By Alessandro Pasetti
Are you looking for the real estate investment of your lifetime in Spain? Do you dream of retiring or living on the Costa Del Sol?
If so, we have some great news for you: thanks to strong local relationships with developers, real estate agents, tax advisors and legal consultants, the Inveztments team can help identify outstanding real estate investments to help you achieve your financial goals.
The latest trends suggest there could be no better time to eye a property development or existing property investment in a country that after years of stagnation seems to be making a long-awaited comeback.
The areas on Inveztments’ radar are Puerto Banus, Marbella, San Pedro De Alcantara, Nueva Andalucia, and Estepona.
“Three Costa Del Sol towns are driving Malaga’s property market into the top of national rankings,” ran the headline in The Olive Press (OP) last week.
Based on data from Panorama Properties, Marbella’s most established estate agency, price growth in Marbella, Estepona and Benahavis is greatly outpacing the national average.
“The three towns saw sales shoot up by 11.15% in 2017 compared to the year before, exceeding pre-2007 levels by 10.4%. The rest of Spain, meanwhile, still lags 21% behind pre-financial crisis levels,” OP reported, noting that Estepona, in particular, saw sales rocket by almost 30% last year.
Along with the UK, the south of Spain is where Inveztments’ founders have lived and invested in for over two decades, and while the choice between the two countries often concerns lifestyle, there are some other important considerations from an investor’s standpoint.
While currency risk has to be managed by European investors hunting for a property deal in the UK, a euro-denominated deal in the Costa Del Sol carries no currency risk at all for European residents funding their purchases in euros — and do not ignore the fact that the right place in Andalucīa could turn out be a hotspot offering even steeper growth rates than the UK.
Additionally, cultural barriers are likely to be lower, and as for the weather… well, that needs no explanation.
The allure becomes more obvious when you consider that not only is the outlook for 2018 in Andalucía undeniably rosy, but the region’s infrastructure continues to attract further investments — read more here about its encouraging mid/long-term prospects.
Of course, you could choose other Spanish hotspots, and even commute from other major cities at a bargain, but that choice comes with caveats.
In an infamous story published by The Guardian in mid-2015 headlined “Commuting from Barcelona: a London worker who makes it pay”, Sam Cookney explained that he had been renting in the UK capital, and was “getting very frustrated” with London prices – “the usual scenario”, he noted at the time.
“It began as a joke. I said to a friend that I bet it would be cheaper if I actually lived in Barcelona and commuted every day.”
It turned out to be true — and even, if you are unfamiliar with London, you will probably understand why some areas are cheaper now than in the past. However, the recent political uncertainty surrounding Barcelona has harmed the local real estate market, at least temporarily. And inevitably this will boost the prospects of locations further south.
Previously on a roll, “the Catalan independence referendum on October 1, and the political uncertainly that followed, stopped the market in its tracks,” The Financial Times wrote earlier this month in a story headed “Lowballers hunt bargains in Barcelona’s faltering property market”.
In the weeks following the independence referendum, it added, notaries and real estate agents reported a 50% drop in sales volumes. As a reference, although total transaction volumes in last year’s fourth quarter were up 3.4% on the year before, they were up 10.4% in the third quarter.
The Costa Del Sol is nothing like that.
What does it mean to invest in Spain today?
The most important headlines came in last summer, when the Financial Times reported that “Spain’s unemployment crisis continued to ease in the second quarter of 2017, as the jobless rate fell to 17.2% of the workforce — the lowest in more than eight years.”
After years of terrible unemployment levels and a sluggish recovery in terms of GDP growth, the property and financial markets currently reflect an increasingly benign economic environment, although admittedly the latest employment figures sent mixed signals, these are probably the result of seasonality. And it could take some time before real estate investment once more becomes risky, given that the ECB last week again indicated that interest rates will remain untouched in the near future — and this is good for buyers as it affects their funding costs. The Wall Street Journal was unequivocal: “ECB Seeks Clarity on Economy Before Next Move”.
Elsewhere, Reuters recently wrote that real estate firm Testa aimed for an IPO with an eye on the rental market rebound, and then there is property developer Metrovacesa, with the first listing since Catalonia’s political crisis?
Even Blackstone, one the largest global private equity houses, is benefiting from certain local dynamics, with the news agency recently noting that “bets on Spanish housing and oil assets” helped it mitigate stock market jitters that weighed on its performance in the first quarter.
The PE firm is so attracted to Spain that it is reportedly looking to bid for “Hispania, the Spanish property company whose shareholders include hedge-fund firms Soros Fund Management LLC and Paulson & Co., as investor appetite for Iberian real estate rebounds,” Bloomberg wrote.
At the end of 2017, the US news agency pointed out that investment in “malls, warehouses, hotels and offices is this year set to reach the highest since 2007”.
Since the turn of this year, the news coming out of Spain has been consistently reassuring, with the latest reports suggesting that “almost 6,000 new building and property companies” were set up in the first quarter, boosted by rising prices across the country.
This is the right time to get in touch with Inveztments: fill in this form NOW and you’ll be contacted within 24 hours.
(This post was written by Alessandro Pasetti. Ale is the founder of Hedging Beta Ltd. He writes about investment strategy and assets valuation for European clients as well as Seeking Alpha, The Loadstar, Transport Intelligence and others. Based in London, he previously worked for about five years at Dow Jones/The Wall Street Journal, producing analysis for the IB community. Prior to that, he contributed to the launch of London-based Loan Radar, where he worked for three years. He had stints in equity research at Bear Stearns in London, HVB in Munich, and Unicredit in Milan.
It was edited by Gavin van Marle, managing editor of London-based The Loadstar. Gavin is also the author of the book Around the World in Freighty Ways: Adventures in Globalisation. He has won numerous awards, including the Seahorse Journalist of the Year 2011 and 2009, and Supply Chain Journalist of the Year 2010 and 2014. )