Spain's property market is enjoying a foreign currency-driven recovery, new research showed.
The sector, one of the country's worst-performing areas since the real estate crisis of 2008 dragged the Spanish economy into the doldrums, has received a new lease of life recently, thanks to wealthy foreign investors.
According to figures released by Spain's registrars society and published by the Financial Times, the number of foreign nationals who have bought property in the Mediterranean country rose 3.2% to 12.2% between 2006 and the first quarter of this year.
The impact is particularly evident in the luxury market, with properties in posh areas such as Pedralbes and the Passeig de Gràcia in Barcelona, and Salamanca and Chamberí in Madrid, having already recovered 20% of the value they lost during the financial crisis, when home prices tumbled by 35% between 2007 and 2013.
“At the high end — €500,000 and up — it’s primarily being driven by international demand,” Alex Vaughan, who in 2005 co-founded Lucas Fox, a Barcelona-based luxury estate agent, was quoted as saying by the newspaper.
Investors in the Spanish property market come from the UK, the Middle East, Asia and and the US, as Spain's real estate sector has been made even more appealing by the depreciation of the euro.
The market has also benefited from the introduction of a so-called "Golden Visa" in 2013, which offers residency to those prepared to invest at least €500,000 in the property sector, with 490 visas issued from September 2013 to the end of 2014, mainly to buyers hailing from Russia, China and the Middle East.
According to the report, of the €10.2bn invested in commercial real estate in Spain last year, half came directly from foreign funds, with a further €2.5bn coming from Socimis — real estate investments that can be traded like shares on financial exchanges — which are heavily backed by foreign investors.
“With their arrival three years ago, opportunistic international funds managers made a market at a time when we had hit bottom,” Patricio Palomar, director of research at CBRE Spain told the Financial Times.
Source: Digital Look