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New boosts for investment in Spain

27th June 2007 | back to article listings BACK    print this article PRINT

To hear some doom-mongers recently, the whole of the Spanish property market was heading for an outright crash, with investors poised to flee in their droves and look elsewhere. Instead, what has actually happened may simply be a market correction, with the long-term prospects for the country remaining favourable.

Evidence for this has come not just from commentators assuring the world that things are better than the most pessimistic predictions. This week it has come from HSBC, which put together a deal with its Spanish partner Solbank to offer mortgages to UK nationals looking to purchase a property in Spain. Hardly, one might imagine, evidence of a collapsing property market being abandoned by overseas buyers.

Described as "perfect" for Britons looking to buy in the country, the deal offers discounts on the mortgages, with interest at one per cent above the Euro interbank offered rate, compared with the usual 1.25 per cent, Banking Business Review Online reports.

The bank has its own ambitions in the area for Britons living in Spain and the Balearic and Canary islands, with a prestige care account also offered for such residents, which depends on the situation remaining favourable for investors. If investors keep coming in and buying property, including buy-to-let investors who will rent properties to Britons, this will increase the UK national population in Spain and with it HSBC's potential market.

In any case, there are other factors which should ensure the Spanish property industry remains strong. Homes Worldwide not only reports that the country remains popular for both buyers and investors, but notes research by Spanish property specialists Kyero that 71 per cent of this investment is still focused on traditional coastal areas.

This is where other factors come in. In a separate report, the same website notes that Spain's beaches and marinas have been awarded over 500 blue flags this year, the eco-label which indicates that a beach has passed a quality threshold concerning cleanliness, absence of litter, safety facilities and water quality. That Spain has so many beaches of this standard ensures that seaside locations, however crowded they may sometimes be, remain popular.

Kyero's survey showed that the most popular investment location is Granada with 18 per cent of investment, followed by Alicante at 15 per cent. But the area rising most rapidly is Almeira, with a 1.6 per cent increase in property values relative to the country as a whole yet still, at an average of €198,000 (£133,000), 21 per cent below the national average. All of which shows that there are still places in Spain that are on the up and offering investors new opportunities.

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