Steeped in history, culture and tradition, Spain conjures up
images of beautiful beaches, classical art and architecture and
a passion for life – whether that be for football, dance or bull
fighting. Whether you like to explore gothic cathedrals, enjoy
the local food and wine, or relax by the Mediterranean Sea, it
is easy to realise why more than 50 million people visit Spain
(the second most visited country in the World, after France)
each year.
Located in the South West of Europe, Spain has borders with
Portugal and France but is otherwise surrounded by the
Mediterranean Sea, the Bay of Biscay and the Atlantic Ocean.
Spain enjoys a warm and sunny climate for most of the Summer
and for some areas in Winter months. As well as mainland Spain,
the Balearic Islands (Ibiza, Minorca, Majorca) and the Canaries
(Tenerife, Lanzarote, Grand Canaria) are popular destinations
for tourists.
The Iberian Peninsula was occupied by the Romans in the 2nd
Century BC and the region of Hispania was formed. In the 8th
century, the Berber Muslims (or Moors) conquered the whole of
the peninsula and large populations of Christians, Jews and
Muslims lived in close proximity. It wasn’t until 1492 that
Spain became a Christian country (now predominantly Catholic).
That was also the year that Christopher Columbus, funded by the
Queen Isabella, discovered the “New World” and the Spanish
Empire was one of the most powerful in the World. Spain had a
large number of colonies in Central America and Mexico and many
modern-day states of the U.S.A.
At the end of the 19th Century though, Spain lost its colonies
in the Spanish-American and there was some instability
resulting in the Spanish Civil War (1936 – 1939) with a
dictatorship established by General Franco. It wasn’t until
1975 (on Franco’s death) that Juan Carlos (grandson of King
Alfonso XIII) was named successor and Spain became a democracy.
Although a Constitutional Monarchy, Spain has a number of
regions (17 autonomous communities and 2 autonomous cities) all
with separate identities and histories and in some cases -
languages. People in regions such Catalonia, the Basque Country
and Galicia, relate firstly to the region and then secondly as
being part of Spain.
Property Market
In recent years, there has been a large increase in the number
of overseas investors buying property in Spain, either as
second homes or main residences. In 2005, there were around 3.7
million foreign residents in Spain which highlights the
popularity of the country for immigration. There are large
communities of British, Argentineans, Germans and Bolivians
resident in the country.
The country has long been a favourite holiday venue for many,
with the British among the most frequent visitors. Among the
types of property available, apartments, holiday homes and
villas have been the most popular. The direct comparison with
the UK weather and climate offers the perfect venue for that
summer break, or some where to retire in later years – with
many older UK citizens taking the opportunity to emigrate to
Spain after retirement.
After historic periods of volatility, the Spanish economy has
been fairly stable for some time, and the relatively low
interest rates further encourage inward investment. While
Spain is a vast land of differing terrains, the transport
system offers easy access by car, plane or train. As visitor
numbers are forecasted to grow substantially over the next few
years, further investment in the infrastructure is essential
and in hand.
This forecasted influx of visitors will ensure a healthy demand
for property, and under a careful new-build program, demand will
always exceed supply. While there was a large increase of 17.5%
in the price of residential property in the second quarter of
2003 (compared to same period in 2002) this kind of return is
unsustainable. A more gradual return is expected over the next
few years, with little potential for downside in the short to
medium term.
The government recently announced reforms which are aimed at
increasing the buy-to- let portion of the market from 11% to
20%, thereby releasing some pressure from the purchase market.
Some 3.1 million unoccupied homes are to be brought into the
market, which will again relieve some of the pent up demand
experienced in recent years.
Why invest in Spain ?
Unlike countries such as the UK where stock market investment
is very popular, Spanish residents have switched a large
portion of their investments from the stock market to direct
property investment.
There is no doubt that the Spanish economy is driven by the
holiday market, and Spain has been a popular location for many
years. As UK property prices have shown massive rises over the
last few years, many are now switching to the Spanish market
which offers better value for money. This constant flow of
visitors has also encouraged a lucrative rental market, with
attractive returns available, especially in the coastal areas.
As coastal property prices have shown good growth over recent
years, the effect is starting to spread inland where the more
sedate and quieter regions are proving popular with the older
generation. So whether you are looking for that vibrant, busy
environment or a quieter, slower pace of life, there is
something for everyone.
Outlook
While the property returns seen over the last 10 years are set
to slow, many are forecasting a steadier more controlled
property market, with constant demand ensuring an upward trend
for the foreseeable future. There are currently a number of
long term property developments ongoing, which will flatten the
supply / demand trend line. Doom and gloom predictions for the
Spanish property sector appear to be wide of the mark.
Spain really does have something for everybody, whether you are
looking for the architecture and art museums of Barcelona, the
energetic night life of Ibiza or the quiet life of
Fuerteventura. Foreign investment in the property sector is
still rising and is the main driving force behind the growth in
the sector.
The buy-to-let market is also attracting lots of interest as
the trend for overseas holiday homes continues. After the
emergence of the budget airlines, it is now as quick to travel
to Spain, as it would be to travel far afield within the UK.
About The Author: The author of this article moderates at
Totally Property – an overseas real estate forum. The forum can
be found at http://www.totallyproperty.com/.
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