Cosmopolitan, by the sea and positively booming, Spanish Florida is the ideal location whether you are planning to up sticks or invest. Explanation.
In April, despite the Catalan crisis, Moody’s (the ratings agency) upped Spain’s rating by one level following a similar move by Standard & Poor’s and Fitch. The Bank of Spain also announced its growth forecast in spring: + 2.7% in 2018. A rate almost identical to the 3% rises seen in the last few years and, incidentally, among the highest in the European Union. After cleaning up their finances, Spanish banks are now lending again. Former ‘ghost towns’ are starting to come back to life. The influx of tourists from colder climes is also on the up. And as usual, the demand for coastal properties is on the rise too. Well, at least some of them.
Barcelona’s bubble has burst
In the Catalan capital, it has all gone wrong. The golden years of the property market bubble are well and truly over. Back then prices had soared to €10,000/m2 and more. In October, Catalan’s declaration of independence created shock waves resulting in a fall in sales of 30%, and a 20% depreciation of the most luxurious properties. “In the higher price brackets, second homes suffered enormously. Many international investors are now looking elsewhere in Spain, and Europe as a whole. However, the market for principal residences remains active albeit in a range of between 200,000 and 1.5 million Euros maximum,” explains Emmanuel Virgoulay, associate director of Barnes Spain, with some regret.
Although for those looking to buy, this downward trend is good news. However, much to the chagrin of vendors, tough negotiating is once again becoming the norm. In Eixample, close to the golden triangle of Gracia, an apartment of 120 m2 advertised at 1.2 million sold for 1.05 million. An apartment of 80 m2 in the same district sold for 350,000 but only after the owner dropped the price by 70,000 Euros. The residential neighbourhoods of Pedralbes, Sarrià and Turó Park are holding strong but the Gothic quarter has seen prices fall by half. In this "fashion" district, sought out by foreigners at 90%, only two apartments priced at over one million sold in the first quarter.
This downward trend is also affecting the Costa Brava. In recent weeks, Americans from the gay community, well represented in Barcelona, are arriving in droves from New York to buy luxury villas. This a new trend. “Recently, we’ve received more enquiries and requests for visits, adds the agency’s manager. The dismissal of President Rajoy in June reopened dialogue officially and informally between Madrid and the Catalan separatists. The political climate has improved but nothing has been settled. “
Investing in rental properties
“We haven’t noticed big price changes in the Catalan capital, just a fluctuation of 2 to 3%,” remarks Camille Letuve, deputy director at Athena Advisers. “Potential buyers are playing a ‘wait and see’ game despite the fact that Barcelona remains the economic centre of Spain. It’s a separate and highly attractive market.” The agency specialises in prestigious renovated stone apartment buildings. For these older buildings, the property developers retain the façade, and ornamental and characterful features. For new buildings, they install picture windows, insulation and all mod cons. Prices range from around €5,500/m2 and €6,500 to €7,000/m2 in the Gothic district. Compared to old non-renovated properties, the increase is 10 to 15% or even as much as 30% for the most dilapidated properties.
But-to-let properties intended for long-term rentals remain profitable according to the agent: "The return is around 4 to 5% depending on the neighbourhood; 1.5 points better than Paris. We have even seen returns of 6%.” They’re great medium-term rental properties for students, modelling agencies and embassies. Short-term tourist lets are becoming increasingly complicated as this area is highly regulated by the authorities. Under the mandate of Ada Colau, elected mayor in 2015 with support from the Podemos party, the granting of tourist licences - which are compulsory for these types of rental properties - have been all but frozen. As for building permits, which are subject to numerous formalities, processing times are lengthening.
The availability of small- and medium-sized apartments is fairly restricted although they tend to be of a good standard: two rooms go for between 360,000 and 415,000 Euros in Aragon in the heart of Eixample and just 500 metres from the Sagrada Família; three-room apartments in the Gothic Quarter go for between 650,000 and 815,000 Euros, a development designed by the Barcelona architect Xavier Guitart, the project manager in charge of renovating Parc Güell, and the Poeta Cabanyes de Poble Sec development, a cultural neighbourhood whose prices are lower than in the city’s hyper-centre. For two to four rooms: 488,000 to 1.2 million Euros.
It is important to understand that “Marbella is nothing like Saint-Tropez. Rather, it resembles a big Cannes with a population of 140,000 inhabitants and 330 days of sunshine a year,” explains Bernard Soultan, a Marbella resident of over 40 years and lover of this well-mannered Andalusian town. The town centre dating from the 1970s-80s is not the most glamorous but the historic old town is not without charm. Its thirty golf courses are well frequented. It also attracts the ‘beautiful people’ - who own properties straight out of interior decoration magazines - including footballers (Cristiano Ronaldo, Sergio Ramos), singers (Julio Iglesias and Lara Fabian) and actors (Sean Connery and Antonio Banderas). As well as tennis players, like the soon-to-be Marbella homeowner Novak Djokovic. In May, Robert de Niro created considerable hype when he launched the Nobu Hotel, which he founded with his partner, the Japanese chef Nobu Matsuhisa. The hotel is located on the Golden Mile, Marbella’s prime location close the Puerto Banús marina.
In terms of the property market, the very best location has always been the villa near Puente Romano costing in the region of 40 million Euros. However, due to a lack of available property, the obsession with the Golden Mile has come to an end in favour of the coastal area neighbouring Marbella. Over the last 18 months, there has been a spectacular rise in new off-plan sales. Entire developments are being sold off-plan based on visits to show homes. The specifications of these homes are radically different from those seen in the 2000s: stylish minimalism, sophisticated landscaping, proximity to golf courses, sea views, etc. But in spite of these attractive features, prices remain affordable at between €4,000 and 4,500/m2. Villas (with land from 800 to 1,500 m2 included) are going for €5,000 to 6,000/m2 but not in prime locations.
Bernard Soultan from Marbellero, a founding partner of Marbella-Paris Propriétés Contemporaines, is selling a range of seafront semi-detached homes in Estepona. Starting at prices of between 1.1 and 1.5 million, the development has already attracted 40% of the required investors. The mix of architectural styles is no accident and some homes have even been designed to spec. Spa, pool, residents’ club and 24/7 security add to the attractiveness of these beach front properties. “The bathrooms and kitchens feature a range of mod cons as is the norm in Spain. All you need are a couple of cups and saucers,” says the developer who is delighted with his new development.
Destination Costa Blanca
Dénia, on the Costa Blanca between Alicante and Valencia, is nothing like its neighbour Benidorm located some 40 kilometres up the coast. Dénia is a historic village perched atop a hillside boasting a medieval castle, old town and Roman port. In the time of the Moors, it was a small kingdom. While Benidorm resembles Las Vegas with its giant skyscrapers beloved of the British. Even the restaurant menus are all in English. Customers are more likely to order fish ‘n’ chips than sample local tapas.
The high-end property market in Dénia focuses on the area around the Monte Pego Park whose beautiful mansions have retained much of their Spanish charm including fancy ironwork on the windows. Others are more modern often with swimming pools. Plots range from 600 to 3,000 m2 and cost anywhere from 200,000 to 4 million Euros. “The core market is between 280,000 and 350,000 Euros for a 4 to 5-bedroom home with sea views,” explains Nicolas Lepot (Luxury Properties Spain), property-finder and estate agent operating exclusively in Dénia. “A house priced at 600,000 Euros will sell in two weeks especially since twenty kilometres of beaches dotted with rocky coves are at the foot of the village,” adds the estate agent who mainly works with French-speaking clients. Foreigners make up almost 20% of property buyers in Spain. First the British then the French (especially in Barcelona) followed by the Germans and Scandinavians. However, in the last few months we’ve seen more Belgians. Seven Belgians buy a property every day in Spain. In Dénia, they are responsible for 15% of all property transactions.