2017 TIME TO INVEST IN COSTA DEL SOL
Property expert Peter Bowerman talks about the 2017 Costa del Sol property market.
After the annual over indulgence of Christmas and the start of the obligatory January detox, normal service resumes and everyone is looking at their new years goals. For many it will be finally buying a property investment or that holiday home in Spain they always promised themselves.
So why is the Costa del Sol still Europe’s favourite destination? Firstly, as the name would suggest, Costa del Sol (Sun Coast) has around 320 days of sunshine a year and an average temperature of 20°C. Having one of the best microclimates on the planet means beautiful long summer evenings outside, lazy days on the sandy beaches and some of the best golf courses in the world. The Costa del Sol also offers an incredible lifestyle with beautiful Marinas, chic designer shops, traditional Spanish Tapa's bars serving fine Spanish wines and glamorous seafront restaurants with their Michelin star Chefs.
The Spanish property crash officially ended in 2014 and Spain is now well and truly getting back on track with all the latest reports showing Spain is once again the most popular destination for overseas enquiries. Analysing all the latest data, coupled with our own front-line experience, it seems that 2016 will now be bringing an average 5.5% increase in property prices. However, the even better news is that economic and market professional forecasters are now predicting that we should be expecting up to 7% rise in 2017 and a further 6% in 2018. This is backed up by the largest property portals also now reporting enormous increases in Spanish property enquires.
The amount of actual sales has also steadily been increased over the last couple of years with recent reports showing between 9-15 % increases year on year, depending on which you read. The other key point for investors is that even with all the controversial goings on around the world, the Spanish property market has continued to grow in both sales and price.
With Brits topping foreign demand for Spanish property, there was no surprise that there was a short lull in the middle of 2016 when Britain unexpectedly decided to leave Europe. Many thought this would be the start of a decline, but no, shortly after the final vote British buyers soon realised it made no difference to their want of owning or investing in Spain and the sales continued to increase. Even the temporary drop in the UK exchange rate and the shock vote for Trump as US President could not stop the market progressing.
Another important factor is that property prices in the UK have peaked and there is no more growth expected in the near future, which has caused a slowdown in the UK market. In fact most first-time buyers have been priced out of the UK property market and now purchasing their first home in Spain as a "buy to let” investment and first step on the property ladder. Although our typical UK buyer is a 45-55 year old, that is already sitting on huge equity in UK property and comfortable enough to now invest in a property market set to boom once again.
Many investors and luxury second home buyers have been watching the Spanish property market steadily improve but understandably waiting before committing to purchase just in case it was just a temporary serge in the market. However, even the sceptics are now convinced that this is a sustainable and continuing trend. One in five sales in Spain are from foreign buyers, mainly Britain, France, Germany, Belgium, Holland and of course Scandinavia. Prices in Spain hit absolute rock bottom after 2008’s financial crises and eventually stopped falling at around 50% of their original value. Since the stabilisation in early 2014 the only way the market could go was up. Even with the steady 2 year sales and price increases, there is still a lot more growth available before matching the original prices of 2006/7.
So why should you invest in the Costa Del Sol? Well, property is still one of the safest and most lucrative forms of investment available, a sentiment shared by one of England’s top economists, who was recently quoted saying “bricks and mortar was a better bet to give people a nest egg when they finish work than a pension". If you buy in Spain now, while the prices are low, you could be looking at 40% capital growth when the prices return to their original value. But it’s not just the increased value that you can enjoy, many buyers are subsidising mortgage costs by renting their property out during the months they are not using it, which is every property investors dream, buying property and getting someone else to pay off the mortgage. History shows that with long term property investment prices always go up, even with all the fluctuations in-between.
You can either rent your property Long Term (11 month contracts), or Short Term (weekly holiday rentals). Most summer holiday rentals will be between June and September and then renting to the thousands of golfers that flock to the coast in the winter months. In our experience, a combination of both is best, short term holiday rentals during the summer and longer monthly rentals during the winter months, as a large number of Northern Europeans want to retreat from cold wet countries for 3 months of the year and enjoy Europe’s best climate. With demand often outweighing supply of quality rental properties in prime locations, yields should hold up even though property prices are rising as rental prices are also on the increase. It goes without saying that wifi, satellite TV, quality furniture are considered standard requirements by tenants.
All the key points that investors look for are now falling into place and investors are expected to flood back to the Spanish property market during 2017-18. Most looking in up and coming areas on the Costa Del Sol like "La Cala De Mijas" and "Nueva Andalucia Marbella", along with old favourites like Benalmadena and Estepona.
Peter is one of the most published Costa del Sol property experts in both the UK & Spanish press, having spent most of his working life as a professional real estate agent and valuer. He is also the Managing Director of one of the most successful real estate companies on the Costa Del sol with registered offices in both Marbella and La Cala de Mijas. For more information on buying or selling your property on the Costa del Sol, contact us now.
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