Spanish Housing Market Sees Yearly Rise

Spanish Housing Market Sees Yearly Rise

Spanish Housing Market Sees Yearly Rise

For the first time in four years, the sale and purchase of houses in Spain rose in 2014, reflecting the improved outlook for the real estate sector and for the economy as a whole.

The number of operations increased by 2.2 percent to 318,389 last year, with second-hand property transactions the main driver behind the recovery.

So is the country’s property sector downturn finally a thing of the past? Well, real estate agents have certainly seen more business over the last year, but prices remain depressed.

Since their 2007 peak, house prices have fallen by more than 40 percent as Spain struggled to weather the storm of the global financial crisis. The average price per square metre of resale housing in Spain stood at 1,594 euros in December 2014, 5 percent less than the 2013 end-year average of 1,679 euros.

Now, however, both residential and commercial real estate prices are stabilising, even picking up in prime areas in cities like Madrid and Barcelona. Coastal properties are also attracting fresh buying interest as Spain’s tourism hotspots are set for another bumper season.

After a sharp correction in areas like Valencia and Andalucia there are some magnificent opportunities on offer at very fair prices for both domestic and overseas buyers.

 

FROM DISTRESSED TO DESIRABLE

Spain’s real estate sector was a pillar of the economy during the country’s decade-long boom. But when its bubble burst in 2007, it was widely viewed as a toxic investment and a symbol of the impact of the eurozone crisis.

Once healthy Spanish banks were saddled with soured loans issued to property developers, forcing most to recapitalise while others sought state aid and/or mergers. Vulture funds were first on the scene buying up distressed loan portfolios and property assets either directly or from bad bank Sareb.

While benefitting from knock-down prices, these investors have at the same time helped to clean up Spain’s real estate sector and a revival in bank credit, including mortgage lending, is helping fuel the recovery in the housing market.

 

NEW PROJECTS BOOST PROPERTY MARKET

Against the positive economic backdrop, property developers and top investors are betting on a resurgence of buying interest in new apartments, office blocks and commercial centres.

The Canalejas Project, spearheaded by local businessman Juan Miguel Villar Mir, is a new urban development currently under construction in Madrid’s emblematic Canalejas square. It will include a Four Seasons hotel, luxury apartments, restaurants and a large commercial centre.

China property developer Dalian Wanda Group’s purchase last year of Edificio España in Madrid is expected to be another shot in the arm for the property industry. Plans to refurbish the landmark building have already been approved by local authorities.

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

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