UK decision to quarantine Spain is another blow to the Spanish second-home market

Boris Johnson’s sudden decision to impose a two week quarantine on all visitors returning to the UK from Spain is a blow to the holiday-home market, which was just starting to show some signs of recovery after the lock-down.

Once the coronavirus appeared on the scene, 2020 was always going to be a disaster for the second-home market on the coast, but this latest move by the British government, which essentially hammers confidence in Spain over the summer, takes the biggest market out of the picture in what remains of the year’s property-sales season.

Hopes to salvage something from the wreck of 2020 in the second half of the year now look that much harder, at least as far as the British market is concerned. As you can see from the chart below, the British market is still the dominant market, even after the Brexit referendum.

spanish property market Q1 2020

“Massive blow”

“The latest news from the UK government regarding travel to Spain is a massive blow for our sector,” says Warwick Pemberton, Director of Costa Brava Fincas, a real estate agency based in Platja d’Aro, a beach resort town in Catalonia’s Girona Province. “2020 has been a crazy year to date, and just when the market was picking up, more negative news from European politicians does not help one bit.”

As other agents around Spain report, buyer interest was picking up after the lock-down ended, and some sales were even made during it.

“Surprisingly enough, during May and June we had a lot of interest from European clients, and fortunately managed a couple of sales via video calls which was a first for me,” Warwick told me. “I imagine we will see another downturn with the latest news, but could be good news for the smart investor.”

As far as house prices go, what sales there are close at double digit discounts, whatever the official figures and blue-chip forecasters say. “Asking prices have stayed pretty much the same (despite me informing vendors we need to reduce them), however sale prices are usually circa 15% of the marketing price,” explains Warwick, adding “Platja d’Aro is open for business, but as you can imagine a lot quieter this year.”

Indignation in Spain

There is a lot of indignation in the Spanish media, and especially in the tourist industry, about the sudden British decision to quarantine Spain, which came out of the blue. What seems to rankle the most is the fact that Covid-19 is already endemic in the UK, where the related death rate is one of the highest in Europe, and the Spanish regions where 99% of British tourists go, namely the Costa Blanca, Costa del Sol,  the Balearics, and the Canary islands, have lower infection rates than the UK. Germany, in contrast, has only discouraged travel to Covid hotspots like Catalonia, where I am.

The feeling is Spain is the quarantine doesn’t make much sense on a public health level, so maybe the decision is political. I also heard it suggested on the radio yesterday that maybe Spain’s competitor destinations like Italy and Greece are being more discrete about their Covid numbers. The more you test and publish, they worse you look. Whatever the truth of that claim, the competition is certainly benefiting from the situation. “Greece gains from the pain in Spain,” reports the Sunday Times today. “Holiday makers are flocking to Greece and Turkey instead of Spain, as they seek out tourist destinations with the lowest risk of travel restrictions,” it goes on to explain. One this is certain,. The UK’s decision to quarantine Spain going to put a lot of people out of business, out of jobs, and make the already dire Spanish recession even worse.

I asked a smart friend of mine, employed at a senior level for a big management consultancy that does work for governments around the world, what is going on in the UK. “It is all a disaster,” he replied. “Management by the day. No plan. No strategy. Nothingness.”

That’s encouraging.

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