Spanish revival


Five years on from the 2008 financial crisis, Spain’s property market remains in the doldrums. But the recent introduction of a new “Golden Visa” looks set to reignite foreign investment and contribute towards the gradual recovery of the real estate sectorLeading Edge

In the years following the democratic transition of the mid-1970s, Spain’s markets underwent rapid liberalisation. The Iberian nation quickly became an enviable second home destination for many Europeans, especially British nationals, in search of a “place in the sun”.

In the post-GFC years, however, investment from these established markets all but came to a standstill, partially contributing to the moribund state of Spain’ s property sector and overall economy. Yet a recently implemented measure that grants residency permits to foreigners who purchase property in excess of EUR500,000 (USD678,000) could entice investors from further afield, particularly Asia, and breathe new life into the market.

To capitalise on the emerging trend, a bourgeoning number of Spain- based high-end developers are now promoting luxury residential projects through launch events and road shows in major hubs around the region, including Hong Kong and Singapore, according to Alex Vaughan, partner at Barcelona-based property agent Lucas Fox.

“There has been a massive increase in interest from Asian buyers,” he said. “Tourism [from Asia]has picked up in recent years and that was followed by a lot of investment. I’ve been contacted by at least 50 companies representing Asian buyers since the new measure was announced.”

In addition to the introduction of cooling measures through many of Asia’s key real estate markets, major attractions for most Asian investors include rock-bottom property prices — which, according to the country’ s National Statistic Institute, have plummeted about 30 percent in the past five years — and the opportunity to travel freely in the European Union.

“The ‘Golden Visa’ is clearly of high appeal to non-EU residents, especially those in Russia, China, the Middle and Far East, keen to access the EU and enjoy visa-free travel in the 26-country Schengen Zone,” said Marc Pritchard, sales and marketing director for developer Taylor Wimpey España. “The fourth quarter of this year is set to be great in terms of sales, surpassing levels prior to the economic crisis with the sustained growth of international visitors and second home buyers not just picking up a Spanish visa, but bringing with them the power to propel national market recovery.”

Indeed, an increase in visitors through 2012 resulted in a 7 percent annual growth in tourist spending to EUR40.4 billion (USD54.7 billion), with the Balearic Islands leading the charge, according to the Tourist Expenditure Survey. Yet unlike the British and European buyers of yesteryear, who primarily purchased properties in coastal destinations to use as second homes, Asian investors seem more inclined to pursue city investments which offer solid returns.

“Buyers from the Far East are not really not looking to come spend 10 days here on holiday,” said Mark Stücklin, a Spanish property market analyst and head of “It’ s more about investment and residency criteria, so what they want is property in a prime, deep liquid market with good rental demand, good sales demand.”

He added, however, that while there is a range of appealing benefits associated with attaining residency in Spain — notably the relatively high standard of living, lack of pollution, political stability and good quality education system, to which the new influx of overseas buyers may not necessarily have access in their respective countries of origin — they should remain cautious when seeking out investment opportunities.

“The British market is very mature and [buyers]are now pretty well informed, while the Chinese market, for example, is very new and investors will be channelled through agents,” Stücklin said. “Unscrupulous sales people could well use residency and the lack of knowledge amongst buyers to sell overpriced substandard investments.”

is the editor-in-chief of Property Report