Recently, increased figures were announced for mortgage lending, rental demand, house sales and planning approvals – all factors that signal a strengthening property market which at the moment, is fuelled by foreign buyers, particularly the British.
Investors are becoming increasingly aware of the strong returns that can be seen across the country and while the economy may have been considered as unstable in the past, there has been no better time to invest into Spanish property than now.
• High number of planning approvals
There is certainly no supply and demand issue in Spain as the number of new homes has vastly increased across the country. It’s been reported that planning approvals are up 28% in Spain over the past year alone. The success of the recovery has led to a new wave of investors in the area which has resulted in old Mediterranean style buildings being replaced with modern apartments that are more attractive to the rental market.
• Sales are up, but prices are low
Sales in the Costa Blanca are already up by 30% this year, so we know demand is booming. Prices are around 50% lower than they were at their 2008 peak so buyers can benefit from a significant discount due to market conditions and get much more property for their money. As Spain’s recovery continues, buying at such low prices allows for significant capital growth resulting in positive equity from day one.
• Rental demand has increased
One of the main reasons buy to let investors are flocking to Spain is due to the strong rental demand. Not only does overseas property allow investors to take advantage of a holiday getaway, the rental opportunities are incredibly strong from both permanent residents and short term visitors. The popularity for Spain’s private rental sector has more than doubled in the last five years, with the number of long term let’s also continuing to increase. Investors looking to purchase in Spain at the moment can expect good yields of around 7% for an average two bed apartment.
• Fantastic pound to euro exchange rate
The pound to euro exchange rate recently hit a seven year high and resulted in a significant boost to the budget of property purchasers. These market conditions have resulted in many turning their attention to Spain due to the number of opportunities to take advantage of. Construction is increasing, banks are lending and prices are slowly rising – all good indicators of a healthy recovery.
• Desirable location for tourists and locals
It’s understandable that some buyers could still be apprehensive about Spain, considering the struggle that was seen during the economic crisis. However, it’s worth bearing in mind how the country has continued to thrive as a tourist hotspot for decades due to its hot climate and range of landmarks and attractions. Aside from seasonal visitors, a thriving tourist location enables local residents to benefit from employment opportunities and as a result, property in busy areas such as the Costa Blanca and Costa del Sol continues to be in demand.
One benefit that investors can see in overseas property is the advantage of owning a second home abroad. At Sequre, many landlords with a strong portfolio in the UK are beginning to open their eyes to the possibility of buying abroad and with good reason. It offers a great investment opportunity that can generate good returns throughout the year as well as provide a holiday home for family and loved ones – just one of the many advantages that come with owning a property overseas.
