Property Investment Advice - Spain 2007

This year saw property prices in one of Europe’s top investment and holiday locations drop by up to 65%! Spain’s tourist hotspots (the Costas) were the worst hit.

Overdevelopment was one of the main causes. They simply built too many properties. People most affected are the short-term investors and off plan buyers.

The biggest prices falls have been in the two-bedroom apartment sector; the most saturated market.

It’s not all bad news though…

Once again, after many years, Spain has become a buyers market with some excellent bargains on offer. Short-term investors and get-rich-quick merchants are selling properties at significantly less than they bought them for before the property slump. At the moment you can get a place for the same price you would’ve paid three years ago.

Most experts agree that Spain still has excellent potential as a long-term investment location.

Investment advice

Think long term

OK, short term is obviously not too sensible at the moment. If you’re thinking of making a quick buck, you should maybe be looking at the Cape Verde Islands or some other emerging markets. In Spain, it’s the recent buyers who are most concerned but realistically there’s no need to be unless they have to sell their property quickly. Most people who bought a number of years ago have made considerable long terms returns on investment in Spain.

Spain has always been a popular investment area, particularly with the British. With thousands of holidaymakers every year it has excellent rental potential. On the Canary Islands, with year round sunshine, buy-to-let investors can rent out properties all year round at tourist prices.

Spain also has a massive expat community of English speakers. Over one million British people have homes in Spain. All together, the British buy between 50,000 and 70,000 homes in Spain every year. An over hyped property scare is unlikely to put an end to Britain’s long term love affair with Spain. Spain has always been a home away from home for the Brits and is likely to remain so.

Homebuyers and investors simply need to look at the long-term perspective. The days of making fast profits seem to be over (for the moment). They need to be realistic about prices. Long term, in a country as popular as Spain, good value quality properties will inevitably go up.

The experts are advising all new homeowners not to panic and to hold onto their property, as prices will eventually recover.

Look for new places to buy

Spain is a massive country known for its beautiful beaches, excellent climate and staggeringly diverse natural landscape. Away from the tourist hotspots you’ll find a country steeped in history culture, art and tradition. Inland, there are some excellent opportunities for both buying a home and investing long term.

The Costa de la Luz, on Spain’s west coast boasts the best beaches in the whole of the country yet still remains relatively undeveloped.

Look for quality properties

Don’t be tempted to buy poor quality properties even if the price is very low. There’ll always be a demand for good quality properties in good locations. Poor quality developments are often hit the worst by market fluctuations. If buying into a new development , always ask to see the developer’s previous work - visit the location, if possible. Remember to bargain hard and never compromise on quality.

Quick tips

Don’t panic. Hold onto the property until the market stabilizes.

If buying a new home to live in, rent in the area first.

Be aggressive in your offer price.

Prices are cheaper and properties are often bigger outside main resorts.

If it’s a buy-to-let investment, thoroughly research the location and rental potential.

Establish a realistic budget - consider ALL the expenses, before, during and after the purchase.

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Property Investment Advice - Spain 2007

Investment advice

Look for new places to buy

Look for quality properties

Quick tips