Spain is certainly having a challenging time and has been considered an “at risk” economy, fuelled by a contracted housing market. Construction accounted for just over 10% of the workforce in Spain, so it has had a big impact on the economy.
Property prices are hard to get to grips with because “official statistics” do not seem to reflect a lot of what is happening on the ground. Tinsa (a leading Spanish Surveyor) reported in August 2010 that annual declines were down 22% from August 2007. Bank of Spain reports Costa del Sol prices down 20% since 2005, with other provinces, popular with British buyers, falling 15% e.g. Murcia, Almeria.
The other side of the coin, is supply of property and this has been building up for some time in Spain. The Bank of Spain estimates that the housing “glut” is at around 700,000 to 1,200,000 homes. However this is across the board, from: city-centre dwellings, to affordable housing and not just holiday home stock.
With price declines and unsold housing stock, this may mean property price stagnation for some time. If the current situation is like the property slump of 1979, when the prices fell 25% from peak to trough, there could still be about 10% more decline. However if the economy and market pick up, then prices could be bottoming 2011-2012.
There are some properties discounted by 40% to 50% and it is these headline prices which are attracting bargain-hunters. However, apart from individuals who are seeking to sell quickly, due to personal circumstances, many “bargains” are not always what people are expecting. Sometimes the really cheap properties are bank repossessions that are not of “holiday home” quality, or in the right location, or they may be on unfinished developments, where all the facilities are not yet in place. So headline prices are stimulating interest, but the reality is not always turning out as buyers might be expecting. Many overseas property buyers are now looking for ready-built, properties with established facilities, to minimise risk.
There are some areas, with a good news story. Murcia, for example is benefiting from:
- an announcement at the end of 2010 by Paramount Pictures, which will be opening its first theme park in Europe, in Murcia, Spain. This may create 20,000 jobs, 15,000 new hotel beds and the attract almost three million tourists each year. This will be a boost for the area and potentially for property prices, as visitors plan their holiday accommodation in the area.
- The new Chinese Enterprise, called ZEIC (Special Investment Zone Chinese) propose to build a commercial and business centre. The idea is to facilitate relations between Spanish and Chinese enterprise and serve as a blueprint for other parts of Europe. Murcia as a region has been chosen because of its high demographic density, diversity in its activities and its connections to the rest of the surrounding regions.With a proposed build start date of 2011, this huge new venue could be completed as early as 2014.
- Murcia has very good transport links: San Javier Airport, AP-7 motorway north & south, Alicante Airport. The new Murcia international airport – Corvera – is under construction and expected to be operational Summer 2011.
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Tags: Europe, holiday home, investment, Murcia