Destination Spain – Property Investment Spotlight


Since Spain turned a corner in 2014, raising its head from the depths of recession to outpace most Eurozone economies last year, select pockets of its mainland and islands have taken on a momentum of their own.

Spain is far from out of the woods altogether, political deadlock persists following two general elections in quick succession and unemployment remains high. But the regions that Knight Frank specialises in – Madrid and Barcelona, Marbella and the Balearic islands of Mallorca and Ibiza – are seeing clear signs of recovery, each fuelled by different forces.

Madrid has seen property prices rise since 2011 – and although 70% of buyers are Spanish, the bulk of overseas demand comes from Latin America, whose troubled economies are driving investors to what they see as a safe Eurozone destination.

Their preferred prime locations are central neighbourhoods such as Salamanca, Chamberí and Jerónimos and they are increasingly viewing Madrid as a place to relocate their families and educate their children. Madrid has eminent lifestyle appeal – and it doesn’t even take that long to get to the beach anymore, with a 90-minute high speed train link to Valencia and a connection to Malaga in just over 2.5 hours.

Low resale stock levels and the scarcity of new-build (there are just 250 new units currently on sale in the city) has kept Madrid’s property values relatively stable in recent years. When a property comes on sale in a prime address, there is strong competition among buyers, 99% of whom won’t need a mortgage.

Barcelona casts its net far wider than Madrid’s. While Catalan wealth props up this powerhouse behind Spain’s economic recovery, the city also attracts an extraordinary variety of nationalities, most of whom want a reasonably-priced, central bolthole in areas such as the Eixample, Gothic Quarter or beachside Barceloneta for their own occasional use and rental income.

Barcelona is also embracing the luxury lifestyle with a new calibre of hotel, including the Mandarin Oriental, the arrival of brands such as Soho House and the transformation of its Port Vell harbour into a super-yacht marina.

In Marbella, Northern European, British and Russian buyers dominate demand. The market turned in 2012 and prices are rising. Northern Europeans are fuelling sales of €10m+ properties in prime areas such as the Golden Mile’s beachfront and La Zagaleta.


There is also healthy demand between the two extremes for modern, ideally newly-built villas or apartments on small gated communities. Off-plan investment is also proving popular again – a way for buyers to get the high-quality, high-tech new home they want and to finance it through stage payments.

The annulment of Marbella’s 2010 urban plan, which meant that the city now abides by the 1986 Urban Plan has brought about some uncertainty as to the future of the 16,500 properties (about 15% of Marbella’s housing stock) which do not comply with the 1986 Urban Plan. Local and regional authorities have expressed their ongoing commitment to drawing up a new Urban Plan. This will deal with the above but also provide Marbella with a set of sustainable regulations for the future expansion of the city and renovation of its housing stock. But it does not affect – nor
is it deterring – most buyers and is throwing up some opportunities among older properties in well located and well-established areas.

Ibiza is a phenomenon all on its own, more closely resembling St Tropez, Miami and Mykonos than the rest of Spain in terms of the lifestyle it offers and the young, wealthy demographic it attracts.

As a barometer of Ibiza’s prestige, look no further than the unprecedented number of private jets and super-yachts that sweep in each summer – and beyond, as Ibiza’s high season becomes ever longer.

The neighbouring and larger island of Mallorca caters to all holiday budgets, but its properties are particularly sought-after by wealthy buyers in search of a city, waterfront or inland property. Palma offers all the charm and attractions of a cutting edge, cultural capital, while other buyers find their haven among the upmarket marina or golf communities or in idyllic mountain towns such as Deià and Sóller.

Their appeal may be distinct and diverse, but these are all markets on the move. They each have a sense of energy, optimism and a hugely attractive lifestyle offering – and overseas buyers are back and want to be part of it.

Click Here to read the full inside view on Spain. http://www.knightfrank.com/publications/inside-view-spain-spanish-version-3931.aspx.

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