A recent article published in This Week magazine Gains in Spain: is now the right time to invest in Spanish property, asks the question as to whether the time is right to invest in property in Spain.
Recent activity which includes the buying of property by large investment funds has indicated over the last few weeks that serious investors believe the bottom of the market curve is rapidly approaching.
What evidence is there to suggest Spanish property is a good bet
Hot on the steps of various investment funds purchase of large tranches of property direct from the Banks is the news that the canny George Soros and equally celebrated John Paulson have both invested $ 127 million into a real estate investment trust called Hispania which has been set up to buy Spanish property and will be listed on the Madrid Stock exchange.
With some areas of Spain showing price drops of up to 70% from the boom there would appear to be indications that 2014 and 2015 could be the right time to buy in Spain.
What about individual buyers in Spain
Many buyers of Spanish Property who want to own a home in the Sun have delayed their purchasing decisions until the market stabilized. The fact that seasoned and experienced investors are now dipping their toes back into water could indicate that for individuals the time to achieve the lowest possible price could be in the coming few months.
Whilst recovery in Spain is sporadic and not as yet sustained, economically it would appear the worst is over.Spanish Banks have cleaned up their balance sheets and are actively lending again, and unoccupied sprawling urbanizations built in the heydays are starting to become occupied as prices have dropped to a point where selling property has become possible.
Will we see a property recovery across all of Spain
In some areas of Spain including the more up market parts of the Costa del Sol, Mallorca and the Canaries small increases in prices and much higher levels of activity are being reported by Estate agents, Lawyer services for buying in Spain and mortgage advisers.
At the top end of the market incentives such as the new golden Visa scheme is also encouraging buyers from non EU countries like Russia, China and India.
Other areas are also showing much higher levels of active interest. This includes areas like Murcia where properties that started for sale at € 250k can now be picked up for under e 100k and prices as low as 30k to 40k can buy a small apartment.
If buying for a return, the purchase arguments are less tangible, particularly for smaller individual investors as the challenges facing Spain remain volatile and unpredictable. If buying for a holiday home or permanent residence where the investment profile is not as important as buying something at the best possible price to specific individual requirements, the arguments are much stronger that now is the time to seriously start looking again.
Credit facilities for purchases in Spain
Credit on Spanish Mortgages has become more flexible and slightly easier to achieve. For buyers looking at property over € 400k one Bank in Spain has recently launched a product with interest margins the best that has been seen for many years and are charging for the variable rate 2% above 12 month Euribor.
Many Spanish Banks have also put together best buy special product for Northern Europeans who have started to flock back to Spain due to prices and exchange rates. Scandinavians are favored applicants for many Banks due to the perceived economic strength of these countries and past experience of the Banks of credit performance.
UK applicants who are not being so actively targeted will find during 2014 credit opening up in Spain and will remain one of Europe’s most prolific buyers in Spain.