The prime property market in Spain has recovered strongly with buyers from Latin America and the Middle East rising, according to the latest index report.
The recovery of the market mirrors the recovery of Spain’s economy which is expected to see growth of 2.6% in 2016, more than the UK and Germany, says the analysis from international real estate firm Knight Frank.
‘Ultra-loose monetary policy by the European Central Bank and low oil prices have led to an increase in consumer spending, higher employment and rising household incomes. The market fundamentals are improving,’ said Kate Everett-Allen, Knight Frank partner, But she added that a backdrop of global uncertainty remains.
The report highlights two key property market trends. Firstly, the rise of the non-EU buyer. Latin Americans now have a strong presence in Madrid, Middle Eastern buyers are active in Marbella plus Swiss purchasers in Ibiza as the profile of Spain’s luxury buyers shift.
The second key trend is the strength of the €1 million to €3 million price band and nearly all of our prime markets now consider it their most active market segment while confidence is returning to Barcelona where the number of residential sales increased by 86% between 2012 and 2015
Online property searches on Knight Frank’s website by Middle Eastern web users searching for a property in Marbella increased by 164% between 2014 and 2015. A third of Madrid’s prime buyers now come from abroad. In 2015 Latin American buyers accounted for 30% of all the prime sales agreed by Knight Frank’s Madrid sales team.
The report also says that the top tier of Ibiza’s property market has become uncoupled from the wider market, recording price growth of 10% in the year to April 2016 while Mallorca saw a 55% increase in the number of applications for new residential projects in the first two months of 2016 compared with the same period in 2015.
Overall, the report says, rising sale volumes in Marbella suggest confidence is returning to the market. Price growth is slowly shifting into positive territory with newly built modern villas in good locations, beachfront properties along the Golden Mile and gated communities such as Sierra Blanca, Camojan and La Zagaleta outperforming the wider market.
It also points out that the recent ruling regarding Marbella’s 2010 Town Plan, which affects around 15% of Marbella’s housing stock, has led to some caution for those properties affected, but it has also refocused attention on properties in established areas which comply with the 1986 Urban Plan, as well as those which sit beyond the municipal boundary in areas such as Benahavís and Estepona.
Meanwhile, Mallorca’s prime market, having reached its trough in the winter of 2014, has entered a new cycle of growth. The island’s prime markets of Andratx, Son Vida and Deià remain firm favourites with British, German and Scandinavian buyers.
The report also explains that in Mallorca, not only has foreign demand strengthened with sales to foreign buyers up 21% year on year in 2105, but sentiment among local buyers has also improved. Mortgage lending across the Balearics jumped 20% in the 12 months to January 2016.
The construction of new homes on the island virtually came to a standstill after the recession in 2008, but the first two months of 2016 saw a 55% increase in the number of applications for new residential projects compared with the same period in 2015, the largest rise in the last 10 years according to the Balearics Statistics Office.
The report also says that the top tier of Ibiza’s property market has become uncoupled from the wider market and is witnessing strong price gains as demand outpaces supply. The number of sales on the island increased 37% in the three years to 2015 and foreign buyers have become more active.
Ibiza attracts more than 8,000 private flights a year and according to NetJets, London to Ibiza and Palma de Mallorca are some of its most popular routes. As the southern coast becomes more developed so attention is turning to inland markets and the northern coastline. The new road to San Juan in the north east will reduce travel times significantly, the report adds.
