Published on 31 October 2006 at 09:33 am
Filed under: Europe:- Spain Property Guides » Spain Investment Property Potential
Spain is most definitely not an emerging market – it has a strong, refined and relatively transparent property purchase process, it has had an active property market for decades, the buying process and laws relating to the purchase and ownership of property in Spain are tried and tested and it’s estimated that up to one and a half million overseas buyers will commit to a Spanish property purchase in the next five years alone – and so a question needs to be asked at this point…where is the investment property potential in Spain?
Despite an initial feeling that perhaps Spain is saturated with property and that to make a profit or derive an income from Spanish real estate is beyond the realms of possibility in this day and age this feeling is actually unfounded because not only is there a wealth of investment property potential in Spain, but it exists across both the residential and commercial real estate sectors and across the country as a whole.
For those interested in targeting residential property it is possible to derive an income from Spanish property, it is also possible to flip properties and collect short term gains or to resell them for maximum profit in the medium term…
Those looking to derive an income from the letting of residential property have two main markets to utilise – the tourism market in and around the main beach resorts and the professional market in Spain’s industrialized North.
The holiday home rental season in Southern Spain is long – in fact in the most popular resorts such as Benidorm and Malaga it is year round with retirees renting apartments and occasionally villas for the whole of the autumn and winter season to escape Northern Europe’s grim weather. This means that there is a high returning buy to let opportunity in and around the main resorts in Spain. But before you get too excited these are the most expensive places to buy property in Spain outside the likes of Madrid and Barcelona and only those properties with excellent amenities will rent well.
Good alternative options include golf properties and those within complexes that have shared swimming pools, sports and entertainment facilities. Because it is relatively simple to raise an international mortgage to buy property in Spain from lenders such as Barclays Bank who have had a presence in Spain for over 30 years, the fact that real estate is expensive doesn’t mean that there are no profits to be made. Those who can utilize the power of other people’s money in the form of a mortgage can find that their rental income not only meets their repayments but surpasses them particularly at the height of the summer season allowing the prudent investor an amount to set aside for the annual refresh and spring clean of the investment property, click here to find out more about Spanish mortgages from Barclays.
Those who want a holiday home in Spain that they can then let to friends and family should take into consideration what exactly their target market will be looking for. Because the investor in this situation will require specific things from the property for their own personal benefit this will affect their buying decisions to a degree – but if deriving an income from the property is a priority as well, then careful consideration of others’ needs should be taken into account as well - or prepare to find it hard to let the property out!
The other main residential market where investors can derive an income is in the main employment centres in Spain. High employment towns and cities such as Barcelona have a massive market demand for central or well located apartments which are furnished to a good standard and which can be corporate let for maximum gains or privately let for a good rate of monthly income. An aside to this market is of course the student market. In university cities in Spain there is a strong annual demand from national and international students for cheap accommodation – such accommodation is usually in the form of flats with basic amenities and cost effective furnishing.
Again, all of these options are possible with finance and as long as an investor works out how much they will realistically rent their property for and that this amount will more than cover their repayment commitments they stand to make a good long term capital gain.
On the commercial side of things there are many ventures from the purchase and rental of shops, bars and restaurants in Spanish resorts to the purchase and leasing of office and industrial space in Northern Spain. An investor should always look at market demand, determine how much a property will generate in rental or lease payments and then calculate if the costs and finance will make the proposed property investment venture worthwhile.
The good thing about buying in a tried and tested market like Spain’s is that with so much historical data available about the property market cycle, even those who inadvertently buy before a drop in prices can make a healthy profit if they are prepared and able to ride out the downward trend in the market…the everlasting and intensifying appeal of Spain means that there will probably always be another upward swing in fortunes.
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