Foreign investment in spanish property hits nine-year high

Photo credit: Pepe Rodmon

Foreign investment in Spanish real estate totalled €6.45 billion in 2013, 16 per cent higher than 2012 and the highest figure since 2004.

The figures are a bright spot in an often dim time for the country's housing market, which now relies upon foreign buyers for its recovery as unemployment and financial uncertainty deters domestic buyers.

For overseas investors, though, Spain's property has never been more appealing, with a PwC highlight the country as ideal for investment thanks to low prices. Indeed, property values have fallen by up to 40 per cent since the market peak in 2007, although that decline is now slowing down: prices are decreasing by just 4.1 per cent annually, which the Bank of Spain attributes to the rise in foreign investment.

Brits led the way, accounting for 15.1 per cent of property purchases, ahead of the French (9.84 per cent), Russians (8.58 per cent) and Belgians (7.26 per cent).

Buyers are being actively courted by Spain, who recently introduced a Golden Visa scheme to offer residency to non-EU buyers spending more than €500,000 on real estate in the hope of encouraging investment.

The picture is not entirely rosy: while Russians are the third-most active nationality in the market, the country's falling ruble is impacting demand. Indeed, queries from Russia dropped 60 per cent in recent months, estate agency Costa Activa told Spanish Property Insight.

"The trend has been occurring since late last year,” founder Agustin Ramirez said. "I think Russian demand will drop significantly if the exchange rate deteriorates any further.”

At the same time, Spain's expat population is reportedly shrinking, as economic problems eat away at the sun-soaked dream of living on the Costas. Almost 90,000 expats left the country, according to town hall registers, which recorded a 23 per cent drop in expats since January 2013, reports The Telegraph. The only country increasing its presence is China.

Indeed, it is no coincidence that idealista.com has partnered up with China’s No. 1 international property website Juwai.com to advertise properties to Chinese buyers - the perfect candidates to be wooed by Spain's Golden Visa.

Regardless of other factors and ongoing issues, the appeal to international buyers is certainly still there. According to the property register, foreigners bought 36,226 homes in Spain in 2013, 35per cent higher than 2012 and a staggering 82 per cent rise from 2010. On TheMoveChannel.com, meanwhile, Spain's share of enquiries increased by almost 1 per cent in March 2014 from February 2014 and remains the third most popular country on the portal.