Is now the time for value property investment in Spain?

Like so many property markets around the world, Spain is struggling to recapture the heyday of years gone by. For a decade it was the only market over which British holiday makers and property investors became excited...

Until, in 2006, the emergence of other residential markets in Europe, combined with the ongoing credit crunch, brought Spanish property to a juddering halt. The growing number of unfinished developments as more developers go to the wall, will see future investors showing extra caution.

This is reminiscent of the market a decade ago when the property sector was dogged by unfinished properties and bad investment advice. It is now being mirrored in some of the so-called emergent markets where the early bargain prices have been replaced by new offers - often in the same price bracket as Spain.

Canny buyers have decided they have had enough of “cheapo” property in countries that, after the initial flush of bargains, are destined to remain niche players. Buying a place nobody wants to rent is a bad investment anywhere in the world, in a place few people want to go to, it’s a disaster.

While Spain may have thousands of unsold properties, and some being bought for a fraction of the original price, it remains the holiday destination of choice for most Europeans seeking sun, sand and a solid, modern infrastructure. Spain offers all that, on top of decades of warm welcomes for tourists and a support industry dedicated to giving every visitor a safe and happy time.

It was thus during Spain’s first property crisis of the Nineties, from which emerged the decade of property boom. History may be about to repeat itself as the ‘panic selling’ scenario is the first stage of a recovery and, currently, could mark the bottom of the market.

Like so many investment markets it is often the time to look again when there is evidence of panic selling as there are clearly savvy buyers gearing up to take advantage during the ongoing recovery. A 30 percent discount is a flying start in the rental market and can represent a worthwhile equity gain when everybody else decides it is time to buy…

Spain will always be a very important market to the UK ex-pat community and while the currency exchange rate is not helping in the short term there is no doubt that some investors are on the prowl for value investments at distressed prices.

Spain has been the strongest market for the longest period of time and one worth keeping a very close eye upon.