Spanish Real Estate Market, How Did We Get here?, What to expect?

5395170_orig-725×410

 

Real Estate in Spain 

 Real Estate in Spain Since 2007  has been falling apart. The real estate offer was incredible surpassing the demand. Too many buildings everywhere, even where they were not demanded.

Even with out money, everybody wanted to makereal estate investments. Who would not invest with a high fast profit margin?. You could earn a lot of money in a few months. You even did not need to inscribe the deed in your name. So many times people did not pay taxes on those earnings. Too good to be true.Banks in 2006 start cutting mortgages. The years before they where lending money easily, without question. Without worries.Everybody new, economy was going to fall, so everybody try to sell properties at he same time. Result: market collapse. And of course prices start falling.The economy was orientated on construction, labor was oriented in construction, so when construction stopped, everything stopped.

During last 7 years, owners, constructors and banks have been loosing money on their properties.

Its clear owners are loosing as a 200.000€ property is now worth now 100.000€. Some constructors are loosing a lot of money because they did not sell the properties so they own money to the banks.

But of course Banks are loosing also a lot of money, as constructors that could not pay their debt, gave buildings to the banks. So banks own many properties. A lot of them. In the last 4 years they don´t now what do to with them. They made huge discounts, they sold entire buildings to foreign investors, but still they have to sell a lot more.

So the government created a terrible public bank (SAREB), This public bank was supposed to deal with most of non sold properties from private banks. Incredible but true. So public money ended up helping private banks. A solution?, for Banks mostly. The SAREB ended up with the worsts properties and loosing a lot of money. Citizens will pay for it.

Spanish Real Estate market at the moment is a mix bag. With different options, prices, locations, and still dangerous investments.

I will resume the most demanded Real Estate requirements our Clients are asking for and where not to put your money in:

– Because there is a lot of properties offered to choose from, and the most important factor is location. Try to understand the importance of location in the area you are looking for. If you do not know which ones are worth, please  contact a professional so you don´t make a bad investment.

– You can choose to buy a big old property or a smaller but new one. Location also determine many times the property age. But if you can buy always as new as possible. The demand for modern apartments is higher and more valued than old properties.

– Don´t buy to big, as rental market is also seeking for modern and small properties. Even if you are going to live on it, it is nice to know the market demand. You never now when are you going to sell, so making a nice investment is always interesting.

– Some areas are already recovered and some prices are raising already. As I told you before, location is what determine the difference. City centers in Barcelona and Madrid, or Marbella on the Coast are the areas recovering faster.

– Lastly but most important, don´t buy properties in bad locations, far away from cities and services, far away from good communications. If they show you a property surrounded by a lot of empty ones on sale, start running…

Cristian de la Torre ABR®
Real Estate Consultant at www.www.selectedspain.com