Spain Guide


Spanish Real Estate

Investors are increasingly turning to Spanish real estate instead of the Stock Market because a home in the sun has proved a safer bet in recent years than almost all other forms of investment. Of course no one knows for certain what the future holds for either the Spanish property market or the Stock Market. In the long term, experts believe the Stock Market will still reap good rewards but its vagaries mean investors must now exercise greater caution and patience than in the boom years of the 1990s. A Spanish property, however, represents as safe an investment as you're likely to find anywhere and judging from the performance of the last two decades the returns are excellent as long as you pick the right location and type of property.

Since the Stock Market slump at the beginning of the new millennium, compounded by the September 11 catastrophe, a Spanish home has proved a more attractive investment opportunity than ever. This means prices have rocketed in the most popular areas. These price increases, together with the weakening of the pound against the Euro, have put the dream of owning a place in the sun out of the reach of many would be purchasers. But there are indications that property prices are now beginning to stabilise and though they are likely to continue to rise for the foreseeable future, the growth rate looks set to proceed at a less frantic pace than we've seen over the last 20 years. One of the most enduring long term assets involved in a property purchase in Spain is of course the Spanish sunshine which is what attracts most tourists and ex pat residents (and unlike the Stock Market it's fairly predictable!)

Many foreigners are now preferring to buy inland because prices are cheaper the further back from the seafront you go and ex pats seeking a permanent home often don't want to be in areas which have been over run by mass tourism.

But if you're buying solely for investment purposes, you'll probably be intending to let the property in which case your best bet is to buy a holiday home in one of the most popular tourist areas. Consider the priorities for the vast majority of tourists who visit Spain they want a swimming pool (private or communal), easy access to the sea and proximity to an international airport. These are basic requirements which will make your property more "lettable" and make it easy to resell.

Before deciding where to buy, scour the web sites of holiday villa rental advertisers to see which properties are charging the highest rental fees. Make a note of the location and type of property which seems to be in greatest demand. The better sites have availability charts so you can see on line which properties in what areas have a fully booked rental season. As a rule of thumb, go as upmarket as you can afford because the higher the standard of your property, the greater the return on your investment in terms of both rental income and capital appreciation.