Property bargains in Spain and Tenerife
Despite dramatic property price reductions by many vendors across Spain, bargain hunters are taking advantage of the weak Spanish property market and are offering considerably below asking prices, fresh research shows.
The latest figures provided by Idealista reveals that in September, the average offer made online through the Spanish property portal was 21.7% below the asking price. Having analysed over 500,000 offers since January 2011, Idealista’s research found that January, March and September are the months with the greatest volume of offers made by purchasers, whilst June was the weakest month in terms of demand. Spanish property investment opportunities The majority of Spanish property investors – 73% – believe that the Spanish property market will improve within the next 18 months, according to a new survey.
The latest study by international property consultants CB Richard Ellis found that three in four Spanish property investors expect market conditions to improve, despite the fact that prices are still falling across many parts of the country. The latest property investment barometer from CB Richard Ellis showed that Spain is expected to improve in early 2013, while 57% of those surveyed said they planned to invest in the Spanish property market within the next 6 months. The majority of investors are interested in buying commercial properties, rather than residential, with half of investors looking to buy offices, while 40% are interested in prime shopping centres. Just 7% of investors said that they plan to buy residential property.
A lack of mortgage liquidity remains a major stumbling block in Spain, which is why three in five investors believe that foreign investors with greater access to financing will drive the market recovery. Take advantage of the weak Spanish property market Domestic investors are taking centre stage in Spain’s investment market making up 66.2% of investors in Q1-Q3 2011, up from 33.3% in the same period in 2010 according to international real estate advisor Savills. Total volume in Spain’s investment market totalled almost €1.25bn (£1.07bn) in the first three quarters of 2011. The firm notes that as well as ongoing sales of large mixed use portfolios which banks are attempting to remove from their balance sheets, local authorities are also selling assets to gain liquidity.
Both the Andalusian and Catalan Regional Governments have portfolios on the market, including well-located office assets, which Savills observes are attracting interest from both opportunistic and core investors. Danny Kinnoch, international investment director Savills Spain, says: “In recent times there has been a two tier market with opportunistic investors focused on portfolio and large scale individual deals while the more traditional core investors remain focused on well-located, high-quality assets with high occupancy rates and solvent tenants on long-term lease contracts. Domestic investors continue to dominate the core market but international players remain on the lookout for opportune deals.” According to Savills major international players including Orion, RREEF, Generali Lend Lease, Doughty Hanson, AXA, Perella Weinberg and Rockspring have all been active this year. Savills has observed increased investor interest in Spain’s hotels market, a shift from the historically dominant retail and office markets and a reflection of the strength of tourism in a challenging economic climate. Key deals in the first three quarters of 2011 include Grupo Millenium’s purchase of two hotel assets, Hesperia Madrid from Hesperia for €80m (£69m) and Tryp Centro Norte from Colonial for €30m (£27m), both in Madrid as well as Mansion Services’ acquisition of Intercontinental Madrid from Morgan Stanley for approximately €68m (£58m). The total investment volume Q1-Q3 represents a fall of 52% compared to the same period in 2010, but with more realistic pricing and improved market sentiment Savills expects 2012 investment volumes to improve on 2011. Kinnoch says: “With an improvement in market sentiment in relation to other Euro countries combined with more realistic pricing taking into account the macro-economic situation in Spain, we expect 2012 investment volumes to exceed those of 2011.”
