The Savills Blog

European luxury market remains strong

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It took a few months for the market across Europe to recover from the UK’s surprise EU referendum result. Many buyers thought twice – but few actually changed their minds. Most were determined not to let exchange rates or economic uncertainty get in the way of a long-held ambition of buying their dream home.

Buyers returning to the fray by late 2016 were being encouraged by three factors. Firstly, sterling rates were unlikely to return to the highs of early 2016, so provided little incentive to delay; secondly, borrowing 60 to 70 per cent on a mortgage in Europe would be, for sterling buyers, a financial advantage thanks to the falling pound; and, finally, buyers letting their homes across mainland Europe would enjoy an income boost if tenants paid in euros, again thanks to exchange rates.

As a result, Europe’s market for quality homes in prestigious resorts – and in cities too – has been stronger than many expected. Portugal’s Quinta do Lago and Vale do Lobo, two of a new breed of luxury havens for the continent, both enjoyed their best sales years in 2016.

Other traditional destinations that suffered in the early years of the global downturn have returned with a vengeance. Much of Spain is ‘back’, with new-build markets in Ibiza, Mallorca, Barcelona and Madrid performing more strongly than for almost a decade, thanks to German and Scandinavian as well as British interest. Meanwhile Corfu – still a strikingly British enclave – has seen high levels of interest, as has Paris, which remains a firm favourite with European buyers.

Watch Berlin, too. It’s young in outlook, open-minded and increasingly international. Like Barcelona, the German capital is benefiting from an increased interest for city homes rather than traditional country properties. Obviously many buy to enjoy a different culture or a weekend bolthole, but cities are increasingly favoured by those many purchasers who want investment income. You can let a city apartment all year, unlike a villa which is inevitably seasonal.

Optimising investment return has led to subtle changes in old favourites, too, such as the Iberian Peninsula, where a plethora of world-class golf courses extend the letting season well beyond the summer months, and Alpine ski resorts such as Verbier that increasingly offer mid-year festivals and outdoor pursuits that take advantage of the warm summer weather.

Buying overseas is rarely spontaneous. It often takes years of planning and Europe now has more choice than ever before. That’s another reason why few buyers are deterred by any political upheaval – they’ve got dreams they want to realise.

Further information

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