According to reports in The Independent newspaper, British property investors are taking full advantage of a weak euro in Spanish property markets in 2015, with one fifth of all foreign purchases in the country being snapped up by savvy buyers capitalising on the significantly increased purchasing power of the pound.
New figures published by the Spanish land registry show that Britons, more than any other nationality are taking advantage of a combination of favourable economic factors. In the last 12 months, the euro has fallen from around 80p to the pound to just over 70p, making holiday homes in the Spanish Costas more appealing to British buyers.
Slow price growth in Spain, coupled with rapidly rising property prices in the UK – in some instances by more than 10% a year – mean that Spanish property is making less of a dent in Britons' wallets. In a report published by the Colegio de Registradores, 19.8% of all property bought by non- Spanish buyers in the first six months of 2015 went to UK buyers. German and other northern Europeans are stymied by the weak euro, while buyers from Russia and China have reduced activity in Spain's property markets after being hit by sanctions or weakening domestic economies.
As many as 750,000 Britons live in Spain for at least part of the year. "The British market is by far the most important," said Marc Pritchard, the Majorca-based sales and marketing director of Taylor Wimpey España, which develops homes in popular coastal areas. "There are several factors at play but people are starting to realise that after years of the Spanish housing market being depressed, it is beginning to pick up."
Spain was one of the biggest victims of the global financial crisis, suffering one of the sharpest economic downturns in the Eurozone, sending property prices plummeting. Many British buyers suddenly found themselves heavily indebted and holding an asset that was worth a fraction of what they paid for it, after many had ploughed retirement savings into a dream home in the sun.
But greater confidence of economic stability at home is allowing people, especially those with plenty of cash, to look abroad for what are still bargain prices, some at 30% discount to peak levels in 2007. "Prices, while rising, are still low," said Mr Pritchard. "Even in prime locations, properties are still at 2002 levels."
The most popular destinations are the sun-kissed coastal areas, with some communities in Alicante and Marbella dominated by English-speaking residents. The house-moving website, Rightmove, says it is the grey pound that is driving the market. Britons aged between 55 and 64 are the most active in Spain, making up almost half of all enquiries about holiday homes. Those aged between 45 and 54 make up one third of all requests.
The research is in line with analyst-predictions made at the beginning of the year, ahead of changes to pension legislation in the UK which took effect from April, allowing pension savers to withdraw lump sums from their pension pot for any purpose. It was widely believed that this would stimulate property investment markets, particularly in BTL opportunities in the UK and Europe.
However, the dynamic of sharply increasing property prices in the UK has led to a shortage of investible asset opportunities, leading pension investors to look closer at overseas markets. When viewed with other countries in the Eurozone, Spain's property markets remain consistently appealing to British buyers and this sentiment has increased further throughout 2015.
Crowdfunding opportunities are on the rise in Spain, as boutique investment companies get creative to capitalise on the increasing interest among British investors in income-generating property assets in the country. Housers, a Spanish-based crowdfunded investment group is hoping to raise around £90m to invest in 500 properties, most of them in Madrid, with a view to renting them out. House prices in the Spanish capital have risen by more than 5% this year.
Crowdfunding provides a real estate investment vehicle with entry levels from as little as £1,000, enabling investors to get in on lucrative property deals, while mitigating the risk considerably in the shared ownership arrangement. With the increased purchasing power of sterling buyers, Spain's property markets offer the perfect opportunity to grow wealth from a lower base than at home and it's perennial popularity amongst holidaymakers ensures a reliable return on investment and sustainable long term value.