For thousands of Britons Spain is an old friend, a hogar del hogar, or home from home.
Since 1994, the country has been our number one choice for holidays abroad, attracting 13,864,000 tourists in 2005 alone. Spain however is not only our favourite destination for sun, sea and sangria; new government figures have revealed that Spain is still dominant in the buy-to-let and investment property markets despite strong competition from emerging European markets such as Bulgaria, Hungary and Romania.
According to the Office of National Statistics, over Â£6 billion has been invested in Spanish property, accounting for 27% of British foreign investments. This mature property market has its advantages over relative newcomers offering low interest rates, a range of mortgage products and sustained growth. Some may say that Spain is â€œover the hillâ€ when it comes to opportunities to profit through property however recent figures released by Kyero.com beg to differ.
According to Kyero.com, the largest independent website connecting buyers and sellers of Spanish property, the average property price in Spain is currently €245,000 (£169,000) well below the UK’s average property price which currently sits at £185,000. The most popular regions for property searches are Malaga, Granada and Alicante where property prices average €312,000, €158,000 and €216,000 respectively. There are however pockets of Spain which offer properties well below the national average in price yet have a strong potential for capital growth and rental income – they are Almeria, Valencia and Seville.
Almeria, located on the south eastern tip of Spain, is a land of contrasts boasting unspoilt coastal fishing villages, picturesque towns such as Mojacar and access to the ski resorts located in the Sierra Nevada mountains in the province of Granada. The region had been one of Spain’s best kept secrets however over the past few years the area has opened up with a number of new hotel resorts and golf developments springing up west of Almeria town and Almeria’s airport being served directly from the UK by a number of budget airlines including Easyjet, Ryanair, Monarch and Flybe.
Property prices have reflected these advancements in communications and amenities; the last 12 months have seen a steady 12% increase in property prices from €171,000 in May 2005 to â‚¬191,000 today. Martin Dell, Managing Director of Kyero.com comments, “Almeria properties still offer a good option for buy-to-let investors, the property prices are 22% below the national average and with increased tourism to the region the demand for rental accommodation is high. We have experienced a 14% increase in enquires for 2 and 3 bedroom properties in Almeria in the first half to 2006 compared to the first half of 2005.”
The region of Valencia has also seen a steady rise in property values over the past year. The traditionally Spanish coastal town of Castellon, north of Valencia, in particular has seen a marked increase of 35% from €167,000 in May 2005 to €225,000 according to Kyero.com Located on the Iberian Peninsula, the Costa Azahar, or orange blossom coast, is a real hot spot for property investors. Boasting over 112 kilometres of unspoilt Mediterranean coastline, 320 days of sunshine annually and properties 8% cheaper than the national average this stretch of Spanish coastline is a real alternative to the traditional Costa Blanca or Costa del Sol resorts.
Valencia is a vibrant, cosmopolitan city and offers all that one would expect from Spain’s third largest urban centre. The America’s Cup which will be held in the city in 2007 has led to millions of euros being spent on improvements to the infrastructure for example the new high speed rail link from Madrid and the extension of the main airport which already receives low cost flights from the UK. The positive impact of the 1992 Olympics Games on nearby Barcelona’s property market is expected to be mimicked by Valencia in 2007 and so there is no better time than to invest in this truly Spanish region.
For the shrewdest of property investors, the traditional costa developments are no longer enough to tempt them; they are more interested in the increased capital growth and regular rental income to be obtained from inland locations. Martin comments, “Seville is a good choice for property investors who are more interested in Spanish culture, history and traditional life.”
The hosting of Expo 92 was a real turning point for Seville, the south side of the city was redeveloped and opened up to the rest of Europe. Since then Seville has seen an increase in both tourism, due to the new low cost flight routes, and domestic in-migration with many companies relocating to the Andalucian capital. This in turn has led to an increase in demand for rental accommodation. Seville saw a 33% growth in property values from May 2005 to today; this trend shows no signs of slowing and there are still property bargains to be had with average property prices being 41% below the national average at €144,000.
It seems therefore that our old friend Spain still has a number of hidden gems to explore and invest in. The potential to profit from property in this country is as good as any other within Europe and maybe we should think twice before ruling out our favourite holiday destination.