Spain’s property market grateful for foreign investors

Brits aboard: UK buyers are vitally important to Spain's property market

As you sweep through the property listings looking for a home in Spain, you may at some point stop and wonder why there is so much choice out there. And if you have ever pondered why the Costa del Sol has such a bulging and impressive, ahem, package, then read on…

Well it’s all thanks to the Brits and, to a lesser extent, Germans, Scandinavians and – more recently – the Russians and Chinese. Wealthy foreign buyers have flooded the region with rising demand for decades, and the market duly responded by delivering an impressively vast and varied supply of property that can cater for all tastes and budgets.

And as Spain’s domestic economy lurches from crisis to mini revival and back again like an inebriated unicyclist, foreign investment has been more important than ever.

Figures from 2012 show that foreign property buyers accounted for 12 per cent of all home sales in Spain that year – a rise of 26 per cent on 2011 and a whopping 64 per cent on 2009.

So the confidence is back, and the Spanish are grateful. They have to be. Home sales to Spanish nationals fell to just 314,654 in 2012, which is some way down on the 455,111 transactions recorded in 2010, although it did represent a two per cent increase on 2011. With banks unwilling to lend, job security unstable and unemployment standing at a quarter of the population, such stagnation in the property market is – if not welcome – then at least understandable.

Which is why foreign money is so important to the Spanish economy right now. In total, 44,087 properties were sold to non-Spaniards in 2012, according to Spain’s Department of Housing. While these figures may be a mere drop in the ocean compared to pre-crash figures, they do represent a pivotal shift in attitude.

Foreign spend was shooed away for a while during the depths of the crash, but investors have been sniffing around with increasing alacrity and increased numbers over the past 24 months, and long may it continue.