Spain property market attracts top global investors

SPAIN PROPERTY MARKET ATTRACTS TOP GLOBAL INVESTORS

Spain property market attracts top global investors 

Spain’s recovering economy is fuelling interest from international investors keen to take advantage of attractive prices across a range of assets from banking to telecommunications but the real estate sector is currently the most popular amongst top global fund managers.

Between 2007 and 2013, Spanish property prices fell by nearly 40 percent as the country struggled to weather the storm of the global financial crisis. Now both residential and commercial real estate prices are stabilising, and even picking up in prime areas in major cities like Madrid and Barcelona. Coastal property is also in demand as Spain’s tourism hotspots are set to welcome another record number of foreign visitors this summer.

Furthermore, rental prices have declined between 30 and 40 percent from their peak and investment yields on rentals in Madrid are still higher than in other European capitals like London; so the time is ripe for investment in Spanish real estate!

TOURISM BOOSTS COASTAL PROPERTY

Spain’s real estate sector was one of the key drivers of the country’s decade-long economic boom but when its bubble burst in 2007, the sector was widely viewed as a toxic investment. Fortunately, the outlook is now rosier and last July ratings agency Standard & Poor’s forecast a 2 percent rise in Spanish property prices in 2016, after bottoming out in 2015. S&P cited the faster than expected recovery of the Spanish economy and the subsequent fall in the jobless rate.

That said, the sector’s revival depends very much on the location of the the properties and the quality of the product. Real estate near the coast and in the bigger cities is expected to rebound much faster than in other parts of the country. Many global investors have yet to return to the residential market, but have focused their sights on commercial property.

Some of these investment funds have made their acquisitions via Real Estate Investment Trusts or Reits, which are excellent vehicles for investing in property because they offer many tax advantages. Other investors from the Middle East or China have invested directly in offices or hotels. In 2013, the Qatar Investment Authority bought the emblematic Hotel W in Barcelona for 200 million euros and more recently the Qataris bought just under 4 percent of listed property firm Colonial – a thumbs up to the real estate sector’s recovery potential!

 

UPTICK IN LENDING KEY TO RECOVERY

The expected uptick in bank lending in 2015 will be essential to ensure the recovery in the property market is sustainable. There are already signs of a revival in mortgage lending, although this will be contingent on improving domestic demand, in line with forecasts from both the government and the Bank of Spain. As more people enter or return to the labour market, buying their own home will be a key ambition.

For information on investment in Spain, contact corporate law firm Argali Abogados.

 

 

 

 

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