Pockets of Opportunities to Invest in Spanish Real Estate

16/09/2014 – Expansion

Experts promulgate the right time to invest has come in the large cities of Spain, both in terms of living-in and renting a property as returns from real estate are much better than from deposits and debt.

After seeing the housing in depression for so much time, one takes any positive data with a pinch of salt but the improvement is real. National statistics office (or INE) reports that the house prices went up 0.8% year-on-year in the second quarter of the year and resi real estate transactions advanced by 10.7% in July.

The turning point indicates that the sector has finally hit the bottom. Recession? Still persists. Recovery? Not yet. The ideal moment to buy? Yes, because the market bursts in opportunities.

Why to invest now and not to wait until the prices drop even more (which is extremely likely)? EXPANSIONs head stock exchange market analyst Jose Antonio Fernandez Hodar advises against bidding in the last minute because 100% sure it will be too late. In other words, the best moment to purchase is just before everybody realizes so.

Analysts believe the real estate sector is showing stability, above all in big cities where bargains could rapidly fade out. Additionally, they have a positive outlook for the buy-to-lease returns.

All right, so this is the perfect moment but for whom? And where? Experts reply that in major cities and for solvent investors who have an access to financing. Moreover, they must dispose of a considerable amount of saved equity as the entrance fee amounts to 30% of the total property value – unless it belongs to a bank – and 11% of management costs, enumerates Carlos Smerdou, CEO of the Realtors Forum (Foro Consultores Inmobiliarios).

Sales have bounced back and began 2014 with positive performance and the specialists forecast the same for the end of the year. With the new taxation ruling on capital gains, in 2015 transactions will bear more costs, says research director of pisos.com, Manuel Gandarias.

Real estate deals slowly climb in 12 Spanish regions but there are areas where the bump is visible with a naked eye. For instance, in Madrid and Andalusia they shot up 21.5% and 22.8% respectively.

Aguirre Newmans business director Angel Serrano assures the quality product becomes scarce in downtown Madrid and Barcelona.

Mr. Perez adds: this is the right moment to buy in the well-communicated coastal areas, with nice views and surrounded by developed zones equipped with all services. While referring to REO assets in inattractive places, the executive advises on waiting because the prices will go down even more.

Julio Gil, director of Horizone Consulting Inmobiliario, also points out the present market is offering a lot of bargains.

Another reason to acquire real estate now might be the shy return of lending. In June, new morgage approvals upsurged 19% on year-on-year basis, although the figures still underperform.

Historically, the sector approaches the turn in tendency as the crisis usually begins when the prices decline in the Costa del Sol coastal area and in Madrid and the recovery returns when both zones leave the red behind (above all Marbella and Madrids district of Salamanca), prove Mr. Serrano and Mr. Smerdou.

Buy, or not to buy, that is the question. According to the opinion of the real estate experts – provided the property is found in big cities, with savings in the pocket and having negotiation skills – the answer is yes.

 

Original article: Expansión (by Juanma Lamet)

Translation: AURA REE

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