Property Search
For further information about adding your properties to this site see
Advertisement.
Directory
Spain's only Complete Real Estate Index
Despite the fact that profitability has been reduced over the last two years, buying property in Spain is still a good investment.
Amid the news of recent figures published by Spain's department of housing that confirm the tendency towards deceleration of the property sector – average property prices are 9.7% higher than last year; the first single-digit rise in five years – the question arises: is it still profitable to invest in property in Spain?
The moderation in property price increases is a result of the market's own mechanisms and to the balancing between supply and demand. Says Julio Gil, president of APCE, Spain's national constructor's association: "this is a situation we anticipated two years ago and that's positive for the market because it represents a step towards a more balanced growth rate."
Many industry professionals agree that investment is still appealing in many cases. The general opinion is that profitability will always be an element in Spain's property market because property prices will never actually drop.
Up to two years ago, Spain's property market was in full boom. Rises like the 17.3% increase in property prices in 2004 were indicators of guaranteed huge short-term profitability: "A few years ago the market was full of speculative investors. Nowadays that type of buyer has disappeared, but the traditional investor still has a strong presence," Gil points out.
Carlos Ferrer-Bonsoms, director of the residential division of the property consulting company Jones Lang LaSalle, thinks that surplus value is no longer a priority: "the hardcore investor has been leaving the market the last two years and now you see more mixed investments." The purchase of flats near the beach, for example, that can yield economic returns through letting and also provide its owners with a place to enjoy their vacations.
Since prices have been appreciating at a slower rate, it's necessary to change the focus when it comes time to invest by looking more towards long-term benefits. Also, as Ferrer-Bonsoms says: "although property can still be interesting as an investment, now it's necessary to seek good advice and to engage in specialization. Some years ago everybody was a winner. Now you have to be a bit more careful and study the different areas well."
Another issue that has to be kept in mind is the rise in construction of homes. Since 2005 there have been around 800,000 new properties initiated, but according to Ferrer-Bonsoms "in one or two years this figure should be around 400,000." Many experts also agree that the current strength of demand makes it impossible to talk about oversupply in the market; a situation that would have an impact on property values – one of the reasons why it's necessary to make a well-informed decision when investing.
The bottom line is that it's still beneficial to invest in Spanish property. Perhaps not as much as two years ago, but the property sector definitely still has a profit margin for the investor.
