Currency fluctuations give way to a rise in British, US and Swiss buyers and a drop in Russian investors to Spain’s prime property market

The Lucas Fox market reports for Q3 and Q4 have been released and suggest that recent currency fluctuations will have an impact on buying habits for property investors during 2015.

The international financial markets are expected to be a key driver in the uptake of Spanish prime residential property during 2015, according to Lucas Fox International Properties, whose latest market reports have just been published.

During the first few months of 2015, Lucas Fox has already registered an increase in demand from UK, US and Swiss buyers thanks to the rise of the US Dollar, GB Pound and Swiss Franc against the Euro. Conversely, the number of Russian investors is expected to dwindle as the Rouble goes further into free fall.

With unemployment falling, the economy growing faster than predicted and property reaching the bottom, 2015 is set to be a pivotal year for Spain’s property market. Prices are on average 40% below what they were since the start of the crisis in 2007 and we predict a slow and steady recovery. This is an opportune time to invest.

Alexander Vaughan, Co-founder Lucas Fox

Significant findings in Lucas Fox regions during Q3 and Q4 2014

Barcelona

  • Prices have stabilised in the past 12 months, and new international interest is impacting on demand for prime residential property. 2015 is expected to be the most significant year of recovery for the prime market in Barcelona since 2007.
  • Lucas Fox sales data shows that Middle Eastern buyers accounted for 12.5% of all purchases during 2014, followed by the Spanish and French (both 11%), the Germans (8%) and the British (7%).
  • Lucas Fox sales data indicates that the bulk of prime market property purchases in Barcelona during 2014 was for investment use (2 in 5 purchases), whereas in 2013, the main reason for buying was for use as a primary or secondary residence.
  • The number of transactions in 2014 increased over 2013, with more properties above €1 million selling than in the previous year.

We see 2015 as the recovery year for the Spanish prime residential property market, driven mainly by increasing numbers of overseas buyers. We expect that those who were deterred by falling prices during the past 7 years or so, will enter the market, enticed by some real opportunities. Prices have fallen by up to 40% in some areas of the city but, in the last 12 months, these prices have stabilised. Some recent figures suggest that in some of the most desirable areas of the city, such as Eixample and the beachfront, prices for the best properties are starting to creep up again. The key change in the Barcelona Residential market during 2015 will be the return of quality, new build residential developments which have not been seen on the market for several years and where demand currently outstrips supply.

Alexander Vaughan, Co-founder Lucas Fox

View Lucas Fox Market Reports for Barcelona

Costa Brava

  • Foreign investment in residential property has grown significantly. In 2010, foreign investment in new housing properties accounted for 9% of the market. In 2014, foreign investment represented 26% of the market.
  • Price movement in the prime residential property market for the Costa Brava region is not expected in 2015. However, sales volume is predicted to increase particularly in the coastal areas around Begur, including Aiguablava, Tamariu, Calella and Llafranc – traditionally a very popular area for mid to high-end British and Northern European buyers.
  • The Costa Brava prime residential property market is seeing maintained levels of activity each quarter, with sales trading leading into the summer particularly strong. In Q2 2014, total transactional value of prime market sales by Lucas Fox reached nearly €8 million.
  • Lucas Fox sales data indicates that the majority (80%) of prime market buyers are looking at the Costa Brava as a second residence or holiday home although just over 13% of buyers in 2014 purchased in the area for use as a primary residence.

Given the worsening economic situation in Russia and the Rouble’s continued struggles against the Euro, the number of Russian buyers will inevitably fall further. On the other hand, the strength of the GB Pound and the likelihood that it will strengthen further against the Euro should attract an ever greater number of British buyers to the market in 2015. Also, since the unpegging of the Swiss Franc against the Euro and its subsequent rise, we have already noticed an increase in the number of Swiss buyers coming into the market. Apart from this, more and more savvy purchasers are taking advantage of cheap mortgages to leverage their properties against a weakening Euro. These factors should help make the market more attractive.  Buyers will inevitably be looking for good deals in 2015, with a focus on reduced priced properties in prime locations.

Tom Maidment, Partner Lucas Fox Costa Brava

View Lucas Fox Market Reports for the Costa Brava

Maresme Coast

  • Russian buyers accounted for a quarter of all sales in Maresme by Lucas Fox in 2014 but this figure is expected to dwindle in 2015. Conversely, an increase in interest from Northern European buyers, especially from the UK and Scandinavian countries, is expected.
  • Lucas Fox sales data suggests that the majority of prime market property buyers on the Maresme Coast purchased properties for their private use, either as a primary (40%) or secondary residence (60%).

We have already seen a significant drop in the level of Russian enquiries and viewings during 2015 and this could have an impact on properties at the high end of the market. Below the range of €1.5 million, we expect to see increased interest from Northern European buyers, especially from the UK and Scandinavia. The strength of the GB Pound, the US dollar and the unpegging of the Swiss Franc is likely to attract ever greater numbers of British, American and Swiss buyers looking to take advantage of reduced property prices and favourable exchange rates. We also expect to see greater numbers of enquiries from local buyers as the Spanish economy continues its revival and banks start approving increased numbers of mortgages.

Rafael Rosendo, Director Lucas Fox Maresme

View Lucas Fox Market Reports for Maresme

Sitges

  • Sitges prime market property prices are expected to remain stable throughout 2015 as most owners have already readjusted prices in line with market conditions.
  • Sitges average sales prices ended 2014 at €3,296 per square metre. By the final quarter of 2014, Sitges average property prices had risen again compared with the Barcelona average, ending the year €108 per square metre higher than the Barcelona average.
  • According to Lucas Fox data, 43% of purchases bought property for use as a holiday home in Sitges during 2014 whilst 28% purchased as a primary residence. The majority of buyers (44%) were from the UK.

Sitges prices are expected to remain stable throughout 2015 as most owners have already readjusted prices to buyers’ expectations. Recently, we have been getting more enquiries from high budget overseas buyers looking for a range of properties: homes with sea views or close to the town centre remain at the top of the wish list. Buyers tend to request either contemporary or rustic properties but demand is currently outstripping supply.

Rachel Haslam, Director Lucas Fox Sitges

View Lucas Fox Market Reports for Sitges

Ibiza

  • Along with slight price increases, Ibiza saw a 10% increase in prime market property buyer interest, a trend that is expected to continue in 2015.
  • Foreign investment in residential property has grown steadily. In 2010, foreign investment in new housing properties accounted for 18% of the market. In 2014, foreign investment represented 32% of the market.
  • Sales trading in the Balearic islands (which includes Ibiza) has shown a more robust incremental increase in sales activity for the past year than is evident in the Spanish overall property market.
  • Lucas Fox Ibiza saw the majority of sales activity in the second quarter of 2014 transacting close to €10 million (€9.35 million) during the 3 month period. While the majority of prime market buyers bought holiday home properties, close to a third (28.6%) of purchases were for investment purposes.

As far as prices are concerned, we are seeing a slight rise once again. Ibiza remains very much the place to be and is a secure investment destination, with its high return on rentals during the peak summer months. In 2014, we saw a 10% increase of client numbers and expect this upward trend to continue in 2015. The high season seems to be extending as increasing numbers decide to enjoy the island’s lovely winter months. As a result, we are seeing an increase in demand for long-term rentals.. The vast majority of our clients come from the UK, Spain, France and Germany followed by Italy and the Netherlands.

Maxim Rettich, Partner Lucas Fox Ibiza

View Lucas Fox Market Reports for Ibiza

Marbella

  • Marbella residential property has seen strong growth in foreign property ownership. In 2010, foreign investment in new housing properties accounted for 12% of the market. In 2014, foreign investment represented 35% of the market.
  • Amongst foreign buyers resident in Spain, transaction value of purchases made across the Málaga region (which includes Marbella) increased for each quarter in 2014 over 2013 levels.
  • Average property prices in key luxury districts across the Marbella region remained steady between the end of 2013 and the end of 2014. Average prices in Marbella Town rose in average prices to €2,307 per square metre.
  • According to statistics from the Lucas Fox website, international interest in Marbella comes primarily from the UK (22%), followed by the US (9%) and after that, the Netherlands, Belgium and Sweden.

The buzzwords for 2015 are definitely location, design and quality. The market for designer and quality properties in prime locations turned around 1 year ago, with buyer interest picking up and a significant increase in the number of transactions in 2014. This has been particularly noticeable in the luxury sector, resulting in an increasing shortage of good quality, luxury properties available to buy. One of the primary changes that we have observed in 2014 is the profile of our buyers, which has evolved from predominantly retirees to a much more dynamic, younger buyer who is more quality and fashion orientated. Therefore, the average age of buyers has dropped from an older age group to late 40s to 50s, whose focus is on quality, style, accessibility, services, security and privacy.

Stephen Lahiri, Partner Lucas Fox Marbella

View Lucas Fox Market Reports for Marbella

Valencia

  • It is expected that during 2015 prices across the market in Valencia will remain stable as they have done over the last 6 months. In the most discerning areas of the city, a slight rise of prices ranging between 1% and 3%, is expected.
  • Although the number of sales transactions of second hand properties in Valencia has dropped significantly since 2007, sales trading has seen increases each year since 2012 with a 31% increase in the number of sales of re-sale properties trading in 2014 over 2013 levels.
  • Valencia average sales prices have been steadying in 2014, with average prices in the Old Town (Ciutat Vella) at €2,158 per square metre by the end of 2014. 

It is expected that during 2015 prices across the market in Valencia will remain stable as they have done over the last 6 months. In the most sought-after areas of the city a slight rise in prices of between 1% and 3% is expected. Foreign buyers are increasingly looking to buy in Valencia city as the market opens up to a more international clientele and this trend is expected to continue into 2015.

Juan Luis Herrero, Partner Lucas Fox Valencia

View Lucas Fox Market Reports for Valencia

Madrid

  • 2014 was a year of stability and growth for the property market in Madrid, with prices expected to have bottomed out.
  • Total sales value of transactions in the first three quarters of 2014 was higher than the corresponding quarters of 2013.
  • The total transaction value of sales of new property iMadrid, totalled €787.1 million (compared with €496.5 million for the corresponding period in 2013).
  • Madrid city centre saw some price corrections in the third quarter of 2013 and has since steadied in price, maintaining an average price of €3,285 per square metre by the end of 2014. The affluent districts of Chamberí and Salamanca both saw slight price increases over the levels recorded at the end of 2013, at €3,260 per square metre and €4,138 respectively.

2014 was a year of stability and growth for the property market in Madrid. Following several years of crisis and an important price correction, positive economic indicators brought renewed interest from international investors. Madrid remains one of the most reasonably priced European capitals with a high growth potential. We believe that the market has bottomed out and predict that property prices in Madrid will remain stable during 2015.

Rod Jamieson, Director Lucas Fox Madrid

View Lucas Fox Market Reports for Madrid

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