While many property markets continue to struggle, second-home destinations and popular vacation spots are ready to rebound, reports Savills, the property consultancy. Spain’s Balearic islands, Tuscany and the Caribbean are among the “retreat” markets the agency identifies as hot markets, with a minimum 10 percent price growth forecast for 2014.
“While cities may have been the growth story for the last five years, it is likely to be city getaway locations that show the best growth in the next five,” writes Savills research chief Yolande Barnes.
Many second home “retreat” markets are still 30 percent below peak levels, Savills reports. Discretionary purchases ground to a halt during the downturn, leaving many markets with a glut of product.
But with economies around the world recovering and credit loosening, people are buying second homes again. As the current supply of flats is absorbed, buyers will find it more difficult to find quality properties, after a shutdown in new building.
“Some [investors] may find what they want in secondary markets and second tier cities, but others will spot the immense buying opportunities that now exist in the wide variety of locations that we have always called retreat property,” according to Ms. Barnes.
Several second home markets are benefiting from programs offering a visa for property buyers. Spain launched a deal last year to offer a residency visa to anyone who pays at least €500,000 for a property.
Visa programs are “actively boosting demand for resort and retreat properties from nationalities not often associated with this type of property,” Savills reports. In Portugal, Chinese buyers accounted for 78 percent of the visa program applicants.
Many second home markets have already started to rebound, Savills reports.
“In Spain, Ibiza has been the star performer where prices for the best villas in the best spots have recovered to their pre-peak levels,” the report says. In prime locations, villa prices have recovered to their pre-peak levels.
There is more supply on nearby Mallorca, where demand has remained “repressed,” but Scandinavians are “particularly active” on the island, the agency says.
The report also spotlighted Sotogrande, the resort 60 kilometers from Marbella. “British, Russian and French buyers (who are often already familiar with the area) are benefiting from heavily discounted prices to buy second properties, some 30-40 per cent below their former peak values,” Savills says.
This recovery in the resort markets is real, but it is still a slow process, Savills says. Many of the getaway markets won’t return to their former peaks until 2019, at the earliest.
The full report can be found here.