Where should I buy an investment property?

Most UK residents will be familiar with patterns that developed in the UK property market over the last 20 years or so. Different locations experienced growth at different times. Areas that were once seen as not worth considering suddenly became the fastest growing “Hotspot” in the country.

Spain is no different, picking the right location is obviously vital to success. It is of no use to invest in a market that has already exhausted its potential growth and similarly you would not want to invest in an area that is perhaps a decade or so away from achieving its potential.

As you may have read elsewhere within our website IPS has a wealth of experience gained from marketing property from all of the regions of Spain. Having our finger on the pulse in this manner has given us unique access to the buying and price trends as they happen. In addition we spend a lot of our time researching possible new areas, talking with banks, developers and promoters and generally being nosy. IPS are always above all else property investors ourselves and expect the best possible return on our investments.

Why Spain?
Spain still offers the most accessible, reliable and affordable sunshine available, always an important factor when considering purchasing and renting a holiday home, or retirement property, a factor that ensures future growth.

In addition it is the most southerly location in Europe that can offer anything like the modern infrastructure, accessibility, facilities, standard of living that will be demanded by future purchasers.

Property prices are increasing constantly and historically Spain has always been a low cost investment area with abundant cheap properties available. Our view is that this will change within the Spanish coastal strip, an 80km wide strip from the Costa Brava to Huelva, just below Portugal. The IPS opinion is that Spanish property values will move up a level in comparative pricing between other European countries and in the future will include some of the most expensive real estate available.

Prices and perceived status can change and in the future years we believe that value for money will be a past condition. The reasons for this are clear and not least of which is the constant stream of transients of all ages permanently moving to and holidaying in Spain from all over Europe. It is commonly forgotten that property is not just sold to UK citizens.

An increasing demographic moving to Spain do so permanently, citing the climate and quality of life as the major motivators alongside a first class health service as well as lower taxation. As communication speed around the world improves through broadband workstation location ceases to be important, freeing many more families from their need to be “where the work is”. Unemployment levels are good, there is a stable economy the cost of living is low and politically there is not much chance of a nasty surprise.

Another point to remember is that the Spanish populace buy property as well and their market is growing, in particular the rising first time buyer demographic that are now choosing to leave home and seek independence from the family.

Where in Spain should I invest?
Spain as an overseas and holiday home location was really established when it joined the EEC some 20 years ago. Most of the development was centered on the Costa del Sol and primarily the area around Marbella. Many, many people have invested in and around these areas in the Costa del Sol making tremendous profit on their investment.

The most spectacular growth in this region occurred between 1999 and 2004 and it was only in the later part of this period that the decline in the market within this particular area of Spain became apparent.

This slowdown and adjustment in values was necessary as property and land prices in this area had left the rest of coastal Spain in its wake and market realignment was inevitable as the disparity was unrealistic.

As this region slowed, other parts of Spain started to fit its profile before the boom and improved rapidly on their already steady growth, people are simply now buying elsewhere.

Some other locations that are established as main tourist areas in Spain have since had major growth and regions like Murcia have become equally well known. It is these areas of Spain that IP Spain specialise in, namely parts of the Northern Costa Blanca, the Southern half of the Costa del Azahar, specific areas of Murcia and Lanzarote in the Canaries.

Why is the growth now occurring in these areas? They have a climate not dissimilar to that on the Costa del Sol, so unsurprisingly it was only a matter of time before the local amenities and infrastructure improved in much the same manner. The natural beauty in these areas is very much still evident and many would argue far superior to that seen elsewhere in Spain.

Other important factors to consider are their climate, they have some of the best beaches in the country, low budget airlines fly from most airports in the UK to Alicante, Valencia and Murcia, San Javier, with a new international airport under construction in Murcia at Corvera and another planned at Castellon, north of Valencia, in addition they benefit from fantastic infrastructure with good roads, motorways, and train services.

IPS are centrally located to these areas and are able to monitor trends and find emerging areas which will enable our clients and indeed ourselves to obtain much better than average returns. We have after all a direct financial interest in finding the best projects as we are property investors ourselves.

There is a growing trend to move inland from both the northern Europeans that are relocating to Spain as well as from an earlier wave of retirees and relocated residents that are seeking a more Spanish environment in which to live.

At the same time towns and places of interest that for various reasons missed the touristic boat before are being discovered and launching themselves onto the market, usually because of an improvement in the road network and access.

IPS 2007

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