Spanish property investment can bring high capital returns, but learning to identify upcoming property hotspots before they become popular with the masses will give you a significant advantage.
If you’re concerned that you’ve missed your chance with Spain’s best bargains, think again. The Costa del Sol may have been the hottest place to buy in the past, but the future looksjust as healthy in other areas. The Spanish property market is set to see massive price rises over the next few years and all you need to do is decide where to buy – but how do you pick out emerging hotspots? The key is to recognise the eight main indicators, and get in there before everyone else.
Trisha Mason, founder and Managing Director of VEF Property says, “Identifying hotspots needs a lot of market knowledge as prices are obviously governed in most places more by the local property buyer than by the overseas property buyer. You need to know about proposed transport links, about company investment in the area, what trends are occurring
within the market and to understand the culture of the country. By the time hotspots have hit the media they are old news. There are still some places where property values remain low and where there is a good opportunity to see strong capital growth within five years but there are not many and they are guarded jealously, so you have to act fast to keep ahead.”
Rising tourism, rising prices
Anywhere that attracts increasing numbers of visitors has excellent rental potential, pushing up house prices. Look for areas being promoted by the Spanish tourist board or receiving tourism funding from the Spanish government. Last summer, the Spanish tourist office in Britain stepped up its promotional activity in London with a beach party on Regent Street. Benalmádena city council has received a government grant of €1,885,000 to improve tourism facilities and establishments. Last year, Mallorca received a €20m coastline makeover. Under the terms of a new agreement between the Balearic government and central ministries, the grant was used to fund projects to enhance beaches around the island, including work to prevent
erosion and improve cleanliness. More recently, the Balearic government has invested in equipment designed to increase safety on Mallorca’s beaches, including lifeboats, rescue
surfboards and jet skis, in an effort to maintain the beaches, which are Mallorca’s biggest tourist attraction. Andrew Spence of The Bendinat Group says, “In the Balearics it’s a question of longterm rental returns. In the southwest, a typical two-bedroom flat in a good complex with pool and close to facilities can fetch between €1,200 and €2,400 per month, year round. Inland, rentals fetch up to €900 per month.”
Government and private investment
Investment encourages improvements in the local infrastructure and amenities and brings money into the area, pushing house prices upwards. Look out for areas receiving grants from the Spanish government or giving the go-ahead for large projects. Jose Ivars Lopez of Blauverd believes that buyers should consider Castellón on the Costa del Azahar. “The government is making massive investments in this area, from roads to hospitals to leisure centres.”
Andalucian handouts
Local councils across Andalucia will receive a €175m cash injection from a rural development fund to improve infrastructure in countryside towns. Various projects are already being planned, with the construction of parks and gardens, the modernisation of irrigation systems and the repair of streets taking priority, with a workforce of local people carrying out
infrastructural work.
Most of the cash will go towards towns that have a less developed economy, with Málaga province receiving €5,800,000 and Seville province receiving €10,900,000. Andalucia is also paying into a massive regeneration plan for Mijas, which will include 5,500,000 square metres of land for industrial use, including a 1,200,000-square-metre business park, and a huge residential and technology area covering a further four million square metres. In addition, 155,000 square metres will be used for commercial ventures as part of a scheme
costing €5,700,000, all of which will attract jobseekers to the area and hike up housing prices.
Hosting an international sporting eventMajor events on the sporting and cultural calendar encourage development and attract tourists, boosting house prices. The 2005 Mediterranean Games were held in Almería, with
over 3,200 athletes from 21 countries participating. “The Mediterranean Games drew more attention to the area, which offers superb value for money compared to other costas,” says Louise Carter of Elite Overseas Properties.
In 2007 Valencia will host the 32nd Americas Cup yacht race. It’s the first time this event has been held in Europe during its 152-year history. Since the announcement of the decision to hold the event here, property and land prices have spiralled upwards by between 25 to 35 per cent per annum and the price of mooring berths in Gandia has trebled since 2003.
Matthew Fitzpatrick of Orange Blossom Homes says, “We have seen steadily rising prices in all of the towns and villages with less than an hour’s drive to the city of Valencia, especially in Gandia, Ontinyent, Alzira and Xativa.”
Property prices have been further boosted by the decision of the Spanish government to fund massive infrastuctural developments throughout the area, including an investment of at least €500 million to cope with the expected ten million visitors expected to pass through the city between now and the Cup itself.
Buy now if you can
Nick Clarke of Christian Financial Wisdom says, “The sailing fraternity is getting ready to descend on Valencia. As a result of and following on from this, massive investment by the Spanish government in Valencia’s infrastructure means that the whole of the area is receiving a ‘face lift’, bringing modern alongside the old and creating demand from people to be ‘where it’s all happening’. An investment in property in the city or immediate surrounding region is bound to create a medium- to long-term increase in capital for those who can act quickly.”
Events that boost income don’t have to last longer than a weekend. Last July, the Pope’s two-day visit to Valencia prompted locals to rent out their homes for as much as €6,000 for two nights. With the city’s hotels fully booked, pilgrims hoping to catch a glimpse of Benedict XVI had little choice but to pay. Even property owners living some distance away reaped
the rewards, with apartments in Moncada being offered at €500 and in Cheste for €400 for the two days. The pope’s visit attracted over 1,300,000 visitors to the city.
Meanwhile, having lost the 2012 Olympic Games to London, Madrid is putting together its proposal to host the 2016 Games. The mayor, Alberto Ruíz Gallardón, made it clear that
Madrid’s ambition to host the Games remains unchanged. The city is creating a new Olympic Foundation and forming an organisation to promote the project. The finalists in the race to host the 2016 Olympics will be announced in Copenhagen in 2009.
Clear house-buying laws and processes
The recent crackdown on corruption in Marbella, where, according to accusations, developers have long been given the go-ahead in return for hefty bribes, is likely to see a positive
outcome for anyone now looking to buy in this part of Spain. The high profile of this corruption in the media means that we should see a more transparent market developing across the province, and there is also a possibility that fewer developments will now get the go-ahead than before. With the current 12 million visitors to the costas expected to rise to 20
million in the next five years, that increasing demand and restricted supply should see prices moving upwards for some time.
Jill Pengelly of Spanish Properties and More says, “A number of factors continue to attract investors and homebuyers alike to Spain in general, factors which newer markets often do not benefit from, including a well established legal framework conforming to EU regulations, tried and tested planning, building and purchase procedures, and increasing provision of
English-speaking services such as financial, legal and medical.”
Improvements in transport links
Research by British consultants Moneycorp shows that in Spain the average price per square metre of land rises by up to three times more near airports than in equivalent zones, due to improved accessibility. The airport being built in Castellón will handle 600,000 passengers annually and will bridge the gap between the Costa Blanca and the Costa Dorada, and provide access to all towns along the Costa del Azahar. Jose Ivars Lopez of Blauverd says, “This airport will connect the area with all the main cities in Europe and guarantee a rise in house prices.”
Clive Robbins of property consultants Blakemore Walker sees Spain’s north-west coast, including Galicia, Asturias and Cantabria, as increasingly desirable, partly in response to
infrastructure projects. “The motorway now runs all the way along the coast from France to the Galician border. You can get in and out of this area by car, ferry or plane more quickly and cheaply than ever before. Now that the north coastal motorway is nearing completion and numerous airports are offering low-cost flights, the region is set to be increasingly
popular in the coming years.
More accessible Almería
Jill Pengelly of Spanish Properties and More believes that transport improvements in Almería are making the province a viable investment option. “Almería benefi ts from ongoing
government investment, with Murcia international airport due to open in 2007 and new motorways linking Málaga, Córdoba and Almería to be completed in 2009. At the same time the Ministry of Housing reports year-on-year price rises of 16 per cent for Almería.”
The new airport will be at Corvera, between Fuente Alamo and Murcia city, and is expected to be as big as Alicante airport. Meanwhile, a firm in Castilla-La Mancha is preparing to open Spain’s fi rst-ever privately-run international airport as an alternative to Madrid’s busy terminals. Don Quijote airport (DQA) will be at Cuidad Real, 200 kilometres south of Madrid. The terminal building will incorporate a new railway station allowing direct access to central Madrid with a journey time of just 45 minutes with the AVE high-speed train. The airport expects to welcome two million passengers within five years of opening.
An expanding economy
The Spanish economy is continuing to grow at an impressive rate, making it an attractive option for investment projects. In the first quarter of 2006, the economy expanded by 3.5
per cent, which compares to a rate of two per cent for the economies of the 12 nations sharing the euro, according to research by financial experts Bloomberg.
This impressive growth means that by 2015, Spain could need more than a million workers from abroad to maintain its ever-expanding economy, driving up the need for housing and increasing property prices. Quiet areas on the fringes of popular areas will benefit from this surge, so look out for places such as Antequera, Campillos, Pizarra, Coín and Cártama, all just inland from the Costa del Sol. According to a new report from property consultants Salvago, prices here are rising by 20 per cent a year, which is four per cent higher than on the coast itself.
Spain is also beginning to drastically improve its employment figures. In the past year alone, around 575,000 new jobs were created in Spain, with national employment growing at a rate of 3.2 per cent. The Costa de la Luz, an area that’s slowly becoming better known among foreigners, has a wealth of career opportunities, especially in Huelva province where
smaller towns such as Cartaya have official unemployment figures of 0 per cent.
New golfing facilities
Spain has long been Europe’s golfing hotspot, but up until now the Costa del Sol has been the location most associated with the game. However, with the development boom in Murcia, this looks set to change. Murcia currently has only a handful of golf courses, but the regional government has approved 40 new golf courses to be constructed in the area over the next six years. According to research by property specialists Irea, homes on these developments are good buys for investors aiming for good rental returns, as golfers spend three times more in a day than tourists attracted to the beaches. In particular, villages in the area are set to become property hotspots. Alan Collinge of First Class Homes says, “Sucina is a typical inland village tucked away from the mainstream developments, but not for long. With only 1,100 inhabitants you would mistake this for any other Spanish village. However, it’s perfectly located a few minutes from Peraleja Golf and side-byside with Polaris Hacienda Riquelme. Prices are expected to rise more than ten per cent on subsequent developments.” Huelva on the Costa de la Luz is also becoming increasingly attractive as courses such as Esuri golf resort are springing up all over the province.
New low cost flight routes
Cheap charter flights increase the demand for holiday homes and rented accommodation, and low-cost airline routes are boosting property prices across Spain, according to Moneycorp. In Seville property values have risen by 114 per cent since 2001, with Almería and Valencia seeing increases of 107 and 97 per cent respectively, due largely to cheaper airline travel providing greater accessibility. According to figures released by the Spanish Airports Authority (AENA), the number of passengers who arrived in 2005 on low-cost flights was nearly double that of 2000.
The increasing availability of low-cost flights into Murcia-San Javier and Alicante airports are giving the Costa Calida great potential for significant investment growth. There was
a 20 per cent increase in foreign travellers arriving at San Javier airport in 2005. This amounted to a record one-and-ahalf million passengers, 70 per cent of whom were British. That
number is expected to rise to almost two million this year with new low-cost flights from regional airports like Newcastle, Blackpool and Norwich. To enable even more flights, AENA (www.aena.es) has authorised the addition of a new runway at San Javier.
Availability is dictated by the holiday market, with a wealth of cheap flights heading to Málaga, Alicante, Mallorca and Tenerife from most British airports. Monarch (www.flymonarch.com) has introduced new flights to the Canaries. This year Monarch will also provide Britain’s first winter flights from Manchester to Menorca. Ryanair (www.ryanair.com) is also opening more routes to Spain, including Liverpool to Granada and Seville.