Lucas Fox’s Head of Middle East desk Amr Shamel spoke recently to Gulf News about the ‘Golden Visa’ scheme which offers non-EU nationals Spanish residency when buying property worth €500,000 or more.
When did the real estate market open up to immigration investors?
In October 2013.
What has been the performance so far? What would property worth €500,000 invested at the start be worth today?
The first homes market bottomed out in early / mid 2014 in prime areas of the main cities (Barcelona, Madrid and Valencia). Since then the trend has changed following the improvement in economic indicators with Spanish cities being perceived as a lagging market with great potential compared to the rest of Europe, not because of the Golden Visa programme although that may have helped. For properties worth €500,000 prices have appreciated around 20% on average in prime areas. Rental revenues are currently considered to be around 4-5% per year. Second / holiday home properties also started to show positive signs led by the Ibiza market and soon followed by other regions according to each market’s supply and demand. Barcelona property is most in demand with a very strong buying momentum from international investors.
What’s the five-year outlook for an investor buying property today in these markets?
We expect an uptrend, with strong rallies in both property and rental prices in the cities of Barcelona and Madrid, followed by second home destinations such as Ibiza, the Costa Brava, Marbella etc.
Which cities / areas in these markets represent the best investment option?
Currently the prime city centre areas of Barcelona and Madrid would be the best investment areas as prices are still far from pre-crisis levels and properties there will always be the first to lead any appreciation. On the other hand, it’s also a good time for investors to start gradually stepping into the second home market because there are still bargains to be had and the current low prices will definitely appreciate in the long term.
Which cities / areas in these markets are a less obvious but potentially valuable investment option?
The outskirts of Barcelona and Madrid, as after price rallies in prime areas we are currently witnessing extremely big price gaps between prime and non-prime areas so you will find investors snatching opportunities there. We expect it to be the same story as what has happened in the British market – as soon the prices in London city centre became too unattainable, investors started to look in other places such as the outskirts of London or Manchester and Leeds.