Property Focus Buying Property

Mon 12 Jan 2015

Foreign investment in Spanish property rises 28.4%
The Ministry of Public Works in Spain has released data which shows that from January to September 2014 foreign investment in Spanish property increased by 28.4% year-on-year. The total worth of this investment was €6.077 billion and the region which benefited most was the Valencia region.

The majority of the investment was made in resale property with foreigners spending €5.404 billion on re-sales, 33.4% more than during the same period of 2013. Investment in new-build property was down in year-on-year times albeit only very slightly, €672.9 million was invested from January to September 2014 down 1.09% on that period of 2013 (€680.3 million).

Foreign investment was most concentrated in the Valencia region and in particular the province of Alicante which is of course where the Costa Blanca is located. €1.284 billion was invested in Alicante province 85% of the total of €1.507 billion which was invested in the Valencia region and just 10% less than the total for Andalucia (€1.429 billion).

New-build property prices fell by 2.2% in 2014
The Spanish valuations company Sociedad de Tasacion has released its price data for 2014 which reveals that Spanish new-build property became 2.2% cheaper over the course of the year. Their study, which has been published annually since 1985, took as a sample 48,000 individual properties from a total of 3,200 developments across Spain.

The company has recorded a 40.2% decrease in new-build property prices from their peak but their statistics show that price falls are now slowing. In the second half of 2013 prices were down 3%, this had slowed to a 1.8% fall for the first half of 2014 while during the second half prices decreased by just 0.4%.

The statistics are based on properties located in provincial capitals and towns with populations of 25,000 or above. The changes mean that the average price per square metre is now at €1,994 which means that one could expect to pay around €179,400 for a standard 90m2 new-build property located in a Spanish town.

Prices of new-build property dropped in all Spanish regions as well as all of the provincial capitals. The greatest regional decreases were recorded in La Rioja (-3.7%), Aragón (-3.5%) and Asturias (-3.1%) while the most marginal falls were in Navarra (-1.2%), Castilla y Leon and the Canary Islands (both -1.7%) and Galicia (-1.8%).

The Sociedad de Tasación data is in line with what most statistics agencies are currently reporting with property prices still dropping but at an ever slower rate. 2015 should be the year in which the general downward trend in property prices finally comes to an end for both new-build and resale property.

INE: Property sales rise 16% in October
The increase in sales continued in October with 26,468 properties being sold during the month which is a 16% year-on-year rise. The increase was higher than the 13.7% year-on-year rise recorded for September and further backs up the claims being made that the crisis in the Spanish real estate sector is over.

The October statistics put 2014 on track to beat the total number of sales in 2013, in the first 10 months there have been 0.1% more sales than in the same period last year. When the October data is compared with September’s it shows a decrease of 2.1% as there were 556 fewer sales completed in October than there were in September (27,024).

Resales continued to outperform new-builds with the number of resales up by 42.1% year-on-year to 18,341 while new-build sales dropped 17.9% to a total of 8,127 for the month. Resales therefore made up 69.3% of all sales in October, new-builds accounted for the remaining 30.7%.

Sales of urban land on the rise in Spain
Sales of urban land in Spain rose by 21% year-on-year in the third quarter of 2014 according to statistics provided by the Ministry of Public Works. There were a total of 4,293 sales of land completed in Q3 which also represented an increase of 13.2% on Q2 in which 3,548 land sales were carried out.

However, land prices appear to still be falling and the average price paid for the land was down 3.3% year-on-year to €142.6/m2, this figure was also down on Q2 by 2.6%. Prices fell even more sharply in municipalities of 50,000 people or more and were down 19.2% year-on-year to just €208.6/m2.

The lowest prices per metre squared in municipalities with populations of over 50,000 were found in Badajoz (€67.5/m2), Murcia (€68.3/m2) and Burgos (€121.9/m2). At the other end of the scale the three municipalities in which land cost the most during Q3 were Barcelona (€539.1/m2), Guipuzcoa (€415.6/m2) and the Balearic Islands (€412. 8/m2).

The increase in sales is clearly positive news for the Spanish real estate sector as a whole and shows that confidence is rising with development activity also on the increase. Spanish banks will be especially pleased as they have large swathes of repossessed land which has been so far very difficult to offload but may soon find buyers if the upwards trend continues.

Permission granted to republish. Data supplied by Fuster & Associates

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