Spanish property market review – the theory

Luxury apartment sold by Holmes SotograndeSince the collapse of the banking sector and the ensuing credit crunch of 2008 we, and much of the world, have been thrust into the clutches of a mean-spirited recession. The year after the great crash saw property sales and prices plummet by 25-30%. After this ‘falling off the cliff’ subsequent years brought a ‘bumbling along at the bottom’ scenario in which sales continued to drop by another 4-5% a year.

We all know the background scene by now: faltering banks sitting on large stocks of unsold houses, dropping property prices, rising unemployment and a double-dip recession that just doesn’t seem to end, fed as it is by continued uncertainty about the Euro and Europe’s finances. Even the fact that much of the rest of the world isn’t in a much better position doesn’t reduce the hurt Spain is feeling right now.

Luxry villa SotograndeBut does this mean we should all give up and head for the hills? No, 2012 has so far been a much better year on the Costa del Sol, with increasing enquiries, interest and also sales. While some continue to question whether the property market has bottomed out, the traditional markets are returning, with money in the bank and little requirement for finance. Therefore, the market has actually been enjoying a gentle recovery in highly desirable luxury pockets such as Sotogrande. This is for all the old reasons; a secure long-term investment, an unrivalled climate in Europe, and superb luxury facilities right on your door step.

Villa in Sotogrande sold in 2012In areas like this supply and demand are converging and prices are holding their own. Barring any major event this means that the market – at least here – has bottomed out. In other words, now is the time wily investors regard as the ideal moment to buy. The craziest deals came in the wake of the financial crisis, in 2009, but generally speaking property prices now look to have hit their lowest aggregate level since the highs of 2007.

Spain got an important bank bailout and Greece voted pro-Euro and austerity, and yet the scaremongering about the Eurozone won’t go away. We agree that the region, and Spain in particular, faces an era of important economic restructuring and that full economic recovery is some time away, but the glaring focus on the Eurozone ignores the fact that luxury property on the Costa del Sol does not depend on the financial health of Spain, moreover it depends on international money. There are several pockets within Spain that for these reasons are enjoying a much more positive outlook. Fortunately Sotogrande is one of them!

By Jackie Cruz - Manifesto · June 22nd 2012