Spanish property buyers and investors are gradually moving away from the Spanish Costas and are beginning to look towards the big cities, for more higher end properties and better returns on their investments, according to a recent report from Knight Frank.
In Madrid alone, 15 per cent of the market is represented by sales to foreign investors, which is particularly high for a city more than 200 miles from the nearest coastline. Barcelona property sales have risen by 50 per cent compared with the same period last year, with a large proportion of that percentage coming from foreign buyers. Valencia is also attracting huge numbers of foreign buyers now as rental yields on property are excellent when compared with the much lower prices.
When browsing prices, if you are concentrating your interest on the lower end of the spectrum, Valencia is the place as prices can be as much as 50 per cent cheaper than the country’s two largest cities. Whilst Madrid and Barcelona are experiencing a huge boom in the numbers of short term rental apartments, available for both tourism and for business, as the Spanish economy begins to move in the those areas and tourists start to look for something more unconventional than the hotel sector.
It needs to be noted that the big cities benefit less from seasonality than the Costas for foreign investors as they are inhabited and are tourist destinations all year round. Traditionally, there are two or three months of good yields on the Costas, bar the Canary islands where tourism is a year round affair. Cities on the other hand, have masses of people flooding into them for work and business opportunities (work is less readily available in the more rural areas of Spain), for students and for long term rental. There is a good opportunity in the long term rental market because the Spanish in general can not get mortgages to buy as the banks are still highly reluctant to grant them and there are many strict lending criteria in place. Therefore people are forced into a situation in which they are having to rent and they are also looking for long term stability within their rental contracts.
One thing to bear in mind is that there are certain places where your investment for rental has to be planned and thought out well. Barcelona has just temporarily suspended the granting of tourist licenses for short term rentals. The hotel lobby is heavily pressuring Spanish Government ministers to regulate against sites such as AirBnB and others which offer short rental stays, the tax office is also tightening up on non-declared rentals.
Ron Wilkinson of Alta Vista Property, a real estate firm focusing on Marbella and the Costa del Sol thinks that the trend is due to the large number of foreign investors taking up interest in the country’s market.
“We have seen an influx of buyers interested in property in the city of Marbella, and the majority of these are indeed foreign investors,” he explained.
“The cheap prices, low cost of living and relatively small tax rates are drawing many to the area, particularly investors from the Far East and China. Many are taking advantage of the governments ‘Golden Visa’ scheme and purchasing properties worth over half a million euros in exchange for permanent residency in the country.”
Bradley Shore is an experienced property and investment blogger who enjoys imparting advice upon his reader ship. You can check out his other work or follow him by taking a lok at his twitter page.