Spain’s bargain homes

Discounts on Spain’s Costas are breathtaking for a reason. UK buyers MUST know where to look for true bargains, says Cathy Hawker.

British tourists heading for a sun-soaked Spanish holiday this summer were probably more concerned with the temperature of the sea than the heat of the local economy. But all is not well on our favourite Costas.

Spain’s unemployment rate is now nudging 20 per cent, making it the highest in Europe; there’s a budget deficit of 11.2 per cent to plug, and the El Economista newspaper is claiming that a third of Spain’s local councils will soon be so broke many will be unable to pay their wage bills. And in the property market the bad news just keeps on coming.

Three-quarters of Spain’s estate agents have gone under and 170,000 construction companies have collapsed in a little over two years. Low interest rates and loose lending helped drive property prices sky high, but now the bubble has burst and finding eye-watering discounts is easy.

A tale of two markets

As for the banks, they have so many bankrupt stock properties to get off their books, they will sell them at bargain basement prices and give you a 100 per cent mortage to take one of their hands. But it’s a case of buyer beware, warns Barbara Wood of The Property Finders. “Spain is a market of two halves,” she says. “There is the well-located, quality product and then there is everywhere else. For the stack-it-high and sell-it-cheap brigade, the predominantly British and Irish buyers who piled in to dreary resorts miles from anywhere, the situation is dreadful.”

Wood highlights parts of Murcia, Southern Costa Blanca and Almeria as typical examples. “I have heard of 50 per cent discounts and can easily envisage them going to 75 per cent,” says Wood. “But frankly some property and locations are so bad that discerning European buyers wouldn’t touch them at any price.”

The good areas, says Wood, include the six miles around Marbella, the NorthernCosta Blanca and the niche markets of Sotogrande and Tarifa: traditional, stable markets where prices have fallen 30 to 40 per cent from their peak and which Wood believes have now bottomed out.

Smadar Kahana, of Engel & Volkers Marbella, agrees that away from prime Golden Mile locations, over-supply is the issue. “In Calahonda or Benalmadina east of Marbella and around Estepona and Manilva to the west, 200,000 apartments came on the market around the same time,” says Kahana. “Who was ever going to buy them all? Many of the complexes are now empty, the community charges are unpaid and gardens are not cared for. Even with 50 per cent off, buyers don’t want them.” It’s a backlog that will take many years to clear.

Too much to handle

Ratings agency Fitch estimate that there are one million unsold new-build properties in Spain, most near the coast. Chris Mercer of Mercers Property stopped selling off-plan property last year. “There’s no point when buyers can get good resales for the same price or even lower,” says Mercer.

Mercers operates in one of the worst hit areas around Torrevieja in south eastern Spain. Most residents there are British, Mercer admits, though he has seen a marked increase in Spanish bargain hunters.

Further north, close to the desirable towns of Denia and Javea, Taylor Wimpey de Espana has three-bedroom houses at Montesol in Calpe reduced from £277,310 to £182,115, a 35 per cent price drop. The new homes, 40 miles north of Alicante airport, are set around communal pools and gardens.

Where once British buyers accounted for 60 per cent of sales, through Engel & Volkers Marbella office, they are now 10 per cent at most. It’s the French, Scandinavians, Swiss and Germans who are bagging the best buys now. “We have a saying here,” says Wood. “The British buy when the Germans are fearful and the Germans buy when the Brits are fearful.” Caution is clearly necessary, but there are good buys to be found from realistic sellers and it is Euro buyers who are grabbing them.

What price Costa Blanca ?

Victor Sague, sales and marketing director of Taylor Wimpey de España answers your questions on this popular stretch of Southern Spain

How is the market in the Costa Blanca?
Like the whole of the Spanish market, the Costa Blanca itself is segmented when it comes to property. There are areas which have suffered in the downturn more than others. From Torrevieja to Santa Pola there are a high number of units available on the market and so prices have dropped in these areas considerably whereas along the northern coast of the region, from Calpe upwards, development over the years has not been so prolific and so prices have held much better. It is in this part of theCosta Blanca that Taylor Wimpey de España has focused its developments and having adapted their pricing to fit the weaker demand plus importantly their high quality of build and specification has resulted in a consistent level of sales to an international audience.

Is there much British interest?
The British market is still one of our most important, second only to the local Spanish market. 39% of all enquiries this year have come from the UK.

Are people still wary of buying in Spain after a)market dip  b) land grab/planning scandals c)continued economic climate in Spain etc?People are more wary about purchasing in Spain, and purchasing abroad generally, however, I think there are in fact many positives to this. Buyers coming over to view homes are much better informed on the market, the properties themselves and the purchasing process; they are looking for quality products and established developers from which to purchase. Clients are not simply looking for a bargain, they want value for money and most of all the security of knowing they are buying from an established and reputable developer.

The Spanish property market took a further knock in May – June of this year with the Spain / Greece market comparison which was grossly exaggerated in the British press. However, the results of the recent bank stress tests and the government plans to reduce deficit have helped reestablish confidence in the market and now buyers are confident in Spain recovering from the crisis.

Are prices still falling? Stable? or indeed rising?

Pricing in the Costa Blanca is very localised, it varies from region to region, even town to town… The prices for new homes in secondary locations where there is a significant over supply are still falling, whilst homes in the best locations are in short supply and already we are seeing some price rises to keep pace with demand.

This year Taylor Wimpey de Espana has sold out in several of our developments, with availability of units in others down to the last couple. We are also one of the only developers to be launching new developments at present.

How far would you say prices have fallen in the last five years on the Costa Blanca (ballpark)?

Between 25% and 35%. Official figures don’t really show the reality of the market

Is the Costa Blanca a market all of its own, or does it mirror the other Costas – del Sol etc?

The Costa Blanca is a different market from Costa del Sol and attracts a different type of buyer. Currently there are more properties on offer at cheaper prices. This part of Spain also seems to attract the people looking to permanently relocate compared with a greater proportion of holiday home owners attracted by the year round sunshine, lower cost of living and excellent infrastructure.

Specific advantages of buying on the Costa Blanca?For many the Costa Blanca offers greater affordability than the Costa del Sol for example, buyers can get more for their money here. This is one of the drivers for buyers in this region. It is an established region with British buyers, offering many a ‘home from home’ experience, however those seeking the Spanish lifestyle are equally able to live out their dreams here. We are finding that increasingly it is not only people of retirement age purchasing in the Costa Blanca but families are attracted to the blue flag beaches, abundant amenities and excellent accessibility by air, 44% of all our enquiries are from people aged between 35 and 45. It also has to be said that the Costa Blanca has a unique micro climate recognized by the World Health Organisation and for those suffering with arthritis and other rheumatic problems living here can greatly improve health.

Off-plan sales have taken a bit of a hammering in recent years, with buyers increasingly worried about losing deposits if sites/developers go bust. Are the British still looking to buy new, or more at re-sales?

We are finding that many people are choosing to purchase stock units – turnkey homes where there is no risk of losing the property. However we are still experiencing interest in off plan products which we believe is down to our reputation as an established and trustworthy developer in Spain.

Presumably having such an established global name and brand as Taylor Wimpey (especially being British) gives a lot of comfort to UK buyers?In today’s climate a well known brand is more relevant than ever. When the property market was thriving any company seemed to be able to jump on the property sales bandwagon however, with the economic shake up, and with so many developers experiencing financial problems and even bankruptcy, buyers are choosing to purchase from reliable brands that they know will be there after the crisis. Sadly for every developer that has gone bust there are plenty of problems left for buyers who are struggling to get their money back amongst other issues. We are contacted everyday by people who have paid deposits to bankrupt developers and are seeking assistance of how to get their money back.

Statistics reveal British motivations for buying property in Spain

Figures recently released by British developer Taylor Wimpey de España point to changing trends for those purchasing in Spain. Traditionally known for being one of the top retirement destinations, the statistics reveal that Spain is now attracting younger couples and families. It is also confirmed that one of the most popular hobbies whilst on the Costas is golf.

This year so far, 80% of buyers are aged between 30 and 55 years of age, with only 19% of purchases coming from the over 55s. This compares with 68% and 31% respectively in 2009 which suggests that more families are looking to own in the Mediterranean favourite.
The proportion of those looking for a holiday residence or a second home has gone up to 75 per cent, which was below 70 per cent in previous years and the number of people looking for a home in which to retire has dropped down to 4% to reflect the decrease in over 55 buyers. Interestingly, despite the economic down turn the numbers of those investing in the Spanish property market has held steady at 13% from 15% in the last couple of years. We can extrapolate from this that Spain has always been a popular destination for investors and the interest is still there from buyers looking to make the most of the reduced prices and turnkey stock in prime locations.

Since 2007 however, property budgets have reflected the reduction in disposable income for Brits. Today 72% of buyers purchase a home costing between €150,000 and €250,000 whereas in 2007 this figure was nearly half that and 45% spent between €250,000 and €350,000. Today only 20% are looking to spend this amount and only 5% are prepared to spend more than €350,000. Typically, 60% of buyers look to purchase two bedroom properties, with around 40% desiring three bedrooms.

The figures on the pastimes in which the English like to partake when abroad also make for interesting reading and partly explains why Brits flock to certain parts of the country. The statistics show that most English people love the Balearic Islands including the hotspot Mallorca. 45% opted for this popular holiday destination and their golf courses, stunning weather, classy beaches and high class shops. The pull for visitors is very strong with around 23 million passengers passing through the Palma de Mallorca Airport annually and an additional 1.5 million arriving by sea. TheCosta del Sol comes very close with 41%. Taylor Wimpey de España has a stronghold in the popular Marbella region of the Costa del Sol, they are one of the only developers launching new product after selling out of their other developments. It would seem the prime locations are still as popular as ever and good property in excellent locations still sell regardless of the economic climate.

Golf, by an overwhelming majority is the hobby that draws the English to the Costas, with a whopping 78 per cent placing it top of their list. According to recent surveys, at least 80,000 golfers from around the globe visit Mallorca to play annually. Over the last couple of years however, other hobbies have also started to prick the interest of the English, with hill walking, water sports and tennis being increasingly regarded as important holiday home activities. The consistent demand for outdoor activities has helped to ensure that resorts offer excellent facilities for visitors and owners alike.
Victor Sague, Sales & Marketing Director of Taylor Wimpey de España comments, “The figures extracted from our client database of buyers between 2007 and 2010 show clearly that more and more families are looking to Spanish hotspots like Mallorca or the Costa del Sol for holiday and second homes, with two bedroom properties for under €250,000 appearing to be the most popular choice. The range of outdoor sporting activities, golf facilities and water sports, with high class restaurants, bars and shops, has always been a huge pull for Northern Europeans to Spain, along with the relaxed way of life, warm year round climate and the beautiful Mediterranean Sea. We of course seek to only provide homes that our clients demand so I recommend Pollentia Mar in Mallorca for those seeking their own slice of Spanish life that ticks all the boxes.”

Pollentia Mar, Puerto Pollensa, Mallorca

Pollentia Mar located in the seaside town of Puerto Pollença is a two and three bedroom apartment complex, just 50 meters from the beach and Pollensa’s famous Voramar promenade. Mallorca and its north coast has a variety of very good golf courses and almost every view from the area incorporates the spectacular view of the Sierra Tramontana mountain range or the beautiful bay of Pollença. Pollença is just 35 minutes from Palma de Mallorca. These properties are available now from €220,000.

Contact Taylor Wimpey España today on 08000 121 020 or visit www.taylorwimpeyspain.com for more information.

If you reside outside of the UK you will need to call 00 34 971 706 244.

Retiring to Spain

More than half of the UK’s ageing workforce plans to retire abroad, taking the pressure off the state system here and piling it on healthcare resources in the rest of Europe.

Less than half (43%) of Brits see the UK as a preferable retirement location, with many instead planning to pack their bags and spend their retirement in sunnier climes. In fact, the Brits are the least likely to retire at home, ahead of the Germans (46%) and the Irish (49%), according to a survey of over 7,500 European workers from Aon Consulting.
In contrast, Spain (87%) and France (81%) topped the popularity tables when it came to workers intending to retire in their home country, followed by the Danes (74%).

Spain is the retirement destination of choice for British workers, with almost one in four (23%) UK employees who wish to retire abroad identifying Spain as their preferred country. In second place came the US (21%), while the similarly warm climates of Australasia, France and Italy filled the next three places in the survey.
An influx of retiree immigrants to any one country could exacerbate the already ticking time bomb of an ageing population in Europe, forcing countries like Spain and France to rethink social policies and budgets to deal with extra pressures on healthcare resources.
This research is part of the Aon Consulting European Employee Benefits Benchmark, a survey of more than 7,500 workers from across Belgium, Denmark, France, Germany, Ireland, The Netherlands, Norway, Spain, Switzerland and the UK, 10 of the leading economies in Europe. The benchmark focuses on the views of workers across Europe on topics such as retirement, employee benefits and other pension-related issues.

Oliver Rowlands, head of retirement, Europe, Middle East and Africa, Aon Consulting, commented: “Cheap air travel and the communication tools available over the internet means that retiring overseas doesn’t necessarily mean being completely absent from your family’s life, making the prospect of emigration to other countries on an previously unseen scale a real possibility.
“Not surprisingly, most people want to spend their retirement predominantly in countries with good weather and good social and government benefits, and ideally close enough so that they can get home quickly if they need to.

“There are financial implications that people thinking about retiring overseas need to consider. Cost of living may be higher in the country of choice, and so people planning on retiring abroad need to factor that into their savings plan. There can also be tax implications both at home and in a new country of residence, so it is certainly worth investigating that in advance so there are no nasty surprises later on. And finally healthcare benefits can vary widely for expatriates and this will be a major concern for retirees as they grow older.”