PROPERTY PRICES IN SPAIN

PROPERTY PRICES IN SPAIN

The Costa Blanca is the most affordable region in terms of residential property prices. Studios or one-bedroom apartments near the beach are available at prices from €70,000. Small detached three-bedroom houses 10-15 km away from the sea on the Costa Blanca sell for a minimum of €150,000. Newly-built villas 2-4 km away from the sea on the Costa Blanca sell for a minimum of €250,000-300,000. In northern Costa Blanca, the towns of Calp, Dénia, Moraira, Jávea and Altea are located. In these towns, real estate is popular with the affluent foreign nationals and retirees who prefer calm relaxation. South Costa Blanca is a resort area. The most popular cities of this region are Alicante, Torrevieja and Orihuela Costa. Thanks to the active construction, the local residential property prices are lower. The region is chosen by the buyers with modest budgets.

Alicante in southern Costa Blanca is the most popular region among foreign property buyers. In the province of Alicante, foreign residential property buyers accounted for 41.81% of the Q2 2019 total. Real estate in Alicante is on average twice cheaper than in Madrid and Barcelona. As of February 2020, apartments in the city of Alicante sold at €1,500/m².

Residential property in Catalonia is more expensive than on the Costa Blanca. For €150,000 only small apartments are available there. Residential property prices in Catalonia have increased by 40.5% over the past five years. This is the highest figure among the regions of Spain after Madrid. Barcelona is one of the most expensive and the highest-yielding real estate markets in the country. As of February 2020, properties in the city were available at an average of €4,100/m². An apartment in the city of Barcelona costs over €500,000. At the same time, the rental yields reach 4 - 5% per annum.

The Costa Brava is a coastal region located north of Barcelona and spanning to the border with France. Families with children buy residential property there. Residential real estate is available at an average of €2,500/m² on this coast. In Girona, a Costa Brava city, the average property price had grown 10% by February 2020, running at €2,250/m².

Madrid offers the most expensive residential real estate in Spain. Its price averages €235,000, which is 56% higher than the nationwide figure. Property prices in Madrid have increased by 50% over the past five years. This is the highest growth among the regions of Spain. Apartments in Madrid cost €4,400 /m² on average. A typical 120 m² apartment in the centre of the city costs €550,000.

Marbella is an upscale Mediterranean resort on the Costa del Sol. In December 2019, the average residential property price in Marbella reached almost €3,000/m², exceeding the pre-crisis levels. This is 8.7% higher than the previous year.

As of February 2020, residential property on the Canary Islands was available at an average of €1,900/m². The local property market has begun to recover rapidly after the crisis. However, the cost of housing remains 30% lower than the 2008 peak values. Prime property in southern of Tenerife, Gran Canaria, Lanzarote and Fuerteventura is appreciating rapidly. Prime villas cost from €1.5M to €8M there.

As of February 2020, the average property price on the Balearic Islands reached €3,000/m². The local prices grew by 4% over a year.

PRICE DYNAMICS

Between 1996 and 2007, the Spanish property market experienced a boom. During those years the country's residential real estate became 197% more expensive on average. Adjusted for inflation the growth ran at 117%. In Catalonia, Andalusia and Valencia, the prices soared by 250% or 155% adjusted for inflation. Spain was one of the European countries with the highest price growth rates.

Between 2006 and late 2012, Spanish properties depreciated by over a third — 34.6%. In 2006, the price per square metre averaged €2,892 (which was the peak value), while in 2012 it averaged €1,891. The building spree and the subsequent crisis led to the property demand in Spain proving to be insufficient. This resulted in an excessive supply in the market and a rapid decline in prices, especially on the Costa Blanca.

The prices for Spanish housing collapsed by a total of 41.9% between Q4 2007 and Q3 2015. Adjusted for inflation, the fall was by 46.8%. The economic growth, low interest rates, affordable housing prices and the increasing number of foreign investors helped the market to recover.

Between January 2015 and January 2020, the average property price increased by 13.2% across Spain, the growth was the highest in Madrid — 25.7%, Catalonia — 18.5% and Andalusia — 12.5%. A slight price decline was observed in the regions of Asturias — by 6%, Extremadura — by 5.5% and Cantabria — by 4.8%.

Spanish properties have become 3.4% more expensive over a year, being priced at an average of €1,752/m² as of February 2020. The property market has not yet returned to the pre-crisis levels and has a potential for growth.

EUROPEAN LIMITATIONS ON FOREIGN PROPERTY PURCHASES

In Europe, no law prohibits foreign citizens from buying property but certain countries have put limitations on this right, often with regards to residency rights, property type or buyer category. For example, only residents can buy real estate in Iceland and Liechtenstein. In Andorra, Hungary, Denmark, Poland and Malta, foreign investors can only buy property after receiving approval from the local authorities. Nevertheless, most major European countries (e.g., France, Germany, Italy, Spain and UK) allow overseas investors to buy residential and commercial real estate with the same rights as local citizens.

EUROPEAN COUNTRIES WITHOUT PROPERTY RESTRICTIONS

Belgium - Bulgaria - Czech Republic - France - Germany - Great Britain - Ireland - Italy - Monaco Netherlands - Norway - Portugal - Spain - Sweden

Even minor limitations can deter buyers, even if they had their heart set on a specific country, but these restrictions can often be avoided by creating a legal entity for example. The most important thing is to have a reliable guide to help you.

TERRITORIAL RESTRICTIONS

National security is an important motivation in some countries that have prohibited foreign citizens from buying property in certain regions. In Greece, non-EU/EEA citizens are not allowed to purchase real estate near military bases and state borders (e.g. near the Balkan borders, Dodecanese archipelago, Crete, and Rhodes). Similar bans are in place in Turkey and Estonia.

Relatively small countries, like Greece, often impose property purchase bans on foreign citizens. National preference is also a European reality and there are countries where whole districts are closed to foreign buyers. Austria is an excellent example as there are limitations on half of the country’s federal states: Burgenland, Vienna, Lower and Upper Austria, Salzburg, Carinthia, Tyrol and Vorarlberg. Switzerland is also a frontrunner for national preference. In addition to extremely strict rules on residency and citizenship, the country has a famously restrictive “Lex Koller” property law, which limits foreign purchases to resort property in specific cantons: Valais, Vaud, Graubünden and Ticino. In Finland, foreign citizens cannot buy property on Åland Islands.

Agricultural land is particularly vital to Europe’s less developed economies in the East and Southeast — particularly in the Balkans and Baltic states. Estonia, Hungary, Latvia, Lithuania and Slovakia have taken steps to prohibit non-EU/EEA citizens from buying farmland. Albania, Croatia, Macedonia and Serbia (who are working towards EU integration) have imposed these restrictions on EU/EEA citizens as well.

  

Economic dependence on agriculture often leads to agricultural land purchase bans Construction and surface area restrictions have been imposed in popular countries where development opportunities are limited by the lack of space. These are embodied by laws prescribing the maximum floor space a foreign citizen may buy and how much surface area they may build on. In addition to that, it is not uncommon to need permission from local authorities. In Switzerland, foreign citizens cannot buy property over 200 sq m in size or land exceeding 1,000 sq m. In Montenegro, purchases of land for development may not exceed 5,000 sq m.

Restrictions on companies and individuals in Countries with little land for development often restrict purchases by floor space. Overcoming restrictions on individuals is often possible by registering property to a company or creating a legal entity to make the purchase. Restrictions on corporate real estate purchases have been put in place by some states to prevent abuse. In Turkey certain types of legal entities (e.g., funds and associations) cannot purchase real estate, but others can. In Switzerland, foreign companies can buy real estate if they are listed on the Swiss stock exchange and less than 33% of their shares are held by a non-resident. Restrictions by nationality are less common but do exist. Turkey bans nationals of Armenia, Yemen, Cuba, Nigeria, Syria and North Korea from buying real estate — but they can buy it through a company.

AGENTS AND DEVELOPERS

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