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|2007 - THE OUTLOOK FOR SPANISH PROPERTY?|
Please note that the information provided in this article is of a general interest nature and intended as a basic outline only. You are well advised to contact a professional for advice specific to your circumstances. Nothing contained in this article should be seen or taken as the writer or publisher providing legal or financial advice.
OK cards on the table - I have a vested interest. For the last four years I have been very actively involved in the Spanish property market assisting, primarily, UK and Irish clients to find, fund and purchase property in Spain. In this time window, the Spanish market has veered from the heady days of bulk off plan purchases to more considered leisure, relocation or retirement purchase for those seeking a lifestyle move.
We have assisted a fair number of clients who have become embroiled in the miseries of planning irregularities on the Costas del Sol and Blanca. In the majority of cases members of our professional services grouping, The Rights Group (TRG), have secured satisfactory results for worried clients and we have glowing testimonials attesting to the assistance received.
Moving into 2007 many of our existing clients will continue the search for their perfect property in Spain despite perhaps a previously disheartening experience - no-one said it would be easy - and for some its been distinctly hard. This is perhaps a testament to the draw of Spain and the bite of reality that this is no longer a get rich quick market. For these second time around clients the suffering of a steep eye opening learning curve has paid off.
New clients have come - and continue to come - to us during the course of 2006 making clear their continued interest in Spain - and appreciable caution - and readily accepting hand held assistance from experts on the ground.
Readers of previous pieces may recall that my family - aside from my wife who is already a fluent Spanish speaker - and I have doggedly pursued our learning of Spanish through the option of Spanish TV at home. Wavering a little towards the end of 2006 we finally succumbed to the installation of a satellite TV service that shows several UK TV channels.
Usual post Christmas lethargy was bolstered by a nasty viral infection that struck our clan with varying degrees of severity. The obvious therapy was an excess of daytime TV.
Staggeringly since I last watched between 2.00 and 5.00 PM the channels have been held up, bound and gagged by the overseas property market with a daily supplement of “where’s the next hotspot?” type programming.
Sun drenched locations featuring busy property seekers and keen presenters sniffing out the perfect property. Invariably such shows miss the target completely as the rather dissolute end credits voice over reports that Mr and Mrs Smith did not increase their rejected offer but have booked another flight to their preferred location to doggedly continue their search.
There is an overwhelming feeling that Mr and Mrs Smith have let the Production Company down by not jumping at the carefully researched choices. I suspect that Mr and Mrs Smith feel a little railroaded into choosing their long dreamt of property by a tight production schedule. “Its Tuesday and we are in the Languedoc and are due to start shooting in Murcia by Thursday morning” - but I may be wrong?
I suspect that rather than providing any real definition or clarification for the interested purchaser such programmes have an overall confusing effect. What clarity can be gained when they seek to compare Bulgaria with Dubai or Spain? Is this not just comparing apples with oranges or even pears?
I suspect that the intensity of such programming reflects a disturbing trend of the UK media to stress just how crap people are finding living in the UK. Last evening’s ITV London News ran a piece on the volume of people leaving the Capital as a result of not just the Tube fare and congestion charge increases. Can it really be that bad? And is the panacea to run away or abroad?
Our friends at the OPP magazine reported 03.01.07 - that a significant proportion of the whopping 2006 City of London Christmas bonuses would be destined for the property market - with no doubt a fair share finding its way into the overseas property market. Many of those I know in London are not in for quick kills so where will they chose to place their hard earned cash?
There has been short-lived boom in speculating in the Spanish off plan market - often seduced by rental guarantees. A few have made short term gains from flipping the off plan contract. However, the more established or considered purchaser will be looking for a number of things depending on the rationale behind their purchase:
1. For the pure investor purchaser, they will be looking for rental yield and capital growth for their jet to let purchases.
2. The leisure purchaser will be looking for a well managed environment for them and their family and friends enjoyment and may be some cream from short-term rental yield. Their long-term goal may be some capital growth but that’s not a priority.
3. The relocation purchaser will be looking for a lifestyle that is preferable to that which they have left - with maybe some spice from capital stability or, who knows, may be some capital appreciation. Such purchasers may not have a mortgage to service so a 5% 10% or 30% appreciation adds gloss but - as it was put to me recently by one of our clients - it doesn’t improve their golf swing!!! Only time and practice can do that!
What this Spanish market really lacks is an excellent, Coast to Coast and comprehensive rental operation that for our friends in categories 1. and 2. above provides comfort that their property is being actively and extensively marketed in the Spanish and overseas markets and diligently managed pre and post rental use.
Without this essential service - and I believe the demand is very strong from owners as well as would be tenants alike - there will always be a doubt or concern as to whether a completed and well-furnished property can deliver sufficient yield in the short-term - can it wash its face? The only way to overcome this caution is by the provision of a comprehensive, properly priced and well-managed rental service. We know certain excellent but small scale local operators, they deliver a great service at a micro level but the economic imperatives seem to exist for a Spanish equivalent to existing cross London type landlord services, for example.
We are actively exploring these opportunities and hope to announce our findings before Easter. We’d be keen to hear feedback from those readers who have had experience of renting in Spain and what may be done by way of improvement.
It has been reported that capital growth in Spain is judged to have fallen from 12% earlier in 2006 year to 10.8% by the year-end. It seems likely to continue slowing into 2007 which should be followed by some stability. It is equally expected that UK holiday home purchasers will continue to support this market which is also underpinned by strong demand from Spanish locals.
Let’s not forget that tourists are not just school age families but the grey or pink £ and those without families can holiday comfortably in Spain throughout the year - with the conventional Winter months favouring the golfer and skier.
Funding for such a purchase in Spain whether by way or UK equity release or locally sourced mortgages are evolving month by month and a coterie of excellent mortgage brokers has developed in Spain who deliver a UK centric service in Spain. However before your trip a word to the wise - please check out what you can afford to avoid disappointment.
Clearly, prospective buyers need to conduct some careful and thorough research before making the plunge - but there is a wealth of data out there to aid your choice. Armed with such due diligence and the services of a good locally based independent lawyer you should not find yourself becoming featured as one of those “House-trapped in the Sun” horror stories.
Here to an excellent 2007…. See you by the pool!
© The Rights Group SL 2006 (Marbella)