As we look at the Property Trends in Spain 2016, it is important to reflect back on what a rollercoaster of a year 2015 was for the Spanish property market. Just when everyone had thought that the real estate situation in Spain couldn’t be better as 2015 came to a close, after years of a prolonged economic recession, it turned out that there was a nasty shock in store for everyone – because of the results of the general elections that were out on December 20, 2015.
Nobody won the Spanish general elections held in December, 2015 - of the 4 political parties in fray, three won 20% of the votes and one won 15%. But it is clear who lost – anyone involved in Spanish real estate as suddenly the country was hit by political uncertainty. 45 days later, there still isn’t a government in place in Spain, so a lot of important decisions related to the economy have been put on the back burner.
The political uncertainly couldn’t have come at a worse time because the Spanish economy had done well in 2015, after several years of under-performance. Property prices had risen by 5% to 10% in most regions in Spain. The job situation was better than before and the local businesses were finally making some kind of profits.
What makes the situation worse for Spanish property market is that there’s a new nationalist government in the province of Catalonia, which wants to break away from Spain. Foreign investors have no horses of their own in Spanish politics, but they hate uncertainty, more than anything else. So this is certainly not good news for the property market in the country given how much it is dependent on foreign investment.
Even so, we expect 2016 to be a very good year for the residential property market in much of Spain, with regions such as Madrid, Malaga, Barcelona, Valencia, Costa del Sol, Canary Islands and Alicante dominating. The increase in home prices in 2016 is expected to be quite high, from 6% to even as high as 12%.
The British are the most involved foreign buyers in Spanish properties, accounting for almost 15% of all purchases. They have been closely followed by the French (10.5%), Russians (8.4%), Germans (7.5%) and Belgians (6.9%).
There has been a strong interest coming from the United States, China and Russia in Spanish real estate. The number of Americas buying Spanish properties rose by 90% in 2015, while the corresponding figures for Chinese and Russian buyers was 83.1% and 62.6% respectively.
Today, foreign buyers account for almost 25% of all property transactions in Spain, with almost 50% of foreign investors being non-residents. The foreign interest in the Basque Country rose by 43%, in Madrid by 42.5%, in Catalonia by 41%, in the Balearic Islands by 36% and in the Canary Islands by 23.8%. Madrid and Barcelona, in particular, are global cities that offer the highest quality of life in Europe.
The Spanish Golden Visa, which promises residency permits in Spain and travel rights across the EU for non-EU individuals and families that invest more than 500,000 EUR in Spanish property, has had an effect as well. This has been particularly attractive to wealthy Chinese and Russians looking for a place to stay in Europe.
The Golden Visa scheme has been particularly effective in Portugal; it is only now that it is beginning to see success in Spain. Wealthy, high net worth Chinese and Russian want more than just great weather, sunshine or a laidback lifestyle – for them, buying overseas property is really more about making profitable investments and finding a safe haven for their enormous financial resources.