Investing in real estate is a potentially daunting task, as there are so many platforms offering different advice on the best locations and times to invest. In light of the coronavirus pandemic, investors have to be particularly careful to make sure that their money is being spent wisely. Therefore, it is more important than ever to filter out the noise and rely on clear insight.
Here are five pointers to bear in mind when considering an investment in the Spanish real estate market.
1. Spain’s property market has grown in the last 10 years
Like most industries, the global property market was devastated by the stock market crash of 2008. However, the Spanish market was largely able to recover due to incremental investment from the foreign market. In 2007, there were 57,674 foreign buyers – a number that has since increased by 77% to 102,252 in 2019. The supply of properties in the country has traditionally exceeded the demand, as increasingly more land has been purchased for new-builds. Naturally, coronavirus will bring a decline in purchases in the short term, but the overall trend is positive.
2. House prices lower than before the 2008 crisis but rising
The prices of Spanish property saw an enormous boom in the early 2000s, before the crash in 2008 abruptly put an end to this. Since then, housing prices have slowly been rising, and despite the slow economic growth globally, they are expected to slightly increase this year with few indications to suggest that they will fall. This can partly be assumed by low interest rates and the rise in popularity of fixed-rate mortgages.
Therefore, investing in Spanish property remains a relatively low-risk venture. And this is supported by the numbers: the Bank of Spain predicted a return of around 9% this year on Spanish property.
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3. Spain is technologically advanced and well connected
Spain has the luxury of having many wonderful cities, two of which have recently emerged as leading cities in Europe for technological entrepreneurship. Barcelona and Madrid are both welcoming and attractive hubs and compared to many other European cities, rent costs are considerably cheaper (particularly in Barcelona), which makes them great locations for startups.
4. Exceptional weather and great culture attracts expats
Spain has a climate for all possible tastes - the Northern regions typically have four distinct seasons, whereas the South has a largely subtropical climate. Then, there are the dramatic arid plains and mountainous regions of Andalucia known as the Sierra Nevada, where skiing is possible. Furthermore, The Canary Islands offer a temperate climate where temperatures stay between 15-21°C (60-70°F) all year round. Lastly, Spain has the highest amount of Blue Flag beaches in the world - a beach is marked as such when it meets a certain set of criteria related to its environmental, accessibility, and high-quality standards.
In terms of living, Spain is reasonably affordable, with food and drink prices consistently lower than the EU average. The country boasts an amazing food culture, from its Jamon Iberico (Iberian Ham) to Morrocan-inspired cuisine in the South due to its Moor heritage. Sports and outdoor enthusiasts are spoilt for choice in Spain, particularly those who enjoy cycling - there are some incredible road cycling routes around the country which also hosts a multi-staged cycling event each year called “La Vuelta”. It's for these numerous reasons, expats and retirees alike often find themselves settling down in this luscious country. British, German, and many other European retirees are known to be quite fond of the many draws of the Spanish countryside.
5. As coronavirus restrictions ease, tourism will increase
Traditionally, property rentals represent a flourishing market in Spain, particularly with expats who take advantage of the high returns available by letting their homes. However, at the moment, travel restrictions and border closures enforced worldwide are slowing down rental income as tourists are unable to travel. Whilst it is an indisputable fact that the property market has slightly cooled lately, the pandemic will pass and this will bring about confidence in the market again.
With diverse crowdfunding opportunities and a stable market, Spain is an excellent country for investors to pursue investment opportunities. There are currently 17 real estate crowdfunding platforms, most of which have been established in the last 5 years.