03 June, 2014

By VIVA Team

Interest in the Spanish property market has been strong so far in 2014

The amount of property sales recorded in the first three months of the year in Spain was up 183 per cent when compared to the first quarter of 2013, a study by Real Capital Analytics (RCA) has found.

Overall, €1.4 billion worth of real estate transactions were recorded throughout Spain, with residential property hotting up as the commercial sector experienced its first contraction after five quarters of continuous growth…

These figures represent a return of investor confidence in Spain’s real estate market, said RCA Managing Director Simon Mallinson, who said that investors have become frustrated by the intense competition and shrinking pool of assets found in property markets like the UK and the Nordic region.

“The situation has forced many to re-think their investment strategy, helping revive certain European markets, particularly those like Spain where pricing of prime assets is still attractive and stimulate demand for secondary assets or location in core markets,” Mallinson said.

The RCA’s research found that investment by private equity firms into Spain’s real estate sector increased from a 13.9 per cent share in 2013 to 37% in the first quarter of this year, with Goldman Sachs particularly active in the residential sector, snapping up a number of fairly priced apartment blocks and housing developments in a number of the country’s most popular regions, including the Costa del Sol.

Domestically, however, Spain’s property market is still struggling somewhat. With unemployment still above 23 per cent and mortgage lending tighter than ever, as much as 30 per cent of the Spanish population has been priced out of the market, RCA found. Foreign investment, on the other hand, has increased dramatically, making Spain one of the leading second-home destinations in Europe.

According to figures released by the Ministry of Public Works, interest in Marbella’s property market is once again on the rise, with 23.6 per cent more properties sold in the city last year than in 2012 – 3,115 homes in total. Again, the majority of these purchases were made by non-nationals, with British buyers the largest single group of investors.

Data from Spain’s Development Ministry released last week revealed that the average house price in the country had fallen by 0.5 per cent in the first quarter of the year when compared to the last quarter of 2013, and were down 3.5 per cent year-on-year. However, despite representing the 22nd consecutive quarterly decline, the 0.5 per cent fall is actually the smallest decline for four years, which suggests that the bottom of the market is near.

On average, Spanish property prices have fallen by 30.6 per cent since the first quarter of 2008 when prices reached an all-time high.