Marvellous Marbella has been largely immune from Spain's financial woes

It sounds harsh to say it, but the current state of Spain’s economy doesn’t really matter to many of you. Yes, millions of Spaniards are unemployed, austerity is biting hard on public services, wages are falling and young professionals are leaving. The situation is termed a ‘crisis’ for many reasons.

But there’s an irony at play here. The negative headlines are having a snowball effect on the economy. People with money are staying away. Despite the welcome news that one million more tourists visited Spain in 2012 than in 2011, not everybody is getting the message.

And that message is: if you want to buy a property in Spain, the country’s wider economic turmoil doesn’t matter to you. Not really. And here’s why…

1. The property market is different today

Poor economic performance is usually enough to scare off investors. The flip side is that should a country be performing well financially, property investors are attracted in their droves. Most of Eastern Europe was at one point deemed the next ‘hot spot’ for property during the Noughties as their economies stabilised and EU accession became an achievable reality.

But where are they now? Where are the Bulgarian brochures, the Estonian events and the Romanian roadshows? Nowhere, because their property boom was unsustainable. Spain, however, remains the most solid, safe bet for property. Not, you’ll note, for property investment – the country has never really been the land of the fast-buck – but rather, for home buying. Yes, homes are for living in first and foremost; the money making should always be a secondary concern. And Spain is blessed with the widest choice, the fairest prices, the best quality and the most robust and transparent home-owning laws in Europe.

So if you can afford to buy a home in Spain, what does it matter what the wider economy is doing?

2. Tourism remains strong

In the run up to the millennium, Spain’s economy hit top gear. EU investment in the country’s infrastructure was incessant; construction was everywhere, jobs were plentiful. They were the good times. Since the crash in 2008, this has all but ceased. But one constant that was in place long before the boom, and will remain forever and a day afterwards, is tourism.

The typical image of the stressed but accomplished Spanish waiter dates back for decades. Spain has always been a top choice for sun-starved northern Europeans, and it still is. Before the crisis, Spain made sure it catered admirably for all types of tourist – and it will continue to do so even as austerity bites. The reason? Tourism is essential for the economy.

For prospective homeowners, this means that flights will always be affordable and plentiful, roads in tourist areas will be well maintained, beaches will be clean and bars, restaurants and cafés will continue to cater for all tastes. Which is all great news for potential expats.

3. Things are unlikely to get any worse

If you really cannot help but be spooked by what’s happening in Spain, here’s one crumb of comfort: nationally, things are unlikely to get much worse. Sure, individuals will continue to suffer – to plough on in poverty, to lose their jobs, to look abroad for work – but the wider economy has, it is largely agreed, reached its nadir.

The government’s reforms and austerity measures are bitter pills for the populace to swallow. But victims take their medication after their illness or mishap – the damage has been done already. There may be setbacks and dark days ahead, but the final goal now is that chink of light on the horizon.

Savvy buyers can snap up brilliant new build bargains in Spain

Figures from Spain’s Sociedad de Tasacion – the nation’s equivalent of the UK’s Royal Institution of Chartered Surveyors – have revealed that prices for new build properties across Spain fell by an average of 67.9 per cent in 2012.

Throughout the country it is estimated that more than a million properties lie empty, the majority of them new builds. Such price drops are inevitable in oversaturated markets, and although Spain’s beleaguered developers are unlikely to welcome these figures, prospective property buyers are sure to be rubbing their hands with glee.

The figures, a reflection of statistics given by developers from all over Spain, reveal that a typical 90 square metre new build home costs an average of just €180,000.

The Sociedad’s report positively predicts that such price corrections are likely to entice international investors already eyeing Spanish property since the government reformed its residency scheme, offering permits to non-EU nationals who pay more than €160,000 for a property in Spain.

The Costa del Sol – Spain’s foremost destination for expats and second home buyers – has not suffered as badly as other areas of the country, with the oversupply issue in particular more tightly controlled here than elsewhere.

Hence, property on the Costa del Sol has not fallen in price as sharply as elsewhere; rather, it remains competitively priced and bulging with choice to suit all budgets and lifestyle choices.

The glamour of Puerto Banús has grabbed the Russians' attention

Discerning Russian buyers have now overtaken the Germans to become the second largest group of foreign investors in Marbella property.

Figures from the Málaga Developers’ Association show that Russian buyers accounted for nine per cent of all foreign property sales in 2012. Brits remain the largest group of overseas property investors, at 35 per cent, while the Germans – whose economy remains the strongest in the EU – slipped to a surprising third, accounting for just seven per cent of sales.

Russian buyers, traditionally attracted to the resorts and markets in and around the Black Sea,  have been wooed by the plentiful charms of Marbella. With world-class golfing, luxurious villas aplenty, privacy, superb restaurants and some of the very best nightlife in Europe, Russia’s growing middle-class is learning what the Brits, Germans and Scandinavians have known for years – Marbella is a superb property investment destination.

And the region is responding. While the beachfronts are still evidently geared to an Anglo-German market, Russian tastes are being catered for elsewhere. Spain’s largest Russian Orthodox Church is currently under construction close to Marbella, and service providers – from waiters and hairdressers to bar and retail staff – have been learning Russian in their droves.

What’s more, the Spanish government has responded to this pique of Russian interest by proposing to change the country’s residency laws for non-EU buyers. Any Russian investor who spends at least €160,000 on a property can apply for a residency permit – a move that has been widely praised by the local real estate market and economists.

The Russians are not the only Eastern investors eyeing the Costa del Sol’s charms. Chinese and Indian buyers are also expected to flock to Marbella in the coming years to exercise their economic power, snap up some brilliant properties and, of course, enjoy the sizzling southern Spanish sunshine.

Members of the VIVA team at the VIVA Alhaurín el Grande launch party.

Having already opened five new offices on the Costa del Sol in 2012, I’m delighted to say that we’ve started the new year as we mean to go on, with the launch of VIVA Alhaurín el Grande at the beginning of the month, followed by a very successful and enjoyable ‘open house’ celebration on Friday 25 January!

VIVA sales manager Marcos Loriente; Carmen Rangel, VIVA administration; Antonio Manzanares of Manzanares International Lawyers; and Toñi Montes, VIVA administration manager.

Wine flowed and delectable nibbles were nibbled.

More than 150 VIVA clients, guests, associates and VIVA RECOMMENDS partners, as well of course as the VIVA team, attended the event, and as with all good parties, many arrived early… and stayed ‘til late, as champagne, wine and beer flowed, delectable nibbles were nibbled and going by all the happy faces and animated chatter, a good time was had by all!

VIVA managing partner Martina Heynemann with lawyer Carlos De Miguel and his wife Carmen.

At the heart of the beautiful Guadalhorce Valley, Alhaurín el Grande is as pretty as a picture. In fact, the famous Spanish poet, Antonio Gala, famously once called it el pueblo que yo soñé – or ‘the village I always dreamt of’. A large number of VIVA clients are looking to buy a property in Alhaurín and the surrounding area, and obviously share his view!

VIVA sales manager Hubert Lako, with Marta Fernández and Lisa Sevillano of El Corte Inglés Home & Decoration El Capricho.

So it was a logical move for us to open an office in Alhaurín. It also fits in perfectly with our current expansion plans – the object of which is to offer our clients an even better service by having a high-profile presence in their own local neighbourhood – and I look forward to enjoying a great working relationship with the VIVA Alhaurín team.

VIVA managing partner Martina Heynemann with the VIVA Alhaurín team: Rosa Gómez, Isabel Gómez, Carolyn Green & Keith Juxon.

The VIVA Alhaurín office is headed by director Isabel Gómez – who has many years’ experience of the local real estate business – ably assisted by Rosa Gómez who takes care of administration and accounts. VIVA sales consultants Carolyn Green and Keith Juxon – both of whom not only have an in-depth knowledge of the area but additionally are long-term residents of the ‘campo’ – are now also based at VIVA Alhaurín el Grande.

Miguel Manzanares of Manzanares International Lawyers and Louise Brace, VIVA Partnership Development Manager. Photo: Euro Weekly News

VIVA’s Alhaurín el Grande office – at Ctra. de Málaga, 103 – is open Mondays to Fridays from 10am to 6pm and Saturdays from 10am to 2pm. So next time you’re passing, why not pop in and say hello!

Tel. (+34) 952 596 261

Foreign buyers cannot resist Spain's abundant charms

The third quarter of 2012 saw an 18 per cent increase in the number of foreign buyers purchasing property in Spain when compared to the same period a year ago.

Statistics from Spain’s Public Works Ministry have revealed that 8,803 Spanish properties were bought by foreigners in the third quarter of the year, maintaining the upward trend of the past five quarters.

In fact, 2012 has been a watershed year for foreign investment in Spain, with every quarter enjoying strong figures – a 16.2 per cent increase on 2011’s first quarter, and a 15.3 per cent increase on the second. The signs are that the fourth and final quarter of 2012 will see the year finish strongly, too.

So what does this mean for the Costa del Sol? As Spain’s most popular region – among both holidaymakers and home hunters – the Costa del Sol is something of a trendsetter, and local experts have been claiming that the market has been in the ascendancy for the past few months.

Coupled with the Spanish government’s incentives for foreign investors (which includes residency permits for Russian and Chinese buyers if they purchase a property for at least €160,000), and a return of confidence among German, Scandinavian, British and French buyers, the situation for property in Spain is looking increasingly positive.

Spain’s economic woes continue to bedevil native Spaniards, however – domestic property sales transactions are down by 1.17 per cent on last year, and new home sales have fallen by 6.7 per cent in the past 12 months.

Property prices across many parts of Spain have fallen to reflect the economic difficulties facing millions of Spaniards. Official statistics show that property values are down by 9.5 per cent since 2011, and prices have broadly fallen back to levels not seen for almost a decade.

It’s a situation that has meant more affordability for foreign investors shielded from financial turmoil. British buyers no longer dominate the market like they used to, but are still a key player in the foreign investment market. As confidence returns and the pound continues to perform strongly against the euro, experts predict that 2013 could be a robust year for British buyers in Spain.

Prices of distressed Spanish properties are 65% below previous value

Spanish properties repossessed in 2012 are being priced at 65 per cent below their previous value, according to figures released by credit ratings agency Fitch.

The new market prices are relative to the value of the property when the initial loans were taken out, representing price falls of more than 50 per cent in many areas across Spain.

Spain’s economy has struggled with a second recession in three years, and unemployment currently stands at 25 per cent throughout the country, which is among the highest in Europe.

Allied to some areas of Spain that are experiencing a slack property market due to oversupply of unsold and unwanted new property, the situation nationwide has created a perfect storm for lifestyle buyers intent on snapping up a bargain.

The price drops are the sharpest experienced in Spain since the start of the crisis in 2007, when prices fell by an average of 50 per cent. “The gap between original valuation and the sale price is a reflection of a distressed mortgage market, characterised by high borrower indebtedness, constrained affordability and falling property prices,” said the Fitch report.

However, despite this latest price drop, agents and industry watchers in Spain’s strongest and most robust property market – the Costa del Sol – are confident that the bottom of the market has been reached. Prices are unlikely to fall any farther, and figures coming out of the region indicate that sales numbers are picking up as confidence, cash and foreign Russian and Chinese investors return to the market.

Spain's architects are universally respected

Spain’s architects are in high demand. Around the world, highly educated Spaniards who cut their teeth during Spain’s post-millennium property boom are sought after for their innovation, expertise, hard work and vast experience, even at an early age.

How do we know this? Well, France 24 has written a recent report about ‘lean times’ for Spanish architects with barely concealed glee. Yet in their rush to paint Spain’s property market as a busted flush, a quick skim between the lines reveals more positives than negatives.

Citing the statistic that unemployment in the architecture sector is ‘close to 27 per cent’, the article mentions that this figure ‘tops even the nation’s overall jobless rate of 25 per cent’. Spin that however you want, but it’s only two per cent – hardly a cavernous well of despair.

The article then states that the ‘slump is more difficult because of the heights that architects once reached’, which is a weak extrapolation of the data to suit their own editorial agenda, and actively flies in the face of their supporting interviews.

The Spanish architects interviewed by France 24 state that, yes, many struggle to find work in the Spanish construction industry at the moment, but all go on to say how the expertise they accrued during the golden period has set them in good professional stead elsewhere.

From that, one can deduce that Spain’s property industry maintained high standards, employed thousands, and reached a natural saturation peak. There is, in effect, no longer the need for thousands of new high quality properties in most parts of Spain… because they have been built already.

Great news, right? France 24 would have you believe not. But behind the headlines, amid the hype and away from the glare of reporters looking to castigate all things Spanish, lies a hard kernel of truth – the boom is indeed over, but the settled reality is one of top-notch properties, priced realistically, and ready to receive hard-working homeowners looking for their very own slice of the Spanish sun.

And as for the architects? Many are still in work, some have left for foreign climes. “The crisis is also an opportunity,” cites one.

There’s no spinning that, despite France 24’s best attempts.

Property prices in Spain will begin to rise by 2017

Property prices across Spain have been dividing opinion over recent weeks, with official statistics and estimates that predict a couple more years of stagnation running counter to experts who believe that the bottom of the market – especially on the Costa del Sol – has already been reached.

Spain’s governing body responsible for overseeing the country’s recent ‘bad bank’ restructuring has released detailed analysis that predicts property prices will begin their upturn after two years of further falls, and another two years of relative stagnation.

The body, known colloquially as Frob (The Fund for the Orderly Bank Restructuring), estimates that by 2017 property values in Spain will increase by three per cent. Before then, however, the market is in for 24 months of small price falls – 2.8 per cent next year, in 2013, and 1.5 per cent in 2014.

Similar research predicts that the value of land will experience similar fluctuations, with recovery expected by 2016.

However, despite this recent uncertainty, the property market on the Costa del Sol has enjoyed some positive buoyancy, with reports suggesting that the number of sales has been rising in a number of areas across the region.

Local agents have cited the comparative strength of the pound sterling against the euro and the reduction of VAT on new-build property bought before the end of 2012 as the reasons for the upturn.

Experienced market commentators, analysts and agents from the region are unified on one telling home truth – the Costa del Sol generally bounces back far quicker than the rest of the market, and the signs are strong that property prices are unlikely to fall any further.

The positive sales rises on the Costa del Sol are indicative of this fact, yet there remains a deep well of lifestyle buyers who are ‘ready to go’ but are nervously, and perhaps naively, awaiting an official sign from the government and the banks that the market is in prime shape for them.

Observers note, however, that an acute lack of consumer confidence is bedevilling the Brits in particular, who appear reluctant to buy in the numbers they were doing so before the market downturn.

Elsewhere on the continent, buyers from Scandinavia, Germany, France, Belgium and the Netherlands have no such worries and are snapping up great value homes on the Costa del Sol in their droves.

Where Brits used to be responsible for some 60 per cent of all foreign purchases on the Costa del Sol, that figure is currently languishing at around 19 per cent – although the interest in a home in Southern Spain is as strong as ever.

Mortgage payments are easier to handle than four years ago

Mortgages in Spain are an average 40% cheaper than four years ago, according to recent data released by the Spanish Mortgage Association (AHE).

The data is in stark contrast to the highest mortgage rates on record – posted in October 2008 when average monthly payments for a mortgage valued at €120,000 over a 25-year term came in at €719, or €8,250 a year.

October 2012 was a different story altogether. Based on the same mortgage value and term, average monthly payments were calculated at €433 – amounting to €5,196 per year, making a mortgage 40% cheaper today than at their 2008 peak.

The rates were calculated using the Euribor rate, which has plunged dramatically in recent months, closing out October at its lowest-ever level, at just 0.65%. The plummeting rates have provided much-needed fiscal relief for thousands of stretched mortgage payers, particularly when the more accurate daily rate hit a ten-year low on 31 October, reaching 0.618%, marking the bottoming-out of 63 successive days of decline.

In August and September, this daily rate regularly flitted between 0.7% and 0.8%, and experts predict it could fall further as the Christmas period approaches.

“We do not expect a rise in the Euribor unless economic conditions change significantly,” said Soledad Pellón, a strategist for IG Markets. “We have had quite some time with the index being low; we have even reached historic lows, which is a milestone.”

The European Central Bank (ECB) sets interest rates for the Eurozone banks, and the Euribor takes its lead from that. Currently, the ECB has embarked on a policy of lowering interest rates across the Eurozone, but compensates for this with what is known as a rise in spreads, which includes the application of the ‘ground clause’ – designed to prevent mortgage holders from benefiting from the Euribor’s fluctuations.

Associations in Spain estimate that some four million mortgages in the country contain such a clause. However, a third of existing Spanish mortgages are also subject to covenants that protect against interest rate fluctuations.

Five short months, five new offices… it seems that there’s just no stopping VIVA’s continued expansion along the Costa! So I’m delighted to be able to tell you that our new Calahonda branch office was officially opened on 1 November.

One of the most sought-after residential areas on the Costa del Sol, back in the early 1960s, Calahonda – or Sitio de Calahonda to give it its full name – started life as a small but well-planned urbanisation. Located close to the beach, midway between Marbella and Fuengirola, such was its popularity, especially with Britons and Scandinavians, that over the years it just kept growing… and growing… So it’s no surprise that with its excellent infrastructure, plus all the sport and leisure amenities of a small town, property is always in demand in Calahonda, and we of course are absolutely thrilled to now have a presence there.

Meet the team... VIVA Calahonda Sales Manager Kristian Rubiano, with Agent Services Manager Greig Hayes (left) and Sales Consultant Sean Vosper (right)

Between them speaking English, Spanish, French, Danish and Swedish, the knowledgeable and professional VIVA Calahonda team includes Kristian Rubiano (Sales Manager) and Sean Vosper & Sebastián Llull (Sales Consultants). Greig Hayes, Agent Services Manager for all the offices within the VIVA Group, is also now based in Calahonda, from where he provides both agents and vendors with a first-class service.

Situated in the El Zoco commercial centre – right at the very hub of Calahonda – the VIVA office is on the ground floor, with free parking outside the door.

VIVA’s Calahonda office is open Mondays to Fridays from 10am to 7pm and Saturdays from 10am to 2pm. So next time you’re in the area, why not pop in to say hello!

Tel. (+34) 952 939 441