Ibiza Hotels Articles

August 16, 2010

Spanish Property


Steeped in history, culture and tradition, Spain conjures up images of beautiful beaches, classical art and architecture and a passion for life – whether that be for football, dance or bull fighting. Whether you like to explore gothic cathedrals, enjoy the local food and wine, or relax by the Mediterranean Sea, it is easy to realise why more than 50 million people visit Spain (the second most visited country in the World, after France) each year.

Located in the South West of Europe, Spain has borders with Portugal and France but is otherwise surrounded by the Mediterranean Sea, the Bay of Biscay and the Atlantic Ocean. Spain enjoys a warm and sunny climate for most of the Summer and for some areas in Winter months. As well as mainland Spain, the Balearic Islands (Ibiza, Minorca, Majorca) and the Canaries (Tenerife, Lanzarote, Grand Canaria) are popular destinations for tourists.

The Iberian Peninsula was occupied by the Romans in the 2nd Century BC and the region of Hispania was formed. In the 8th century, the Berber Muslims (or Moors) conquered the whole of the peninsula and large populations of Christians, Jews and Muslims lived in close proximity. It wasn’t until 1492 that Spain became a Christian country (now predominantly Catholic). That was also the year that Christopher Columbus, funded by the Queen Isabella, discovered the “New World” and the Spanish Empire was one of the most powerful in the World. Spain had a large number of colonies in Central America and Mexico and many modern-day states of the U.S.A.

At the end of the 19th Century though, Spain lost its colonies in the Spanish-American and there was some instability resulting in the Spanish Civil War (1936 – 1939) with a dictatorship established by General Franco. It wasn’t until 1975 (on Franco’s death) that Juan Carlos (grandson of King Alfonso XIII) was named successor and Spain became a democracy.

Although a Constitutional Monarchy, Spain has a number of regions (17 autonomous communities and 2 autonomous cities) all with separate identities and histories and in some cases – languages. People in regions such Catalonia, the Basque Country and Galicia, relate firstly to the region and then secondly as being part of Spain.

Property Market

In recent years, there has been a large increase in the number of overseas investors buying property in Spain, either as second homes or main residences. In 2005, there were around 3.7 million foreign residents in Spain which highlights the popularity of the country for immigration. There are large communities of British, Argentineans, Germans and Bolivians resident in the country.

The country has long been a favourite holiday venue for many, with the British among the most frequent visitors. Among the types of property available, apartments, holiday homes and villas have been the most popular. The direct comparison with the UK weather and climate offers the perfect venue for that summer break, or some where to retire in later years – with many older UK citizens taking the opportunity to emigrate to Spain after retirement.

After historic periods of volatility, the Spanish economy has been fairly stable for some time, and the relatively low interest rates further encourage inward investment. While Spain is a vast land of differing terrains, the transport system offers easy access by car, plane or train. As visitor numbers are forecasted to grow substantially over the next few years, further investment in the infrastructure is essential and in hand.

This forecasted influx of visitors will ensure a healthy demand for property, and under a careful new-build program, demand will always exceed supply. While there was a large increase of 17.5% in the price of residential property in the second quarter of 2003 (compared to same period in 2002) this kind of return is unsustainable. A more gradual return is expected over the next few years, with little potential for downside in the short to medium term.

The government recently announced reforms which are aimed at increasing the buy-to- let portion of the market from 11% to 20%, thereby releasing some pressure from the purchase market. Some 3.1 million unoccupied homes are to be brought into the market, which will again relieve some of the pent up demand experienced in recent years.

Why invest in Spain ?

Unlike countries such as the UK where stock market investment is very popular, Spanish residents have switched a large portion of their investments from the stock market to direct property investment.

There is no doubt that the Spanish economy is driven by the holiday market, and Spain has been a popular location for many years. As UK property prices have shown massive rises over the last few years, many are now switching to the Spanish market which offers better value for money. This constant flow of visitors has also encouraged a lucrative rental market, with attractive returns available, especially in the coastal areas.

As coastal property prices have shown good growth over recent years, the effect is starting to spread inland where the more sedate and quieter regions are proving popular with the older generation. So whether you are looking for that vibrant, busy environment or a quieter, slower pace of life, there is something for everyone.


While the property returns seen over the last 10 years are set to slow, many are forecasting a steadier more controlled property market, with constant demand ensuring an upward trend for the foreseeable future. There are currently a number of long term property developments ongoing, which will flatten the supply / demand trend line. Doom and gloom predictions for the Spanish property sector appear to be wide of the mark.

Spain really does have something for everybody, whether you are looking for the architecture and art museums of Barcelona, the energetic night life of Ibiza or the quiet life of Fuerteventura. Foreign investment in the property sector is still rising and is the main driving force behind the growth in the sector.

The buy-to-let market is also attracting lots of interest as the trend for overseas holiday homes continues. After the emergence of the budget airlines, it is now as quick to travel to Spain, as it would be to travel far afield within the UK.

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