The Spanish Property Market – Predictions for 2020
There’s no doubt that Spain is an excellent choice when it comes to real estate investment. Statistics have backed this up since 2015. The investment potential is one of the reasons so many foreigners choose to buy a property in Spain, be it in Madrid, Valencia, Barcelona, or in one of the fabulous resorts.
But will the favourable conditions continue? Will the trend we have seen during 2018 and 2019 continue? That is what we will take a look at in this post.
Firstly, Spain will continue to be a good market for foreign investors; the market won’t stop growing.
Since the impact of the 2008 economic crisis, the property market in Spain began to recover in 2014. The sector is still undergoing a new boom after the one that led up to the crisis. That is important to note, as the construction sector and tourism are the most important activities for the Spanish economy.
With the COVID-19 pandemic, the sector will likely experience some slowdown, but it won’t be sufficient to turn buying a Spanish property into a bad investment.
New constructions are the fuel of the sector
If we look at the data, we can divide property sales into new constructions and resale properties.
During 2020, brand new constructions will be the primary type of housing sold to fuel growth in the sector. Why? During the 2008 economic disaster, many areas due for development abruptly stopped due to a lack of financing, and many constructors went bankrupt.
But with this new growth, many of these “ghost buildings” have come to life again.
Hundreds, or possibly thousands of flats have been developed during the past few years in new blocks and residential areas. New life is being generated in regions that were previously deserted.
These types of buildings will be leading the economic growth of the real estate market. Second-hand homes will also likely see an increase in value, but it will be the new constructions that are most significant.
Therefore, if you are thinking of Spain as an investment location, check out any of these newly emerging areas. They are a massive opportunity now as they will be lively towns in the future and consequently experience a large increase in prices.
Barcelona and Madrid may not be the best options
Barcelona and Madrid are the most popular touristic destinations in Spain, so it’s reasonable they are top of the list for foreigners as a destination they fell in love with as tourists, and where they would like to start a new life.
Nonetheless, neither city may not be the best choice for investment.
Take, Barcelona, for example. Property prices and rents are currently very high (especially when compared with the average wage in Spain) and the city can’t develop any more due to a lack of space. Therefore, investing in Barcelona produces less than optimal conditions regardless of the reason for your purchase.
If you are investing in Spain as opposed to buying a home for yourself, it is likely the current price of a property in the city won’t increase, so getting a decent return on your investment is difficult.
If you would like to purchase a new residential house, you might find prices are too high unless you have a huge budget.
So, turning your focus to other areas is the ideal thing to do. Where to invest then?
There is little doubt Valencia will become a go-to alternative during 2020. Conditions are similar to Barcelona, the same weather, food, coastline, etc., but with significantly lower prices. Therefore the city is an excellent investment opportunity.
Malaga and cities in the Basque Country such as San Sebastián and Bilbao will also become popular with expats worldwide.
Coastal areas as perfect if you are wanting to buy a residential home
If you are not wanting to invest but want to live in Spain and get the best possible residence for your money, coastal areas are where you should focus. They are an ideal option if you plan to buy a first or vacation home.
Valencia is not only a good area for investment, but also to live in. Or you can go down a bit further south, to the Costa Blanca. This area is the preferred choice for many Brits, French, Belgian, and German citizens.
Spanish property market after Brexit
UK citizens (followed by the Germans and French) are the largest international group of buyers of property in Spain. For this reason, Brexit has created uncertainties on how it may affect the real estate market.
There is no need to worry. It is almost definite that the small slowdown property prices will experience in 2020 is not a result of Brexit but other factors, such as COVID-19. Brexit did not influence the market during 2018-2019, so there’s no cause to think it will in the future.
Moreover, maybe the Brexit uncertainty will benefit the industry. Why? When things are unclear, or there is a perceived risk, investing in real estate seems to be a sound choice.
Some people worry about the additional legal procedures a UK citizen may have to go through to buy a house in the EU. Others who are in the buying process have concerns about what will happen to their transaction.
But that shouldn’t be a problem, because any rights already granted won’t be removed.
Also, there is a transitory phase of a least two years when the UK leaves, so there will be plenty of time for the real estate market to adjust. Therefore, taking those statements into account, the property market will not suffer from any possible side effects because of Brexit.
If you decide to buy in Spain, as we are talking about a significant financial transaction, so make sure you hire a reputable real estate lawyer to guide you step by step. It is particularly important to find one that speaks both Spanish and English, as you need to understand what is written in the contract.