Spanish Property Continues to Attract Foreign Investors10/04/2013
Despite the economic uncertainty surrounding the country and the global recession, foreign investors are continuing to put their confidence in Spanish real estate. In fact, according to statistics from the Bank of Spain, during 2012, international property investment in Spain grew by 17% to more than 5,445 million euros.
However, this figure is lower than in 2011, when the increase was 23.6%. This lower growth was mainly due to the contraction of investment registered in the first half of the year, when doubts about the solvency of Spain led to a slowdown in foreign investment in real estate. Once these fears were dispelled, the investment activity resumed.
The Bank of Spain data shows that in 2011, foreign investors injected 4,723 million euros into real estate assets, from homes to offices and shopping centres (the bank does not provide a breakdown of this data), representing an increase of 23.6% compared to 2010.
Between January and June 2012, El Mundo reported that investors deposited only 2,445 million euros, almost the same as in the same period of 2011, when the figure was 2,432 million euros. However, these investments increased in the second half of the year, to over 3,000 million euros, which is 35% more than in the second half of 2011, bringing the total foreign investment for acquiring property in Spain during 2012 to more than 5,445 million euros.
The Chief Investment Officer of CB Richard Ellis, Mikel Marco-Gardoqui said that the difference between the first and second half of 2012 was “visceral” with the investment activity in the first half being very low because of the perceived risk of Spain’s possible exit from the euro. However, he said that “the doubt was gone” in the last four months of 2012 when, according to data from the consulting firm, 60% of the year’s investment operations were carried out, mainly by international agents, and particularly opportunistic investors and those looking for good locations.
Angel Serrano from Aguirre Newman, agreed that “the turmoil in the months of April and May 2012 caused many investment operations in shopping centres, offices or hotels to be suspended” but stressed that the market recovered after the summer, because the second half is usually more positive than the first, and also because there was an increase in home purchases in anticipation of the increase in VAT from 1st January 2013.
The Development Ministry said in the Plan for Infrastructure, Transport and Housing (Pitvi) 2012-2024 that “demand by foreign investors is key to the sector’s reform and recovery”, and noted that the ‘stock’ of unsold homes has been reduced by barely 8,000 since their peak levels in 2009, to around 680,000 homes.
Secretary of State for Trade, Jaime García-Legaz, announced in recent months that the Government were to consider the possibility of granting residence permits to foreigners who buy property in Spain for more than 160,000 euros.
For every euro the Spanish invested in real estate abroad, some nine euros came into Spain from foreign investors. Thus, cash flows to abroad declined by 3.5% in 2012 compared to 2011, with 596 million euros, a much more moderate drop than that experienced in 2011, of 23.4%.
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