Research, research, research – we’ve spent the last 18 months revising, changing and recommending build changes – now the leading industry developers must take action or be left behind.
Spanish developers must invest more time and effort in market research rather than remaining to build the same old properties in areas that no clients would want to buy in.
European and worldwide purchasers are always keen on the “luxury end” in the very best areas for their budget requirements, the greatest unanswered concern is whether lessons have now been profited from the experience of the last few years?
If we are about to see new advancements coming through, nonetheless tentative the recovery may be, this time developers need to build exactly what the marketplace wants and in regard of the high-end overseas buyer they desire top quality in prime locations, not boxy apartments in high-density advancements in inferior places.
Regrettably, most Spanish developers developed exactly what they wanted to build and presumed it would sell in droves … Well, they now understand that this was not the case, designers / architects need to lose their ‘we understand finest’ perspective and conquer their unwillingness to listen to a larger, better informed, opinion about worldwide buyers and their requirements for Spanish property.
Crucial times — new directions …
It is now more crucial than ever before that developments truly reflect the wishes of the anticipated buyers. In general, 2012 was not a great year for the domestic Spanish property market, but one of the bright spots was the increasing number of international buyers. There is an expectation that these buyers should increase by about 20% each year.
The frustrating majority of abroad buyers bought quality property in prime inland and coastal areas throughout 2012, leaving the lower end of the overseas market pretty much standing still, however, these varying sectors are most likely to perform extremely in a different way during 2013.
2012 was when numerous Spanish property sellers came out of the denial trap and accepted offers they had previously declined. With regard to pricing, offers will remain to be close to 30-40 % below peak prices (2007/8), evidence shows that correctly priced homes sold steadily during 2012.
Over-priced homes are still on the marketplace, where sellers have actually not reduced the cost sufficiently enough, and these should drop 20-30 % to secure a sale. It’s worth mentioning that large amounts of these properties are not in ‘prime’ areas, but in town suburbs and new towns in the middle of nowhere, therefore really only appealing to the Spanish residential market.
It is difficult to know just how much prices have fallen at the bottom end of the overseas property market place as little movement has occurred since the crash, with most overseas purchases taking place at the better end of the market. The banks continued to resist lowering prices during 2012, in return offering 100% mortgages at favorable rates. However, during the latter half of 2012 pressure on banks increased following the announcement of the ‘bad bank’ strategy, therefore this sector of the market should increase once the worst properties are lowered in price to a point even worth considering
“For example, on the bank’s website a repossessed development of 25 properties on a well known golf development have 2 bedroom apartments from 88,000€ tagged with ‘make an offer’… These most likely would have sold at peak selling time around 220,000€ which is a 60% reduction.
It’s therefore probable that the lower end of the market needs to fall by again to attract buyers, which means we’re just about there for an average property and perhaps we will see 70%+ discounts for ‘difficult to shift’ properties.
As Spanish property market statistics are very often based on registered transaction prices that can be distorted by the tax-saving practice of under-declaration, i.e. a property bought at €500,000 in 2006 may have been officially declared at only €400,000. It was again then sold in 2012 for €320,000 and that would be recorded as a 20% reduction. However, in reality, that price was reduced by 36%.
It is uncertain what effect the ‘bad bank’ and the recent plan to grant residency to non-EU buyers will have, however, it’s a really positive thing that numerous enquirie’s are already being received from around the world.
We are therefore all looking forward to the time when the boom mass-market years of mortgage-dependant purchasers will be seen as just a fault on the horizon, and that the 2013 Spanish market place, and beyond, returns to what it was before the turn of the century, i.e. a market of genuine strong cash buyers of ‘quality’ built properties in excellent true ‘prime’ locations.
// Overseas Property Shop