Foreign money boosting Spain’s property market, reports the FT

The recent recovery of Spain’s luxury home market has been boosted by foreign capital.

The Financial Times (FT) – one of the most respected newspapers in the world – turned its attentions to Spain’s property market last week, reporting that foreign buyers are driving a sustained recovery in the Spanish property market, as reported previously by VIVA…

The FT article examines exactly where money is being spent in the sector, and by whom, and finds that foreign nationals have purchased 12.2 per cent of all residential properties in Spain in the first quarter of the year. That figure stood at nine per cent in the first quarter of 2006.

With house prices having fallen by more than 35 per cent on 2007 levels, many foreign investors – led by the British – have turned their sights to the luxury home market, where prices are much more affordable today than they have been for almost a decade.

The housing markets of Marbella, Barcelona’s elegant Passeig de Gracia neighbourhood, as well as Chamberí in Madrid, have all recovered around 20 per cent of their lost value, according to CBRE Spain. This recovery in the higher end of the market is thanks to foreign money, the FT says.

“At the high end – €500,000 and up – it’s primarily being driven by international demand,” Barcelona-based estate agent Alex Vaughan told the FT. And while the demographic of buyers has begun to shift from Europe to Asia, the US and the Middle East, Brits are still the leading investors in residential Spanish property.

However, in some regions of Barcelona, it is the turn of US investors to shine. “We’ve seen Americans back,” said Francisco Nathurmal, founder of luxury estate agents Bcn Advisors. “And the Swiss. The franc has really gone up and they are buying like there is no tomorrow.”

Spain’s Golden Visa scheme – which allows non-EU citizens to claim Spanish residency should they invest more than €500,000, has helped to boost the recovery, with more than 490 visas issued by the end of last year.

Domestic demand remains relatively weak, however, but the trend for recovery is also beginning to emerge in this sector. According to Spain’s property registrars society, Spanish banks agreed around a third more mortgages for 27 per cent capital in the first quarter of 2015 when compared to last year, the FT reports.