FTSE-100 company Taylor Wimpey has been building homes in the UK since 1880, and in Spain since 1958 as Taylor Wimpey España, after company founder Frank Taylor fell in love with Spain on honeymoon in Mallorca, and set up a Spanish subsidiary with the help of Jaime Ballester. As Taylor Wimpey España celebrates 60 years building homes in Spain, Sales & Marketing Director Marc Pritchard, answers questions on how the market for second homes on the Spanish coast has changed over the last decade.
What brought you to Spain, and what’s your role at Taylor Wimpey España (TWE)
Born and brought up near Hamburg in Germany, I spent my first holidays on Mallorca at the age of 5 in 1975 in Font de Sa Cala / Cala Ratjada in the north east of the island. After many happy holidays there I came back to work in Mallorca in 1989 as a windsurf and sailing instructor, then joined TWE in 1993 as a sales consultant, rising to Sales Manager for Mallorca in 1995, Market Development Manager in 2006, and Sales & Marketing Director Spain since 2012.
Summarise TWE’s business and main selling points.
Established over 100 years ago in the UK, TWE has been building homes in Spain since 1958 and delivered over 6,000 properties, mainly second homes and holiday homes on the coast in areas such as Mallorca, Menorca, Ibiza, the Costa Blanca North & South and Costa del Sol to clients from over 40 countries worldwide. We deliver what we promise, with no legal problems, so we are a name you can trust in the Spanish property market
What was the market like when you first started in sales with TWE?
When I started at the end of 1993 everything was very different. We had three developments in Spain, and I was employed as a sales consultant in a showhome in north east of Mallorca. The internet hadn’t been invented, and everything was done face-to-face. Most of our clients were from the UK, especially for the Costa del Sol and Costa Blanca, though German buyers were increasing fast in Mallorca, and saved our skin in the property crisis of the early 90s. We reached our clients through advertising in papers, magazines, and shows. We would organise inspection trips for them, or they would come over on their own steam, and there were some walk-ins. Nowadays it’s all about online positioning, Search Engine Optimisation and Search Engine Marketing, so it’s all changed.
What are the main factors that have changed the market over the last 10 years?
Two things changed the market dramatically.
Firstly, the advent of low cost air carriers like Easyjet boosted demand for second homes in Spain by increasing accessibility and reducing the price of travel. This was a big driver of demand, so we certainly have to thank the budget airlines for that.
Secondly, the internet has transformed our marketing and customer service. It took some time to for our industry to get up to speed with the internet, but nowadays we wouldn’t know what to do without it.
How does your demand breakdown today by nationality compared to 10 years ago?
In 2007 we sold homes to 12 different nationalities, and the top 2 markets including the UK represented 65% of demand. Last year we sold homes to 33 different nationalities, and the top six combined had a 55% market share. This just illustrates how international demand for property in Spain has diversified. Mallorca is still dominated by German and UK demand, but the market on the Costa del Sol and Costa Blanca is more international than ever. British buyers are still number one on the Costa del Sol, but in the upper-market segement on the Costa Blanca we now have less buyers from the UK – there our buyers come from regions like Scandinavia, the Benelux countries, Russia and Spain.
How has Brexit affected the market?
Obviously it has had an impact, we all know that, but we have also seen an important change between the immediate aftermath and today. In the first six months of 2017 UK buyers fell to sixth position in terms of sales volume, but by the end of 2017 they were back up to second position. We see that British demand has dropped in in the €200,000 to €350,000 bracket for TWE, and we don’t have a lot of properties for sale below that. Brexit has hurt the middle-market most, but British buyers with budgets around €450,000 or above really came back very strongly in the second half of 2017, and are now our biggest market, along with the Germans. I suspect Brits with financial resources are getting money out of the UK before Brexit. Most of them are cash buyers.
What are buyers like today?
Buyers are far better informed now than they have been in the past and in some cases seem to know the market better than some of our sales staff, having done a lot of research online. But their reasons for buying are the same today as they were 20 years ago: Quality of life, a good climate, outdoor living. 80% of our clients are lifestyle buyers, not investors looking to make money, though we are starting to see more of them. Of course, our lifestyle buyers are buying an asset they expect to protect their wealth. The majority are buying second homes or holiday homes, and with an average age of 51 years clearly some have an eye on retirement. They use their second homes for holidays and weekend trips throughout the year. We see people buying more as holiday homes in Mallorca, and more as second-homes on the mainland.
Do you think people care about a developer’s brand?
Customers do investigate who they are buying from after all the horror stories from the boom years. It’s important to check who you are dealing with. Property is a big investment, and you can lose a lot of money dealing with the wrong company. Our clients run background checks and know who they are dealing with, though we find that wealthy buyers invest more in due diligence. The strength of our brand makes life easier for us. Our order book currently stands at 375 properties, thanks in part to the name behind us that gives our clients confidence.
Are you worried about another new development boom on the coast that turns out to be unsustainable?
I think we are still light years away from the building volumes of the boom years, although there are a lot of new developments in the pipeline. But it’s nowhere near crazy yet, though I hope the industry can avoid repeating past mistakes. We have noticed that some developments on the Costa del Sol are being launched for sale without license in place. We would never do that.
As far as prices go, we are seeing some areas of Mallorca hit the pre-crisis peak, 11 years later! But I’m not worried about a bubble as this time round the market will signal when prices are too high and people stop buying. We are very careful about the plots we buy and disregard any that are too expensive to build homes within the market price and at our standard of quality.
Which areas have a bright future?
Accessibility is always the key, though in the Balearics land is also a problem, as it’s so scarce. The better the access, the brighter the future. A good airport with low cost flights 365 days a year is very good for the second-home market. It helps explain why demand is so strong in the Costa del Sol and the Costa Blanca. If Murcia’s new airport gets going, that will be good for demand in that region. Mallorca could do with more flights to more cities throughout the year.
What are Taylor Wimpey España’s plans for the future?
We now have approx. 800 homes under construction, on 18 active sites. Will continue to focus on the second home market in selected areas, and aim to be the home-builder of choice for discerning buyers. This has worked well for us 60 years, through boom and boost. We have around 70% of 2018 delivery already sold, and are now focusing on selling 2019, so the outlook is promising for now.