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The foreign investor takes root in Spain's real estate market

In recent weeks, coinciding with the publication of various data on the sector, Spain's real estate market has been subject to multiple assessments in the media. All the sources agree that the growth of the sector is gradually bringing it closer to the figures existing in 2007, before the start of the Great Recession, in cities such as Madrid and Barcelona. The increasing weight of international investors on the national real estate market has also attracted attention. This is not a new trend as it has been with us for several years, so its consolidation is beyond doubt.

According to the data provided by the Ministry of Public Works, foreign investors whose habitual residence is in Spain contributed to 10,084.6 million euros in real estate transactions between January and September 2017. The figure is certainly remarkable and even more so when considering that it is 19.7% above the figure registered in the same period of 2016. At that time, transactions of this type totaled 8,423.5 million euros, which already represented a record-breaking number. Surprisingly, between January and September 2016, foreign investment also grew 19% compared to the previous year. In other words, the accumulated rebound between the last two years is close to 40%.


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Beyond the general figures, the predisposition of foreign residents to invest in resale real estate stands out by 8,985.5 million euros, which is 89% of the total investment going to resale properties. This is perhaps why many home owners have been encouraged to put their properties up for sale, taking advantage of the market recovery and the upward trend in house prices in many areas of the country. The other side of the coin is obviously the foreigners' who have seen a good investment opportunity in these types of assets. What's more, the consensus of the market anticipates that prices will continue to rise steadily during the coming years.

In any case, there is a polarisation of the market between the sought after resale homes and the new builds that do not have many buyers. Investment in resale homes increased by 19.7% compared to the same period of the previous year, whereas new builds did so by 19.8%. Moreover, if we take into account that in 2016, the year-on-year advance of investment in resale assets stood at 19.3%, while the purchase of new homes remained at 16.2%, the latter category would have grown more in relative terms. This means there is a clear convergence within the sector.

If the characteristics of the purchased assets are eloquent about the market's condition, it is also best to check the location of the investment within the country. It is no secret that Spain's real estate market is moving at a different pace at a regional or local level. Between January and September 2017, the Comunidad Valenciana became the preferred destination for real estate investment. In this Levant region, foreign residents invested 2,177.5 million euros, which was no less than 21.6% of the volume of operations in the whole country. The Alicante resort was the most sought after location, as we will see later on.


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The second position went to Catalonia, a market that has surprised its investors very positively for several reasons. Firstly, the already high price of housing in areas such as the centre of Barcelona, the Costa Dorada or the Costa Brava did not discourage investment in both resale and new build homes. Secondly, the doubts generated by the institutional uncertainty in the region did not weigh on the minds of the investors, who have been able to assess the evident economic strengths of Catalonia. Andalucía, with the attraction of Costa del Sol, is positioned as the third region that attracted the most investment during the period we are discussing.

If we refine the objective a little more, Alicante was the province in which more investments were mobilised. In fact, the 1,821.8 million euros in real estate transactions registered by the province accounted for 18% of total investment in Spain and 84% of the deals signed up in the Valencian Community. Other important coastal destinations, such as Benidorm, Calpe, Torrevieja, Santa Pola and Altea, were added to Alicante capital.

The next province with the highest investment activity is Málaga, again with the coast as the main protagonist. In the second most populated province of Andalusia, 1,570.7 million euros were recorded in real estate investments, 15% being the local market. In this last region, the luxury real estate market, led by Marbella, was once again decisive. It should be noted that, both in the case of Malaga and Alicante, we are talking about two traditionally attractive areas for foreign residents in Spain.
 Arriba



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