, then Murcia – which offered coastal property at lower prices than in more established areas – has been its molten core, with its growth mainly driven by British buyers.
For centuries Murcia was a poor, if beautiful, backwater. In the 1980s it reinvented itself as Europe’s market garden and iceberg-lettuce king. The reinvention process is once again under way, this time as a holiday destination.
It’s not hard to see why. The climate is exceptional, with sunshine, balmy temperatures and low rainfall. And, coming late to the development game, its 150 miles of beautiful coastline are still largely unexploited – a big asset in a market that is starting to kick against mindless overdevelopment.
Considering that Murcia has been largely overlooked until recently, it is ironic that Spain’s purpose-built holiday- resort business kicked off in Murcia with the La Manga Club 35 years ago. Established by Gregory Peters – a Californian rambler who fell in love with what was then wild countryside looking on to a saltwater lagoon known as the Mar Menor – La Manga was Spain’s first residential golf development, and is still one of the classiest. A celebrity-spotter ‘s paradise (Wayne Rooney and girlfriend Colleen McLoughlin were recent visitors), it has a five-star Hyatt Regency hotel and spa, and is often chosen by leading football clubs as a place to train, relax and bond.
As La Manga is a mature resort, there is little opportunity for new building, although the developer Medgroup will soon offer a limited stock of properties in a type of leaseback agreement, with the rental and management handled by the Hyatt hotel. However, Marilyn Sleep, head of Design Home Sales – an estate agency based at the La Manga Club – says the resale market at the resort is robust. “The club’s reputation gives people the confidence to buy here because they know what they are getting, unlike some other resorts. However, it is very exclusive, and villas here start at about 1m (£680,000), which is unusual for Murcia.”
But while the La Manga Club has been in the limelight for years, Murcia as a whole is now definitely on the radar of British buyers. One reason is the super-slick marketing campaign being waged by just one developer – Polaris World. With six resorts containing about 30,000 properties, Polaris World’s ambitions are almost pharaonic, with resorts rising like small cities out of the dusty plains of Murcia.
Gordon Payne, 64, and his wife Ann, 62, from Malvern, Worcestershire, have recently moved to Murcia, after buying a three-bed, three-bath villa at Polaris World’s Mar Menor Golf Resort, just outside the town of Torre Pacheco and 15 minutes from the beach. They paid £150,000 off-plan in July 2003, and spent another £12,000 putting in a pool. Similar homes without a pool are now selling for £270,000.
“We knew we didn’t want the Costa del Sol because we don’t think it offers value for money,” explains Gordon over an ice-cold lunchtime pint in a bar overlooking the fairway. “So we started looking in the Costa Blanca, but found the overdevelopment there oppressive, and just kept heading south until we reached Murcia. When we got here we knew it was right.” One week into their new life in Murcia, and despite some snags – today their air conditioning isn’t working – the couple are convinced they made the right decision. “I had a swim last night at midnight after eating out under the stars,” says Ann. “For me, that is quality of life.”
Other notable developments in Murcia include the Hacienda del Alamo resort, inland at Fuente Alamo, which Sleep tips as the most likely to follow in the La Manga Club’s well-heeled footsteps, and the Lorca Resort in the south of Murcia, halfway between the picturesque town of Lorca and the beach at Aguilas, set in the foothills of the Sierra Almenara, with eucalyptus forests and a national park.
With so much new development going on, what about the resale market? “The resale action today is largely inland,” explains Andrew Lupton, head of Stacks Relocation Spain – a relocation and buyer’s agency based in Murcia city. “Coastal property is flatlining after pricing itself out of the market, and rising crime and overcrowding are also conspiring to drive buyers inland.”
According to Lupton, a typical British client will have about £170,000 to spend, and is looking for a three- to four-bedroom, two-bathroom villa with a bit of land. But interest is also growing in three-bed town houses in the attractive old quarters of inland towns such as Lorca, Calasparra, Caravaca and Mula, which can be had from about £45,000 fully refurbished. Looking to the future, he expects the coastal city of Cartagena to turn into a real jewel – Murcia’s answer to Barcelona.
But after four years of boom time for Murcia’s property market, ominous clouds are gathering. For a start, the holiday-home market across Spain is clearly cooling down, and Murcia has not escaped this trend. When British house prices stagnate, the effects are soon felt on the Spanish costas. Now that Murcia’s price advantage over the other costas has largely evaporated, and with it the region’s main selling point, it looks likely that Murcia will struggle.
In the short term, there is a risk that the market won’t be able to absorb all the new properties being built. Relative to other areas, Murcia doesn’t stand out for excessive building (48,000 new housing starts in 2004, compared with 97,000 in the Valencian region and 146,000 in Andalusia), but by Murcian standards this is a flood of new properties. If an already slowing market can’t absorb them all, then off-plan investors and developers may be in for trouble.
Property investor Kevin Walsh certainly thinks this is likely. After paying a deposit for a town house on the Polaris World La Torre Resort, he got cold feet and backed out.
“I was looking for pure financial gain, not a lifestyle investment,” Walsh says. “Then it dawned on me how much they are building in a region that is still relatively underdeveloped from a tourism point of view, and I realised that there was a high chance that I would be stuck with a property that I didn’t want and couldn’t rent. I also doubt it’s sustainable as there are currently 30-plus golf-course developments under way in Murcia, and water already seems to be a huge issue, so it can only get worse. I invested in the Lake District instead.”
There are other issues, too: the resale market is rife with unprofessional estate agents targeting British buyers, and the rapid rate of development has sucked in a number of greed-driven local developers with no experience of the complexities of realising homebuyers’ dreams.
Juan Bertomeu – a real-estate lawyer who covers both Murcia and Almeria – describes it as “the Wild West”, where planning permission is too often ignored and developers make little effort to deliver on their promises.
And then there’s the water issue – “The Issue”, as Lupton calls it. Spain is in the grip of its worst drought for years, making the situation more severe than normal, but even Murcia’s average annual rainfall would not be able to meet the area’s needs once all the properties and golf developments are built.
Plans to solve the water problem presently revolve around desalination plants, although the environmental cost of these is high. For the time being, Murcia doesn’t appear to have a viable long-term solution that reconciles its real-estate development plans and thirsty huertas, or market gardens, with its lack of water.
If they can solve the water problem and learn from the development mistakes of other coasts – a big if – then Murcia, with its lovely climate, scenery, and thus far unexploited coastline, may turn out to be a good bet in the long term. However, given Murcia’s frontier character, British buyers have to tread especially carefully when buying there, and only deal with the most reputable companies. And, in the short term, if only the clouds gathering on the horizon contained nothing more welcome than rain.
© Mark Stucklin (Spanish Property Insight)