As many of you may already know, Spain has been experiencing a major economic decline for many years. However, after the country’s housing market started climbing into the recovery, buying property here became an attractive opportunity for investors from all over the world.
So, why is investing in Spanish property a good deal? What effects of the Corona crisis will impose on the Spanish property market? And most importantly – how to invest in property in Spain smart? In this article, we are going to look at this matter closely and answer all these questions. Let’s dive in!
Why Invest in Property in Spain?
Before we can move on to Spanish property investment tips, it is important to take a few moments here to understand why it is a good idea to invest in real estate in this country in the first place.
First and foremost, it is about the price. The Spanish housing market started going up not so long ago, which is why it still registers pretty low prices.
Another big reason is the high availability of a mortgage. Compared to many other countries, Spain offers less strict requirements for requesting a mortgage. At the same time, interest rates for loans here are pretty low, which makes it a good deal.
Finally, Spain attracts foreign investors thanks to its recovering real estate market. Although buying a property in Spain is relatively affordable at this point, the value is rising and will likely continue to do so in the nearest future. The growth of value really makes it a good long-term investment.
How Will Coronavirus Affect the Real Estate Market in Spain?
The outbreak of COVID-19 has, without a doubt, influenced every country and community across the globe. Respectively, it is fair to assume that it will have a long-term effect on all different spheres of our lives.
Currently, due to the global pandemic, most sales operations and industries have been paralyzed. The whole world has been put on pause for a fairly long time. Without any doubt, after the end of the quarantine, Spain, as well as the rest of the world, is going to face a massive economic blow. Then why is it a good idea to invest in property in Spain after the Corona crisis?
Although the global crisis is going to hit the country’s economy rather hard, it will also have some positive effects. Experts in the area of real estate believe that the housing market will likely not recover fully at least until 2021. This will result in the following positive changes:
- Price Drop. Experts claim that a significant drop in housing prices is an inevitable consequence of the crisis. At the same time, it is expected that in terms of the price of houses buyers will have their say in the following months. Sellers will have to adapt to the situation in order to close those deals fast. Thus, due to the buyer’s empowerment and economic crisis, the price drop will be at least 10%-15% or even more depending on the duration and depth of the crisis.
- Low Interest Rates. For anyone thinking about investing in the real estate sector, some more good news is that apart from a price drop, it is predicted that interest rates on loans to businesses and families will remain low all the way until 2022. This basically means that getting a loan for buying property will be cheap and easy.
Top 6 Tips for Investors
Based on everything mentioned above, it is clear that the Corona crisis creates an extremely positive setting for investment in Spanish property. Thus, if you have ever considered making an investment in housing in Spain, now is probably the best time to start acting. However, there are a few things to keep in mind before making any deals:
- Define Your Objectives
First and foremost, you must define your goals and then stick to them when choosing your property. Some of the most common objectives for buying property are:
- To move to a different country and live there;
- To rent a property and gain income;
- To sell purchased housing later when its value grows.
Depending on the goal you have in mind, you should pick the right property. At this stage, you should be very thoughtful of what you are looking for. You should consider every small detail when making a choice. For example, if you are planning to engage in vacation rentals, one or two-bedroom furnished properties in a good condition would be a perfect choice. For a long-term rental, you may want to seek something cozy and comfortable, family-type apartments with 2 or 3 bedrooms will work well. Meanwhile, if you are considering long-term leasing or sale, you should look for well-distributed properties that have the potential to grow in value.
- Study the Legal Terms of a Deal
Generally, anyone can buy a property in Spain. This basically means that the country allows such deals for any person of any nationality. The age (of course, you should at least be of legal age to make a deal) or social status also doesn’t matter much. Even a student can invest in property in Spain. But, keep in mind that it will take lots of time and effort, so you might need some pro help with your studies (visit here EssayOnTime) to back you up while you search for the right property and take care of everything else. However, there are still a few legal nuances to keep in mind.
One of the main requirements for investing in property in this country is to be able to prove that the funds you are planning to invest have been obtained legally. Additionally, every foreign investor will have to complete certain legal and administrative steps, including:
- Get a local Tax number for foreigners (NIE);
- Open an account in a Spanish bank;
- Get the anti-money laundering clearance;
- Put in place a Power of Attorney if it is necessary;
- Complete the foreign investment declarations in case you are making sizable investments.
All these processes are integral elements of every deal. Thus, it is recommended to study all the legal and administrative nuances far in advance to know exactly what is required from you. Following this tip will help you somewhat ease the stress from the legal process and mitigate the risks.
- Define the Right Area
Of course, the choice of the area where you are going to buy a property depends a lot on your goals. However, it is generally recommended to opt for large cities and tourist destinations.
Buying housing in large cities like Barcelona, Madrid, or capitals of Spanish provinces is a good idea regardless of your objectives. First of all, the real estate market in these areas is more dynamic, meaning you will have plenty of options to choose from. Another big advantage is that housing prices in large cities are subject to more revaluation. In terms of rental, obviously, housing in tourist destinations is in larger demand. Finally, even if you are looking to buy a property and live there yourself, moving to a large city is still a good option because they are more diversified, modern, and developed. Besides, if you don’t know Spanish yet, people in larger cities are more likely to speak multiple languages than those living in smaller towns.
- Consider the Condition
Many beginners make a big mistake looking for property in Spain through a paradigm of “The Cheaper, The Better” but it is not always a good idea. It is advised to search for properties that are in a fairly good condition because the cost of a makeover can actually turn out to be more expensive than the initial price difference. On average, it will cost you somewhere between 450-500 euros for m2. Not to mention that remodeling property takes lots of time and work. Thus, it is better to avoid such complicating factors as a bad condition.
- Search in the Right Place
Buying property outside of your country can really get tricky. Unless you are residing in Spain, searching for available options can be hard and risky, if you don’t know where to start.
Of course, with the help of the Internet, searching for things on sale outside of your country is easier than ever, it is still hard to find trustworthy platforms. Thus, our next tip is to search for properties on reliable and time-tested property portals. To help you get on the right track, here are a few nice websites to use:
- Venta de Pisos
- Balearic Properties
These portals are proven to be reliable and trustworthy.
- Calculate Profitability
This is a great tip for aspiring investors. If you are new to investing in real estate you might be making a common beginner mistake, in particular, considering only the initial purchase price. Here is a thing to remember – when making an investment in property, you have to consider its profitability as well.
To calculate profitability, keep in mind the following aspects:
- Initial price;
- Operation cost;
- Additional expenses required to do up the house (such as buying furniture, painting, adding appliances, etc.).
When you sum up all these expenses, you can calculate the potential profitability of your investment.
The Bottom Line
As you now know, investing in property in Spain really is a good opportunity, which is why it attracts so many foreign investors. However, to make the most of this possibility, it is crucial to do things right. It is important to weigh out all the pros and cons, consider lots of nuances, and stay cold minded.
The tips from this article should help everyone, who is looking to invest in Spain, to mitigate risks. Following these simple pieces of advice can make the process of investment much more comfortable and beneficial for you. Thus, don’t hesitate to use them to your advantage!
Author’s Bio: The article was created by Sandra Larson. Sandra is a professional academic writer with a degree in real estate management. In this article, Sandra shares with us an insight into property investment in Spain and shares effective tips on how to invest wisely.