It doesn’t seem like that long ago that Spain was viewed as one of the basket cases of Europe; the country’s devastating property crash littered the landscape with mothballed residential developments, and forced the government to beg European officials and the International Monetary Fund for a handout.
While a lot of the country is still feeling the effects of the eurozone crisis, there are pockets — including Madrid, Marbella, Barcelona, Mallorca and the party island of Ibiza — that have managed to claw their way back toward recovery, and that is in large part is due to buyers from outside the European Union.
According to Knight Frank, the global real estate consultancy, non-EU buyers, especially those from Latin America, the Middle East and Switzerland, are now more active in Spain’s prime markets than three years ago, rising from 31% to 40% of foreign purchasers.
MORE:Why Ibiza Is a Good Place to Invest in a Second Home
“Since Spain turned a corner in 2014, raising its head from the depths of recession to outpace most eurozone economies last year, select pockets of its mainland and islands have taken on a momentum of their own,” said Mark Harvey, partner and head of Knight Frank’s Spanish network.
“Spain is far from out of the woods altogether,” he continued. “Political deadlock persists following two general elections in quick succession, and unemployment remains high. But, the regions that Knight Frank specialises in —Madrid, Barcelona, Marbella, Mallorca and Ibiza — are seeing clear signs of recovery, each fueled by different forces.”
MORE:Colombians Up Their Game in Miami’s Residential Market
In Madrid, sales were 27% higher in April compared with a year earlier, while the number of purchases by foreign buyers jumped by 18%. The bulk of demand came from Latin American countries whose troubled economies are driving investors to what they see as a safe eurozone destination.
Latin Americans accounted for almost a third of all the prime sales agreed by Knight Frank’s Madrid sales team last year, and many are increasingly viewing the Spanish capital as a place to relocate their families and educate their children.
Elsewhere, Middle Eastern buyers are particularly active in the Marbella area, with online property searches on Knight Frank’s website from this part of the world up 164% between 2014 and 2015.
Increased interest from the Middle East will no doubt come as a relief to Marbella-based developers, as the seaside resort has traditionally been popular with British buyers, whose purchasing power has been hit since the Brexit decision last week.
As a result of increased demand, price growth is slowly shifting into positive territory with newly-built modern villas in good locations, beachfront properties along the Golden Mile and gated communities such as Sierra Blanca, Camojan and La Zagaleta outperforming the wider market.
Finally, Knight Frank believes that the the top-tier of Ibiza’s property market has become uncoupled from the wider market, recording a year-to-year price growth of 10% in April as demand outpaces supply.
The number of sales on the island increased 37% in the three years leading up to 2015 and foreign buyers, especially from Switzerland, have become much more active. The island, which was previously a quiet fishing village, now attracts more than 8,000 private flights a year.
“Ibiza is a phenomenon all on its own, more closely resembling St. Tropez, Miami and Mykonos than the rest of Spain in terms of the lifestyle it offers and the young, wealthy demographic it attracts,” Mr. Harvey said.
| Increase in number of sales between 2012 and 2015 | Increase in number of foreign buyers between H2 2014 and H2 2015 | |
| Madrid | 27% | 18% |
| Marbella | 56% | 15% |
| Barcelona | 86% | 8% |
| Mallorca | 38% | 21% |
| Ibiza | 37% | 21% |