A fast-growing economy, falling unemployment, an increase in bank lending and a re-adjustment of property prices have combined to create unique buying conditions for overseas investors in Spanish property.
The end of the property crisis was confirmed recently by the Bank of Spain and the government has stated that the country’s economy is growing at its fastest rate since 2008 – close to 4% in the first 6 months of 2015 compared with the same period last year. Some analysts are predicting economic growth of up to 4% in 2016.
This year, international Real Estate agency Lucas Fox celebrates 10 years in business. Founded in Barcelona by former lawyers Alexander Vaughan and Stijn Teeuwen in 2005, the company has grown to become Spain’s leading independent estate agency, with nearly 100 staff operating in key cities and desirable second home locations.
To mark the company’s 10 year anniversary Lucas Fox has released a 10 year Spanish property report, illustrating the changes in the market since 2005, with prices rising to a peak in 2007, then falling until midway through 2013, stabilising throughout 2014 and now steadily beginning to rise again with a stronger focus on quality properties and a long-term view on both investment and lifestyle.
In the majority of Spanish property markets where Lucas Fox now operates, peak sales occurred in 2007, with prices maintained for slightly longer in the more resilient areas such as the Costa Brava and Sitges, where asking prices peaked as late as mid-2008. Prices fell up to 40% in most areas but less severe drops were seen in the lifestyle-conscious markets of Ibiza and the most desirable areas of Marbella. On Ibiza, properties now have average sales prices matching those in 2008, with 2015 first quarter average prices at €3,010 per square metre (only €31 lower than in 2008). Marbella has seen more of a drop: average prices in 2008 were €2,733 per square metre then, and ended the first quarter of 2015 at €2,313 per square metre.
Barcelona has seen a steady decline in asking prices each quarter until the third quarter of 2013, and has been slowly rebuilding average asking sales prices since then.
Over the past 10 years, Barcelona’s average sales prices peaked at €4,732 per square metre in 2007, dropping to a low of €2,957 per square metre in the third quarter of 2013, before slowly rising again to start 2015 at an average asking sales price of €3,263 per square metre.
Madrid and Valencia have followed a similar pattern but with less of an upswing in prices, with 2014 seeing prices level out. The report shows that both cities have yet to sustain quarterly increases in asking prices during 2015.
During the last decade, Lucas Fox co-founder Alexander Vaughan has seen changes in the Spanish property market at close hand:
“In the period 2007 to 2013 there was uncertainty about the market and this made a lot of people put their plans on hold. In the last 2 years, thanks to more confidence in the recovery of the Spanish economy and the Euro in general, we have seen the market reactivating with price readjustments across the board. The appeal of Spain is as strong as it has ever been and we are seeing a huge growth in what we call ‘lifestyle investors’. They want to make a wise property investment but choose Spain because of the quality of life it offers. This is a key trend in the recovering market today, which we believe offers ‘once in a decade’ conditions.”
Jane Mitchell, is one of the growing breed of ‘lifestyle investors’ choosing to relocate to Spain. She moved to the beautiful wine-growing region of Maresme just north of Barcelona in 2009 and bought a property in the pretty commuter-village of Alella in 2014.
“My husband has a 15 minute commute to work and we live near the children’s school so there is no stress at the beginning or end of the day. The weather is great – we wake up to the sun most mornings and that alone has a very positive affect. And we are all comfortable in a multicultural and multilingual society – hopefully our children will find it easy to adapt wherever they chose to live in the future.”
Since mid-2013 the number of sales transactions has steadily increased in all Lucas Fox regions, indicating greater confidence in the market and more recognition amongst buyers that prices are at their best level, but there is some way to go before sales trading reaches anywhere near 2007 levels, in part due to the lack of quality stock available.
“We are now beginning to see a higher number of quality properties and new developments coming onto the market,” continues Alexander Vaughan. “The new breed of developers are a combination of the better national developers who have survived the last eight years and also international developers. Both often have institutional money behind them and are not reliant on bank finance. New developments appeal to everyone, local and international buyers, basically anyone who wants to own a brand new modern home.”
Lucas Fox is currently focused on growing its New Developments business in response to the growing demand for this type of turnkey product.
The company has also further expanded with the opening of two new Property Lounges in Begur on the Costa Brava and in Marbella as well as a third office in Barcelona at the site of the new Superyacht Marina.