Underlying economic conditions remain challenging in Spain. Unemployment stands at 22.4%, slightly down from a high of almost 27% in 2013. In spite of this, at the national level the Spanish residential market appears to have stabilised. Prices stand 28.6% below their 2008 peak and by the first quarter of 2015 the rate of falls had slowed to 0.3% on an annual. A rapid rebound is unlikely given the high volume of new housing, delivered prior to the crisis, still being worked through.
While the domestic market is still suppressed, there are opportunities for homebuyers and investors from abroad. A weak euro makes Spanish property especially affordable to GBP and USD buyers, giving greater purchasing power. Meanwhile, the Middle East is a rapidly growing source market for residential investment in the country – particularly at lower price points.
This has been supported by the rapid expansion of air routes to and from the Middle East with summer capacity up 36.6% over 2014, according to airport operator Aena.
Non-EU nationals have a route into the market via the country’s golden visa scheme, which attracted 530 foreign nationals between September 2013 and December 2014. A €500,000 investment in real estate means the visa holder is automatically granted residence and working rights in the country. Investors may also invest in public debt or share purchases but, so far, the vast majority (92%) have taken the real estate route. The recent stability of nominal house prices and transaction levels may be due at least in part to the golden visa market boost. Investors will do well to consider how vulnerable the market will be to the cessation of this policy.