SPAIN MARKET
VIEW
Spain’s democracy has strengthened by
leaps and bounds since Franco’s death in
1975. So too has the economy, fuelled, no doubt, by Spain’s
entry into the European Union in 1986
(then called the EC).
Despite today’s unemployment level of
11.2 per cent – the highest rate in the EU, followed
by France at 9.5 and Germany at 9.2 – the Spanish economy
is robust. Inflation, for example, followed a downward trend
throughout 2003 according to Spain’s Ministerio de Economía.
By the end of the year, annualised inflation was 2.6 per cent,
down from 4.0 per cent in 2002. Gross domestic product (GDP)
growth at 2.4 per cent in 2003 outstripped most other EMU
countries.
Economic policy is expected to alter little under the new Spanish Socialist Workers’
Party government.
If the GDP fared well against other eurozone
countries, so too did house prices. Last year Spain recorded
the highest house price rises in Europe, reports Michael Ball,
Professor of Urban Economics and author of the Royal Institute
of Chartered Surveyors’ Policy Unit’s European
Housing Review 2004. Spain’s residential property market
is thriving.
While the boom years between 1996 and 2001
saw an overall increase in property prices of 41 per cent,
by 2002, when property slowed down significantly across
Europe, Spain remained buoyant, says Professor Ball. During
2002 prices rose 14.7 per cent and 2003 saw a further increase
to 15.8 per cent, with an average cost of C1,931 per square
metre. Prices are expected to continue upwards throughout
2004, but to a lesser extent than in 2003, predicts Spanish
property valuation specialist Sociedad de Tasacion. The most
expensive place for property in 2003 was Barcelona at C2,927
per square metre, with Madrid a close second.
Contributing to Spain’s strong property
market is the substantial holiday-home sector in rural and
coastal regions, where foreign buyers are key players. For
Britons, as well as many northern Europeans, Spain remains
the premier property destination for second homes abroad.
While the traditional coastal region of Costa
del Sol has not lost its lustre, areas once considered too
far afield – and/or in need of infrastructure development
– are rapidly gaining ground.
Costa de la Luz to the south-west of Gibraltar,
for instance, is in the ascendant, especially in places like
Tarifa between Gibraltar and Cadiz, as is the Costa del Azahar
between Barcelona and Valencia. The announcement of the Americas
Cup in Valencia in 2007 has provided a huge boost to the local
property market.
The Costa Blanca, to the north of the Costa
del Sol, has the potential of becoming a prime market, predicts
Alexander Kraft, Sotheby’s International’s senior
vice-president and European regional manager. Prices, he notes,
are around 50 per cent lower than on the Costa del Sol.
Improved infrastructure, increasing numbers
of no-frills flights and tighter building regulations have
all aided the development of hitherto little-known coastal
areas. New hinterland regions too are gaining in popularity:
Coin, Gaucin and Monda are three such examples, all within
shooting distance of Marbella and the coast but with substantially
lower property prices. The Spanish property market remains
the European ‘numero uno’ for a place in the sun.
