Spain Can Reign Again

A recent Sunday Express article attempts to place the doom and gloom surrounding the Spanish property market into context - without rose-tinted glasses - but also without the scaremongering and hype often present in the media coverage of Spain.

In it they observe: "the glory days of double-your-money investments have evaporated. However, a new, more cautious breed of buyer is breathing hope into a market that shrank 39 per cent over the past year."

"The Spanish market basically hit the buffers about three years ago largely due to the stupidity of the authorities that allowed disaster after disaster to pile up," said John Howell, senior partner of the International Law Partnership which has 30 years' experience dealing with property negotiations in Spain.

"We are now seeing more canny investors moving back into Spain because they can see real bargains at a 30 to 40 per cent discount. It is still a viable place for property investors but it is not a market for the leading-edge investor who expects 20 per cent capital growth."

Not everyone shares the positive views, and the massed ranks of estate agents shutting up shop, builders standing idle and developments empty suggest it will be some time before a feelgood factor returns. But reputable British developers believe the crash has put the cowboys out of business and forged a new generation of sensible investment.

"The net result is ultimately good for the consumer because the estate agents who stay in business will be the ones who have upped their game. Everyone in the market will have to look at their product, make sure it is good and that they provide a good service, otherwise they won't do business," said Paul Owen, chief executive of the professional body, the Association of International Property Professionals (AIPP).

"People will not stop going to Spain and buying there. It provides a great lifestyle, is easy to get to and in the right places it is cheaper to buy than in the UK. There is no immediate sign of an upturn but Spain will still be number one for lifestyle purchases for years."

An AIPP survey places Spain top of foreign sales for UK buyers, with 24 per cent of sales in 2007 (down from 30 per cent in 2006), with France in second place at 18 per cent.

The critical facts are still grim. The market has retracted by 39 per cent, sales from developers are down 60 per cent compared to last year and the market is still swamped by unwanted homes - Spain built 600,000 a year since 2002 on the back of a decade-long boom.

Mr. Howell adds: "Property prices go up and down. They have fallen 30 per cent and I think we are at the bottom of those falls. I would be amazed if they had not recovered their value in five years. In the early Nineties there was a big dip yet they clawed back the value."

Original article in the Sunday Express on July 6th, 2008