Spain’s Sunny Murcia Has a Warming Housing Market

With 300 days of sunshine every year, the region of Murcia in southeastern Spain claims to be the warmest place in the country. And after a long property recession that saw house prices cut in half, there are signs its housing market is heating up, too. In September, Spain’s Ministry of Development announced prices had edged up by 1.3% in the second quarter—the nation’s first quarterly increase since 2008. In the same period, the number of homes being sold—an indicator of the health of any housing market—rose by 13.9%, said Spain’s Ministry of Public Works. Sales in Murcia, meanwhile, rose 25.7%. Murcia is a relatively unknown region to foreigners. Other coastal towns along the Costa Del Sol and the Costa Blanca—such as Marbella, Alicante and Malaga—have been developing as international property locations for the past 40 years. Meanwhile, Murcia, situated between the two, has largely escaped the attention of discount developers and noisy holiday makers that have long marred parts of Spain’s coastline. Other than the upscale La Manga golf resort, which opened in 1972, development along Murcia’s pristine coast didn’t start to gather steam until the 1990s when La Manga was joined by several other golf-orientated resorts. Then the crash came, leaving the region with a glut of properties and few buyers, driving down prices.

Today, however, national and international buyers are being drawn back to Murcia by its great weather, its beaches and, away from the coast, its open spaces. It is also offers relatively good value for the money. Nigel Salmon, managing director of Girasol Homes, which operates in the region, estimated that a villa with sea views and four bedrooms along Murcia’s coastline would cost about $1.1 million. In nearby Alicante, an identical property would cost about one-third more, he said. Of Murcia’s 10 or so major golf resorts, La Manga, with 1,400 acres and three courses, remains the most upscale. Matt Oakley, managing director of Murcia Golf Properties, estimated that prices at the resort range from $275,000 for a one-bedroom to up to $16.5 million for the largest villas with five or more bedrooms. Other options along Spain’s “golf corridor” include several built by holiday company Polaris World. These are led by Hacienda Del Alamo, which has the longest championship course in southeast Spain; La Torre, one of the largest resorts in Murcia, with a course designed by Jack Nicklaus; and Mar Menor Golf Resort, with a course by Dave Thomas plus a club house, swimming pools, tennis courts, and plenty of restaurants and bars.

Contemporary homes are still being built in the valley setting of Las Colinas Golf & Country Club, which opened in the depths of the recession in 2010. Las Colinas this year was named Spain’s best golf course and best villa resort at the World Golf Awards. British buyers dominate the market for golf-resort homes in the area, making up about 50% of all sales. Spanish buyers account for 10% to 15%, said Mr. Oakley. The rest, he added, tend to be Northern Europeans seeking sunnier climates than their home countries can offer. Mr. Oakley said he first noticed the Murcia market was picking up some 18 months ago. “Since then prices have been creeping up,” he said. “All the bank-owned property and the really cheap ones have been snapped up, and so buyers are having to look at more-expensive properties.” Yolande Barnes, head of world research at Savills, said she feels that Spain’s property market has now stabilized, and suggests that growth will be slow and steady. “A rapid rebound is unlikely given the high volume of new housing delivered before the crisis still being worked through,” said Ms. Barnes. The weak euro is making Spanish property particularly alluring to U.S. and U.K. buyers, she added. And the rapid expansion of air routes to the Middle East could see investors attracted from that region as well. Taxes are stiff, however. Buyers pay a purchase tax of 8% on resale properties and a Value Added Tax of 10%, plus, in Murcia, an additional Stamp Duty tax payment of 1.5% on new homes. Non-European Union and non-European Economic Area citizens pay a capital-gains tax of 24.75% when they sell, and there is a transfer tax based on the increase in value of the land upon which the property is built. Cost aside, another downside to Murcia is the limited inventory of high-end properties. There are large but dated 1970s villas and myriad small apartments, but buyers need to search hard for historic or upscale contemporary property. This article originally appeared on The Wall Street Journal.