Spanish luxury home prices could fall modestly in the New Year, agents predict

Property sales prices in Spain at the upper end of the market will continue to fall modestly in the first half of 2014 and begin to stabilize as the year goes on, it is claimed.

In the last 12 months luxury independent estate agency Lucas Fox says it has seen its sales revenue nearly triple, mainly due to Northern European buyers returning to the market as well as a surge in interest from Russia, the Middle East and China who are attracted by the introduction of Spain's recently introduced golden visa scheme.

In its latest report it says that 2013 was it's best year to date for its Barcelona office with the average transaction value close to the one million Euro mark. The number of transactions almost tripled, a trend that the company expects to continue in 2014.

 ‘The last 12 months have been a pivotal year in the Spanish luxury property market. Confidence returned and, along with it, increasing numbers of international buyers, enticed back to the market by historic low prices in some of Spain's most desirable areas,’ said Lucas Fox co-founder Alexander Vaughan.

‘The new Spanish residency laws allowing non-European clients to gain Spanish residency if they invest €500,000 or more in property means that British and European clients are now competing with their Russian, Chinese and Middle East counterparts for the best deals. There are good investment opportunities to be had but in some areas, sellers still need to adjust property asking prices in order for the market to regain momentum,’ he added.

With prices in prime locations expected to level off in 2014, Lucas Fox head of business development, Jason Ham, predicts that the new wave of foreign investors will not be able to resist some of the attractive prices on offer.

‘What we are witnessing is a combination of investment factors. These include attractive opportunities for quality property in desirable internationally famous prime locations such as Barcelona, Marbella and Ibiza; confidence rapidly returning to the market with the real possibility of capital appreciation in the medium term; the Golden Visa effect; the Spanish lifestyle factor and the need for many overseas investors to put their money and sometimes their families in a more secure and politically stable country.  All of these factors combined have created a unique window of opportunity,’ he explained.

According to the latest official figures, foreign demand for Spanish property, particularly in prime coastal areas, rose 29% in 12 months. In Malaga province, which includes Marbella, foreign purchases rose by 61% over 12 months and by 52% in Girona which covers the Costa Brava.

There has been a significant increase in the number of transactions in Marbella although the market remains fairly segmented, according to the firm’s Marbella director Stephen Lahiri.

‘Most interest has been for quality properties in prime locations, which offer the best rental returns and capital appreciation. Locations such as Marbella´s Golden Mile and those nearer to Marbella Town and Puerto Banus have been the most popular,’ he said.

In nearby Seville, Lucas Fox's country and sporting estates team ended the year by closing two large transactions. Growing interest from foreign clients in landed properties indicate that this could be a sign of a future improvement in this sector of the market.

‘This year saw a marked increase in the number of residential sales in the Costa Brava and Maresme Coast. The market was almost entirely driven by foreign investment, the majority of this coming from northern European and Russian buyers,’ said Tom Maidment, director of Lucas Fox's Costa Brava and Maresme operations.

‘The past six to nine months have seen a notable surge in buyer confidence with investors returning to the market in greater numbers than at any time since the start of the crisis. The general improvement in the state of the Eurozone economies coupled with Span's emergence from recession and increasingly attractive prices in prime locations have all been key drivers behind this improved buyer confidence,’ he added.

Within Lucas Fox's commercial property sector too, transactions increased in 2013. After years of limited movement with investors preferring to wait on the sidelines and monitor rather than actively engage in the market, there has been a marked increase in the number of overseas and local clients, mainly in Madrid and Barcelona, with key transactions involving the purchase of city centre buildings for purchase into residential or touristic use.

‘We think that the current momentum of interest for commercial property, particularly within the hospitality sector, will continue in 2014 as more signs indicate a turnaround in the Spanish economy and the property market as a whole,’ said Lucas Fox co-founder Stijn Teeuwen.
‘We believe that prices for commercial property will initially level out and then increase at a modest pace in prime areas in the second half of the year. With more and more international buyers looking to capitalize from the low prices we think that 2014 could turn out to be a very interesting year,’ he pointed out.

Lucas Fox projects for 2014 include a new property app and lifestyle magazine as well as four more Property Lounges planned for Barcelona's Zona Alta, Sitges, Mallorca and Ibiza.