How foreign buyers are shaping the Spanish property market

Foreign buyers have driven the Spanish property market since the turnaround in 2014. Lucas Fox partner Tom Maidment looks at the trends they are setting in 2019.

Foreign buyers

Lucas Fox Partner Tom Maidment recently spoke to leading Spanish property portal pisos.com about the purchasing habits of foreign buyers and the regions and types of properties most in demand.

Tom Maidment, Lucas Fox Partner

What is the share of foreign buyers in the luxury property market?

Since the launch of Lucas Fox in 2005 foreign buyers have always been an important part of our business. Indeed the company was originally established specifically to cater for this sector of the market, providing a professional service to overseas buyers that previously wasn’t available in the Barcelona market.

Throughout the years of ‘La Crisis’ foreign buyers were the most active investors in the Spanish market, allowing us to grow the company whilst other agencies more dependent upon national buyers struggled.

At the start of the property turnaround midway through 2014 it was international buyers who first capitalised on low property prices – up to 40% below the peak in some areas – a gamble that has already paid off. In Barcelona for example. prices have already increased by 40%.

We began to see a resurgence in sales to national buyers during 2016 – initially in the three major Spanish cities of Madrid, Barcelona and Valencia – and now we are seeing increased activity from Spanish buyers in the most desirable coastal areas too. For example in the first quarter of 2019 we saw significant increases in sales by national buyers in Marbella, the Costa Brava and Sitges.

Which are the main nationalities buying residential property?

In 2018 just under a third of our buyers were Spanish and the greatest proportion of foreigners (12%) came from the United States or Canada. British buyers have continued to show interest in buying homes in Spain despite the ongoing issues surrounding Brexit and represented 11% of the foreign buyer market last year. The French and Scandinavians have also continued to be active and this year we expect to see more sales from Middle Eastern buyers in certain city and coastal markets as a number of new development projects finally complete.

What is the typical buyer profile?

It’s hard to generalise but a large proportion of our buyers are entrepreneurs, company CEOs, figures from the financial services and banking sectors and even high profile sports and entertainment personalities.

We also see a high volume of young international families looking to relocate to cities and digital nomads attracted by the quality of life looking for a base in a vibrant Spanish hub.

Many of our buyers are also investors in the traditional sense of the word but we are also seeing increasing numbers of lifestyle investors opting for Spain due to its numerous benefits – from climate and culture to gastronomy and communications.

In the past couple of years we have also seen a rise in ‘passion investments’ – buyers looking to set up a business, such as a rural hotel or vineyard, to get some return from their lifestyle investment.

How has the Spanish real estate sector changed over recent years?

The Spanish property market has changed considerably in the last decade or so. It has had to become more professional and adapt to meet and cope with the growing demand from foreign buyers. The mortgage sector is significantly more competitive, offering good packages to entice buyers over the long term.

Real estate agencies have become more savvy and innovative with regards to marketing and now employ multilingual staff with experience in other markets. There are growing numbers of investment consultancies based in Spain offering guidance on developing and growing property portfolios. None of this was available when Lucas Fox first launched nearly 15 years ago. However, Spain still lags behind sophisticated markets such as the UK and US, where there is much more regulation in the industry, more professionalism and generally much more movement.

Which types of properties are currently most in demand?

Buyers’ requirements depend entirely upon the location and type of property. If it’s a purely lifestyle purchase the buyer will often look for something they can’t necessarily get back in their home country, such as sea views, walking distance to the beach, a swimming pool and large terraces. A pure investor will look at supply and demand and potential rental returns – in these cases it’s a business decision rather than an emotional one. High-end buyers will always be driven by location and will look to buy in prime areas. Privacy, security, light and space are almost key criteria for this type of buyer.

What is the price range for these types of properties?

At Lucas Fox the average sale price achieved is around €1.1 million with prices starting from around €450,000 up to (in rare cases) €15 million or more. Most of the sales activity in the cities tends to be between the price range of €500,000 and €900,000.

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