The following article is an abridged and adapted translation of an article published by the Spanish daily El Mundo on the 11th of September 2017, explaining how real estate development is recovering faster in the Valencian Region’s Alicante province than in the regional capital itself, largely thanks to Alicante’s foreign demand.
Alicante doesn’t beat Valencia very often when it comes to big economic figures, but there’s one activity where it does win against its northern neighbour: the property sector. Construction in Alicante is recovering at a faster rate than in Valencia.
Both have suffered similar problems since the property bubble burst back in 2008, although the impact was higher in Alicante. But almost ten years later, the property industry is on the way to stability. And in the race to recovery, Alicante is ahead of Valencia thanks to the driving force of residential tourism.
While Valencia beats Alicante in some market sectors such as luxury city homes, offices, business premises and industrial warehouses, when it comes to sales of houses and land, new developments, finished projects and investment figures, Alicante leads the race.
In terms of sales, Alicante is way in front of Valencia. Official statistics point to 32,068 sales in Alicante province in the year to June compared to 23,644 in Valencia province.
The trend for number of new-build starts is similar. According to the latest Spanish government figures, some 2,080 new builds were started in Alicante between January and May this year. The Alicante Architects Association say 2,544 were started by June. In Valencia, the figure sits at just 698, three times lower than Alicante.
Houses are also being finished more quickly in Alicante – between January and May this year 1,487 were completed. In Valencia, just 501 and it’s a similar story for non-residential construction. In Valencia, work started on 60 buildings in the first five months of the year while in Alicante, the figure was 63. Office and industrial construction is, however, higher in Valencia (11 buildings) than Alicante (5).
Real Estate Investment
According to the Alicante Technical Architects Association, some €182 million was invested in new residential projects in Alicante in the first six months of this year. Bearing in mind that construction activity in Alicante is considerably higher than in Valencia, it seems to logical to conclude that investment is also much higher.
Spanish government figures put new-build investment in the Comunidad Valenciana region at €236 million. If Alicante is building 70% of the developments, some €165 million of the total was invested between January and May.
Land sales are also more active in Alicante than Valencia. In the former, there have been 796 land sales over the last year with a value of €135 million and a total size of 1.3 million square metres. In Valencia province, 692 land sales took place with a value of €86 million and 1.08 million square metres.
There are several reasons why the residential sector in Alicante is busier than in Valencia. The main one is demand from foreigners who buy 40% of all homes in Alicante, 12,700 properties out of the total 32,000. In Valencia, just 2,000 homes are bought by foreigners.
Alicante has always had more appeal for foreign buyers. Resorts such as Las Marinas, Torrevieja, Orihuela Costa and Pilar are dominated by the foreign market. “There are more residential projects because there’s more demand, especially for holiday homes,” say construction companies.
Proof of this is the fact that Spain’s largest new-build construction companies are concentrating more on Alicante than Valencia. Aedas, Neinor, Activum SG and Lar y Merlin all include the Costa Blanca in their new development plans. Valencia is also included, although to a lesser extent. And Sareb (Spain’s so-called bad bank) also does more business in Alicante, tipping the balance in favour of Alicante.