As January is a time of reflection, we’ve been talking to fellow real estate agents and legal experts to get a complete picture of Spanish real estate performance in 2020 and asking for their predictions for 2021.
In a recent interview, Lawyer Miguel Manzares shared with us that the year had started very well, with a significant increase in the level, quantity and quality of the clients looking to buy on the Costa del Sol, compared to the previous year. He then saw a dramatic pause for the months of March, April and May, with no activity whatsoever. However, as soon as travel restrictions lifted and the very strict Spanish lockdown came to an end the market reacted very well and the summer was strong.
This mirrors what we experienced, with a six-week burst of activity in the summer, where people arrived very determined and ready to buy. During lockdown, they had clearly done their research and so when they turned up they were in a much stronger position and our conversion rate doubled at this time. During 2020, we also noticed a shift in budget and the mid to high end of the market was very busy, whereas the lower end of the market was slow.
However, both Miguel and Cloud Nine experienced a drop in activity during the autumn and winter, as restrictions returned, but there were still people determined to buy and move over before the Brexit deadline. Now we’re looking forward to a better year ahead.
Predictions for 2021
Based on the buyer response to the lifting of travel restrictions in summer and how serious and committed those buyers were when they did come, I’m expecting something similar in quarter two and quarter three. We have a lot of clients that want to buy here but they just can’t, or they don’t feel comfortable travelling at the moment. So I’m expecting that when people can travel again that we’ll see a spike in visits, tours and very importantly a high quality of clients, as they’ve had so much time to do their research and are prepared to buy.
Our lawyer Miguel was also feeling optimistic about the later part of the year thanks to the roll out of the vaccine and the lifting of restrictions. He predicts a slow start to the year, following a second or third wave caused by the Christmas period and the colder weather, followed by gradual improvement and a good end to the year, particularly in the mid to high end segment, who will be more resilient to the economic issues caused by the pandemic.
Miguel predicts that developers will delay their plans for new developments until they sell their existing stock, which is good for the strength of the market, as we’re not going to see a huge volume of supply. We’ll have the developments that need to sell during construction, and we’ll also have resale stock that private individuals want to sell. But on that front, there hasn’t seemed to be any panic in the market. We haven’t seen lots of new instructions from vendors to sell and therefore prices are remaining stable.
This is important for buyers to understand, as many are expecting prices to be dropped overnight and this is not a realistic expectation. We’re not seeing an oversupply of stock, or desperate vendors, so although there have been some price corrections, this is not a distressed market and so buyers should expect to pay close to the asking price if they are serious about purchasing property in the very best locations.
In terms of how Brexit will affect the level of interest from British buyers, it still remains to be seen, as there is still some legal uncertainty regarding the rights of British buyers moving forwards. Currently, as a non-EU citizen Brits can stay for 90 days every 6 months, or apply for a non-lucrative residency if they can prove that they can support themselves in Spain without being a burden on the system. Another option is to apply for the so-called Golden Visa, which entitles investors into Spain to residency. This investment must be €500,000 or more, and can be applied retrospectively to investments made any time from September 2013 until now. This means that if you have invested 500,000€ or more of your own money into a property in Spain, you will be entitled to residency, regardless of Brexit.
We hope that these options and future legislative changes will make it easy for British buyers to come to Spain and move permanently if they wish, so that we do not lose this important category of buyers.
2021 is sure to be another interesting and challenging year for the Spanish property market. We expect the release of pent-up overseas buyer demand to drive the market forward as soon as European flight restrictions are relaxed, and for the mid-upper ranges of the market to remain robust. Even at the time of writing, sales are being transacted, viewings are taking place (in person and in virtual formats) and enquiry levels remain steady, so the fundamentals remain in place for a return to some semblance of market normality in 2021.
Author Biography – Sean Woolley is the Founder and Director of leading real estate agency Cloud Nine Spain. With 20 years’ experience of helping clients buy and sell properties in Spain, he has become known as “The Property Doctor” and has contributed to a host of publications, offering practical advice and a refreshing manner that is always truly honest, no-nonsense and full of common-sense. He has recently written the book From the Ground Up – The Insider’s Guide to Buying Spanish Property, sharing his years of experience, real life stories, tips and tricks with buyers interested in investing in Spanish Real Estate. It is available on Amazon now and features a bonus chapter on the Impact of COVID-19 on the Spanish property market.