World’s Real Estate Sector is gradually recovering

Sadly, this modest recovery has not yet embraced Spain, where real estate prices are still falling and conditions are still difficult. This is one of the findings published by Ramón Forcada, Head of Analysis at Bankinter, in a recent study on strategies and opportunities for Q3 this year.

According to the study, there are six signs worldwide indicting a recovery and Forcada recommends investing in the US real estate sector based on these findings.

While US home values have increased by 11% and interest rates have fallen to record low levels across the globe, Spain’s enormous surplus of unsold homes is still hampering a real recovery.
 
While REITs (Real Estate Investment Trusts) are attracted to other markets in every greater numbers - especially the US real estate sector - in Spain REITs have been slow to pick up bargains offered by the newly formed “bad bank”, created to sell off repossessed real estate assets it has taken over from Spain’s troubled banks.

Meanwhile, the Spanish government seems to do everything within its power to confuse foreign investors with ever changing new rulings on taxation, residency permits and energy certificates. The changes are, so experts surmise, partly to blame why foreign investment in Spanish real estate dropped by 37% in Q1 this year compared to the final quarter of last year. In the first three months of 2013 foreign buyers invested EUR 1.116 billion in Spanish properties, which includes commercial, residential and industrial real estate according to the Bank of Spain. In the last three months of 2012, foreign investment saw an amazing 56% increase to EUR 1.771 billion.

So where does that leave buyers looking to invest in a holiday home at the Costa del Sol?

If you are planning to buy a residential property in Marbella for example, and you are planning to let it out for 4 months of less of the year it will be exempt from having to provide an energy certificate, which is a new legal requirement when selling or renting property in Spain.

The price of new homes has fallen by another 5% in the first 6 months of this year, according to data published by the Sociedad de Tasación, and while Marbella is still one of Spain’s most expensive areas to buy, there are plenty of bargains around.
 
If you are prepared to look further away from the coast and head to the Granada province, you can buy a 10-bedroom, 10-bathroom villa set in a plot size of 5,000 sqm for EUR 795,000. Located just 40 minutes from Granada Airport and 90 minutes from Malaga Airport, rural properties such as this one offer the best of all worlds - holiday rental during the skiing season and in summer, hikers love to rent places like this - and the Granada province is located just 1.5 hours’ drive from the Costa del Sol, offering the choice of the occasional day at the beach.

A little closer to Marbella there are bargains under EUR 100,000 to be found - a 2-bed, 2-bath apartment in Manilva, just 400 metres from the beach and with access to a communal swimming pool, can cost as little as EUR 94,900. Set within landscaped gardens in a gated community, the small development sells off apartments at prices reduced by 45% from their original asking price.

In Benalmadema small resale apartments with one bedroom and a sun terrace with 10 sqm can be found for around EUR 90,000 or less. Fully air-conditioned and with access to communal and children’s swimming pool, apartments like this one may not always be fully furnished, but if you’re planning to upgrade the interiors, this is a good choice as a start of a property portfolio consisting of long-term rental and holiday homes.

Marbella studios - set along the Golden Mile - can often be found for around EUR 80,000 or less. It takes a little patients and research, but there some amazing starter holiday homes around. Complete with access to tennis courts, gardens, swimming pool and fully furnished, small but beautiful homes like this one don’t stay on the market for long, despite Spain’s otherwise depressed real estate market.