British headlines in recent months have enjoyed making a meal over the Spanish property market. The corruption and land grab scandals were all evidence that the Spanish property tracks were buckling under the spotlight of investor recrimination. Then, a ripple in Madrid’s stock market was seized upon as a sign that the property bubble in Spain had burst.
The reality on the ground is rather different ? or, to be precise, tells differing tales. At the lower end of the market, there remain pockets of problems with overdevelopment, planning permission (or lack thereof) and other scurrilous activity. But experts confirm that for those not looking for a snappy investment, Spain has abundance of qualities that many deprived northern Europeans find beguiling: the pace of life, local culture, excellent infrastructure, ease of access, good healthcare and political stability.
‘It’s unhelpful to talk about the Spanish property market as a homogenous entity other than in overview terms because each region has its own unique market,’ explains Mark Stucklin, head of Spanishpropertyinsight.com. ‘One area can be in recession while the other areas are doing well. What people don’t understand is that Spain is highly autonomous. It’s not federal but not that far off.’
James Stewart (+34 952 827 999) who has worked in the real estate market in Spain for 25 years and is the Savills associate in Marbella and Sotogrande agrees. ‘Different regions have different climates and different markets,’ he explains. ‘The Balearics are currently faring better than, say, the Costa del Sol which has without question suffered from oversupply but it is by no means a dead market as some reports suggest. Things were far worse in the late 80s and early 90s. The market here is different: prices are set by sellers who are then in no hurry to sell. In turn, buyers will walk into an estate agency who are in no hurry to buy ? they might not have even decided on whether to buy in Spain, France or Croatia. But overall it’s a good time to buy as vendors have learnt to be more realistic about their expectations.’
Several months on from the series of problems which led to panic about a possible Spanish property crash and the signals are good. The Economist said that Spain’s economic growth is at 4.1% which is the highest of all the developed countries in Western Europe. Unemployment is also falling. Mr Stucklin continues: ‘So the economy is strong and in there is plenty of wealth creation. Against this background it is unlikely that the Spanish preoprty market will crash. What we should expect, however, in the months to come is a slowing of growth. ‘Construction activity must fall and this currently makes up 18% of the GDP, compared to an average of around 9% of the EU. That will take some of the wind out of the economy’s sails.’
Costa del Sol & Andalucia
The Costa del Sol still has, despite misgivings about over development, tremendous cachet. There are, of course, several no-go areas: of the more publishable aphorisms, the ‘Costa del Crane’ has some disaster towns and discernible buyers are sticking to the well known resorts of Sotogrande and Marbella or head for the pueblos blancos in the hills. Planning controls have been tightened, corrupt mayors imprisoned and prices are correcting themselves following the boom a few years back. Added to which, according to James Stewart, no official body has said any of the buildings will be knocked down. As there are an estimated 30,000 illegal buildings ? many of which bought by Britons ? the retreating threat of demolition will lend some stability to the market. ‘Anyone looking to turn a quick investment here should forget it,’ advises Mr Stewart. ‘There are definitely problems with too many 2-bed apartments overlooking motorways but the introduction of more controlled planning, the improved railway connections and the new motorway means that the Costa del Sol is still a safe long term bet.’
In general terms Andalucia’s strength is that it caters for all buyers ? and not just the British market. ‘Despite the negative publicity, the Costa del Sol has 30 or 40 flights from the UK every day and still has the best climate in Europe,’ says Michael Corry Reid, sale director of Aylesford (+34 951 371 371). ‘Besides, the Germans, Dutch, Scandinavians don’t read the British press. 2007 is shaping up to a good year for us.’
A four bedroom, frontline villa on the Costa del Sol — that’s the sea side of the N340 road, an important distinction along this stretch of coast ? will cost anything from EUR1m upwards. ‘But many British buyers tend to head for the hills unlike the eastern Europeans who insist on the sea views,’ says Mr Corry Reid. Aylesford are currently marketing El Puerto del Negro, a five-bedroom cortijo a few miles outside Gaucín, a pueblo blanco which is long attracted British buyers. The owners, Tony and Christine Martin, have no doubt played host to several Country Life readers during the time it was of the ‘101 Leading Hotels of the World’. They have put the estate, which includes a 2-bedroom cottage with a separate swimming pool and stunning views of the Jimena valley, on the market for ?3.5m.
The frontline villa market on the Costa del Sol has been sluggish for the past two years, ‘But this recently negative publicity has had the reverse affect,’ says Michael Hornung of the Marbella Club (+34 952 866 306). ‘Enquiries are beginning to pick up and a couple of clients have expressed their renewed confidence in the area following the clean up of Marbella’s Town Hall.’
Another sign that the top end market on the Costa del Sol operates to a different beat to the rest of the market is the fact that Kristina Szekely’s office in Marbella (+34 952 81 01 02) have a waiting list for frontline properties. Tine Hagemeister says: ‘The expensive top-end of the market is very active indeed and we are finding a shortage in property. Owners of the frontline beach villas on the Golden Mile currently read like a Sunday Times Riches List.’
Villas in the exclusive Euro-millionaire playground of Sotogrande rarely fetch less than ?2m. So it comes as little surprise that the modernist, rust-coloured villa, designed by the Mexican architect, Ricardo Legoretta commands a price tag of ?3.5m. Enormous glass windows take full advantage of the Mediterranean views and vast outdoor patios provide plenty of room for entertaining. Engel & Volkers (+34 956 79 02 90), who are marketing the property, estimate that prices in the resort rose by 10% in 2006.
At the other end of the scale, there are plenty of developers who are keen to off load new build flats that have been victims to market saturation and bad press. With some investors taking fright having laid down their deposits, there are some bargains to be picked up. Two-bedroom apartments over looking golf courses near the coast are available for ?180,000. ‘But that same amount of money will buy you something really special inland,’ says Jon Clarke of Andalucia Exclusive (+34 665 787 191). He buys up properties ‘of character’ and restores them using local techniques and materials such as cork for insulation. While unsold apartments are rendering some coastal resorts ghost towns, the market inland is more buoyant. Prices are up to a third less than they are on the coast and the popular town of Ronda (where Bryan Ferry has been spotted house shopping) experienced a healthy 10% growth in 2006. Andalucia Exclusive are currently marketing a three-bedroom, two bathroom stone house in Arriate, near Ronda, which has been sensitively renovated to a high standard at a rather digestible ?180,000.
David Scheffler of Engel & Völkers in Barcelona, is adamant any suggestions that property that exclusive coastal areas of Spain are liable to drop in value are way off mark. ‘On the contrary, in our opinion the market is just taking a breather after a huge six-year boom and we expect to see it rise again continue its ascent.’ He cites villas in the high end locations of the Costa Brava (around Begur) undergoing a 60% increase in value from 2001 and 2005, and a further 7% in 2006. John Taylor’s offices in Barcelona and the Costa Brava (+34) 972 307 827) say that, to date, the negative publicity hasn’t affected their market where buyers from the UK, France and Holland are keeping up demand for houses with sea views.
The Orange Blossom Coast has long been popular with smart Spaniards (Prince Charles is an occasional visitor). It has been blessedly protected from mass development catering to the British market mostly due to the fact that access (with the exception of Madrid) has been tricky. This is set to change with a new airport at Castellón is due to be finished next year. Lionel Westell, the Jackson-Stops & Staff associate (+34 96 221 04 46) reports: ‘The premium market is still looking and purchasing but carefully avoiding many of the traditional resorts also adventuring inland for country houses and estates, re-discovering real Spain and its colour.’ He is marketing properties in Portocala, the new upmarket resort just outside Benicasim. ‘Portocala was designed for well heeled Spaniards who have known the Onofre-Miguel family. It’s ideal for English buyers want to avoid living in a foreigners enclave.’
Aylesford Marbella +34 951 371 371 www.aylesford.com
James Stewart ? Savills +34 952 827 999 www.sav-spain.com
Engel & Völkers Sotogrande +34 956 79 02 90 www.engelvoelkers.com/
Engel & Völkers Marbella +34 952 900 077 www.engelvoelkers.com/
Kristina Szekely Sotheby’s International Realty +34 952 81 01 02
Andalucía Exclusive +34 665 787 191, www.andalucia-exclusive.eu
Marbella Club Real Estate, +34 952 866 306 www.marbellaclub.com
Jackson-Stops Valencia, +34 96 221 04 46 www.jackson-stops.co.uk
John Taylor Costa Brava (+34) 972 307 827, www.johntaylorspain.com