Golden visa schemes attracting foreign buyers to Spain and Portugal
Real estate investor visas in Spain and Portugal have helped to revive some second home markets, according to a new analysis of their property markets.
After a long recession in Spain and Portugal, there are signs that the second home market is starting to look brighter, at least in some places, says the report from international property firm Savills.
Prices for good quality second homes have fallen by between a quarter and a third from the peak of 2007 and this means there are still some bargains to be had. Properties at the top end of the market are still in demand and there has also been a resurgence in smaller town houses and the apartment market, the report explains.
Residential markets in some parts of the Algarve remain extremely depressed. Portugal’s golden visa scheme has seen significant uptake from the Chinese but they have focused their buying mainly in Lisbon. This reflects the still dominant preference of many Asians for urban properties.
One lifestyle development at Quinta do Lago in Portugal has seen a bit of a revival, especially from British buyers. However, developers in the final stages of completing schemes are tailoring their packages around the golden visa categories with the €500,000 minimum spend in mind as durability and investment returns are at the forefront of these buyers’ minds so many ere seeking a good property that will sell well in five or six years time.
The residential markets of the Balearics are as varied as the islands themselves. Ibiza has been the star performer, having refined its image in recent years. The island offers high end entertainment, retail and restaurants, attracting a diverse range of sophisticated buyers to its shores, typically aged between 35 and 50, the report says.
‘The island is particularly popular with the British, but many Spanish will also buy second homes here. In the best spots villa prices have recovered to their pre-peak levels. In neighbouring Mallorca, where supply is greater, the market has remained suppressed, although Scandinavians have been particularly active.
On mainland Spain, residential markets have also suffered significant price falls since 2008. Some buyers have taken advantage of this. In Sotogrande, a purpose built resort 60 kilometres along the coast from Marbella, British, Russian and French buyers are benefiting from heavily discounted prices to buy second properties, some 30 to 40% below their former peak values.
Some purchasers have taken advantage of Spain’s low interest rates and obtained local mortgages, although the majority of buyers are equity rich. Sales, however, continue to be slow and volumes remain well below previous levels.
The report explains how Spain experienced extremely high levels of new development in the run up to the market peak, much of it aimed at second home buyers in coastal resorts. Housing starts peaked at 760,000 in 2006, but by 2010 they had dropped to under 100,000. As a consequence, new development remains largely unviable. Market activity as a whole is restricted only to the most established locations, it adds.